FORT WAYNE, Ind., Sept. 22, 2008 – Approximately 10,000 South Bend, Ind. area customers of Indiana Michigan Power (I&M), a utility unit of American Electric Power (NYSE: AEP), will soon participate in a demonstration of new technologies designed to promote service reliability and help customers manage usage and save money.
Through a collaborative effort with the Indiana Utility Regulatory Commission (IURC) and the Indiana Office of Utility Consumer Counselor (OUCC), I&M will test the use of advanced metering and energy efficiency technologies in homes and businesses located west and northeast of downtown South Bend by the end of the year. The project will be the first deployment of “smart grid” technologies that AEP could implement in model cities across the company’s 11-state service territory.
The pilot is also part of an AEP initiative with General Electric (NYSE: GE) announced last October. AEP and GE Energy, a business unit of General Electric, will pursue the development, integration and deployment of advanced energy delivery infrastructure and metering technologies.
“These new technologies offer exciting potential and will benefit both our customers and our company,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “This pilot, and the deployments to follow, will provide customers with the tools to make wise energy decisions, giving them more control over how they use electricity and, ultimately, more control over their monthly bill. For AEP, the potential to reduce peak demand for electricity by helping customers understand the difference in value of our product at different times of day can delay or avoid the future need for expensive new generation.”
“I&M is very pleased that the IURC and the OUCC are closely involved with this project,” said Helen J. Murray, I&M president and chief operating officer. “We appreciate the foresight of these organizations as we explore how this technology will enable utilities, like I&M, to provide the tools that can help the residents of Indiana save energy, manage costs and conserve natural resources.”
Customers in the South Bend pilot project area will have their homes and businesses equipped with GE smart meters, which are digital meters connected to a two-way radio frequency communications network. Because the meter is in constant communication, a utility company can provide timely information back to the customer that he or she can use to modify consumption behavior. The information also empowers customers to make environmentally friendly decisions when using electricity. Service interruptions can be detected more quickly and restoration activities will be faster and more efficient because smart meters provide continuous grid status to the utility operators.
Smart meter technology will enable pilot project participants to voluntarily enroll in enhanced customer service programs such as:
- Time-of-use prices, where the cost of electricity is lower during off-peak periods and higher during times of peak use.
- Direct load control, a feature that allows automatic adjustments to central air conditioning units during periods of peak demand during summer months in exchange for price incentives on electric rates
- The ability to pre-pay for electricity service.
The project will include the first use of General Electric’s ENMAC system in the United States. ENMAC is a fully integrated, advanced network management system that automates the real-time management, monitoring and control of electrical distribution networks. Distribution automation is expected to lead to faster service restoration following outages and to improved power quality.
I&M will begin installing smart meters and other technologies in South Bend in October, with installations to be completed by the end of 2008. All systems will be in use by the second quarter of 2009 and will be evaluated for one year. The company will also work with homebuilders to install advanced energy controls in 50 new homes.
“First and foremost, we want to know how well these technologies work and how our customers use the additional capabilities to control their energy use,” Morris said. “But we also want to see how much interest there is in offerings like pre-paid accounts and direct load control, how much customer education is needed for the in-home displays associated with the pre-pay option, and how the distribution automation improves our ability to serve our customers.
“What we learn in the South Bend pilot will position us to better match our future programs and technology enhancements with the needs and interests of our customers,” Morris said.
I&M is collaborating with the OUCC for the South Bend pilot under an agreement reached last year. I&M and the OUCC worked collaboratively to define the scope of the program, select the technology, develop programs, design experimental tariffs, and will work together to measure the results.
I&M is headquartered in Fort Wayne, Ind. Its 2,600 employees serve more than 580,000 customers in northeast, east-central and northwest Indiana and southwest Michigan. It operates 3,595 MW of coal-fired generation in Indiana, 2,160 MW of nuclear generation in Michigan, and 22 MW of hydro generation in both states.
I&M is an operating company of American Electric Power, one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in Electric Reliability Council of Texas (ERCOT), the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.
News releases and other information about I&M can be found on the World Wide Web at http://www.IndianaMichiganPower.com
This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the registrants believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity (including the company’s ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing AEP’s ability to refinance existing debt at attractive rates; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and the allocation of costs within regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.