aep 2011 csr
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Our Board of Directors
AMERICAN ELECTRIC POWER
2011 CORPORATE SOCIAL
RESPONSIBILITY REPORT
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You may browse through the AEP 2011
Corporate Social Responsibility report
at your leisure or you may skip to a
specifc section rom this page.
ABOUT AEP
OUR PROGRESS, OUR FUTURE
COMPANY OVERVIEW
OUR BOARD OF DIRECTORS
ENERGY SECURITY, RELIABILITY, AND GROWTH
ENVIRONMENT
CLIMATE CHANGE
CONTACT AND WEBSITE INFORMATION
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AEP ranks among the nations largest generators o elec-tricity, owning nearly 38,000 megawatts o generating
capacity in the U.S. AEP also owns the nations largest
electricity transmission system, a nearly 39,000-mile
network that includes more 765 kilovolt extra-high volt-
age transmission lines than all other U.S. transmission
systems combined.
AEPs transmission system directly or indirectly serves
about 10 percent o 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 o the electricitydemand in ERCOT, the transmission system that covers
much o Texas.
At American Electric Power, no aspect o operations
is more important than the health and saety o people.
Our customers needs are met in harmony with
environmental protection.
AEPs utility units operate as AEP Ohio, AEP Texas,Appalachian Power (in Virginia, West Virginia), AEP
Appalachian Power (in Tennessee), Indiana Michigan
Power, Kentucky Power, Public Service Company o
Oklahoma, and Southwestern Electric Power Company (in
Arkansas, Louisiana and east Texas). AEPs headquarters
are in Columbus, Ohio.
Gene Campbell, transmission station
manager, AEP Ohio.
About AEP
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WE BELIEVE THAT RELIABLE ,SAFE, AND REASO NABLY PRICED
ENERGY IS A KEY TO THE GLOBAL
ECONOMIC RECOVERY.
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Our Board of Directors
A CLIMATE OF CHANGE
Our Progress, Our Future
American Electric Power (AEP) will be
an energy leader through programs and
technologies that protect people, manage
our impacts on the environment, promote
energy eciency, provide or customer
control over electricity usage and provide
or greater access to renewable orms
o energy and advanced clean energy
technologies. We will work with our regu-
lators and other stakeholders to achieve
this through an approach that maxi-
mizes the positive economic, social and
environmental impacts o our operations.
Many AEP power plants are being retrotted with emission control systems, such as these
Cardinal units in Brilliant, Ohio.
GLOBAL REPORTING INITIATIVE
This report was developed according
to the Global Reporting Initiative (GRI)
Sustainability Reporting Guidelines Version
3.0 (G3) and meets the content require-
ments o Application Level A. Our GRI
elements were reviewed by and our
Application Level A was armed by
GRI. Additional inormation on the GRI
can be ound on our websitewww.
AEPsustainability.com. We also report on
electric utility industry-specic indicators.
GIVE US YOUR FEEDBACK We want
to hear rom you and we welcome your
eedback on this report. Hearing rom our
stakeholders helps us understand what
concerns them. E-mail your comments to
Sandy Nessing at [email protected].
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SERVICE TERRITORY
MARKET PRICE (COMMON STOCK)
$49.11
$25.54
$33.28$36.51
$24.00
$34.79
HIGH H IGHL OW L OWY E AR-END YE A R-END
2008 2 0 0 9
STATISTICAL OVERVIEW
Revenues (in billions) $ 135
Net Income (in millions) $ 1,3571
Earnings Per Share $ 2961
Cash Dividends Per Share $ 164
Service Territory 197,500 square miles
Transmission 39,000 miles
Distribution 215,800 miles
Generating Capacity 38,988 MW 2
Generating Stations More than 80
Renewable Port folio (hydro) 364 MW3
Renewable Portfolio (wind, solar) 1,406 MW 4
Pumped Storage 586 MW
Total Kilowatt-hour Sales (millions) 195,312
Total Assets ( in billions) $ 483
American Electric Power has been providing
electric service or more than 100 years and
is one o the nations largest electric utilities,
serving 5.2 million customers in 11 states.
1. Generally Accepted
Accounting Principles
2. Includes 270 MW o retired/
decommissioned generating capacity
3. Represents nominal capacity;
includes 270 MW o mothballed/
decommissioned generation, AEPs
interest in Ohio Valley Electric Corp.,
purchased power agreements
and renewables
4. Excludes pumped storage;includes owned capacity and
purchased power
5. Regulated wind capacity online or
under contract
Company Overview
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TOTAL SYSTEM ANNUAL CO2EMISSIONS (in million metric tons)
ECONOMIC IMPACT (2009)
AEP GENERATING CAPACITY BY FUEL
Jobs 21,673
Wages $19 billion
Construction Expenses $28 billion 1
Local Taxes $469 million
State Taxes $3087 million
Federal Taxes $123 million
Goods & Services (not fuel) $43 billion
Goods & Services from Diver se Suppliers $69 8 million
Remain Value of All Contracts $43 billion 2
Coal Purchased ( tons) 759 million
Coal Average Purchase Price $50/ton
Corporate Giving $118 million
AEP Foundation Gr ants $113 million3
1. All numbers are rounded
2. Construction Expenses include
those expenses listed in the Cash
Flow Statement
3. Supply chain purchased contracts
and inventory system
4. Includes all grants and contributions
by utility units to support economic
development
900
2005
145.1
2005
275
2005
853
2006
143.9
2006
270
2006
749
2007
147.7
2007
266
2007
638
2008
148.2
2008
249
2008
457
2009
129.7
2009
121
2009
TOTAL SYSTEM ANNUAL SO2 EMISSIONS (in thousand U.S. tons)
TOTAL SYSTEM ANNUAL NOX EMISSIONS (in thousand U.S. tons)
In 2009, AEPs CO2emission decreased 12.5 percent. The
decline in SO2and NOXemissions refects, in part, the suc-
cess o our environmental programs.
NA TURA L GA S / OI L22%
NUCLE A R6%
HY DRO, W IND, S OLA R, &
P UMP E D S TORA GE6%
COA L/ L IGNITE 66%
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Our Board of DirectorsOur Board of Directors
The AEP Board o Directors has assigned the
responsibility or monitoring and overseeing the
companys sustainability initiatives to the Boards
Committee on Directors and Corporate Governance.
At two o the Committees meetings in the past
year, the Committee and company managementreviewed the companys sustainability objectives,
challenges, targets and progress. That Committee
supported the integration o sustainability report-
ing with nancial reporting and gave management
input and guidance or the proposed approach to
this corporate accountability report. It reviewed
and discussed the nal text o this report beore
recommending its approval by the ull Board
o Directors.
The AEP Board o Directors has received periodic
reports both rom management and rom the
Committee on Directors and Corporate Governance
about the companys sustainability initiatives. Many
o the topics in this report have been the subject
o active discussion at Board and Committee meet-
ings. All members o the Board received copies o
this report beore it was published, and several
directors made suggestions that have been incor-
porated into the report. Following its review, and
upon recommendation o the Committee, the Board
o Directors adopted a ormal resolution approving
the report. The Board believes this report is a
reasonable and transparent presentation o the
companys plans and perormance and o its
environmental, social and nancial impacts. The
Board realizes that the company must be prepared
to make requent adjustments in response to thedicult economic and nancial challenges that the
nation and the regions we serve are experiencing.
The Board is committed to the companys con-
tinuing eorts to increase its transparency and to
its sustainability. The Board has emphasized
to management that it will be evaluated by its
success in executing the companys strategic plan
to meet stakeholders and the Boards expectations,
including being agile in responding to changing
circumstances while respecting the commitments
in this report.
AEP BOARD OF
DIRECTORS STATEMENT
LEFT TO RIGHT: Ralph D. Crosby, Jr., Lionel L. Nowell III, James F. Cordes, Linda A.
Goodspeed, Dr. Donald M. Carlton, John F. Turner, Thomas E. Hoaglin, Sara Martinez Tucker,
Dr. Lester A. Hudson, Jr., Dr. Kathryn D. Sullivan, E.R. Brooks, Dr. Richard L. Sandor, andMichael G. Morris.
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DURING A T IME OF GR EATCHANGE, HAVING A STRATEGY FOR
SUSTAINABIL ITY IS ESSENTIAL TO
AEPS LONG-TERM SUCCESS .
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BUSINESS PERFORMANCE
Energy Security, Reliability, & Growth
50,000
2
110,000
96
APPROXIMATE NUMBER OF
CUSTOMER CALLS HANDLED
EACH DAY
MILLION TIMES CUSTOMERS
LOGGED IN TO CONDUCT
BUSINESS ONLINE
CUSTOMERS IN AEP
OHIOS GRIDSMART
DEMONSTRATION PROJECT
CONSUMPTION OF NATURAL
GAS IN BILLIONS OF CUBIC
FEET IN 2009
Our business is to produce electricity and
deliver it over high-voltage power lines to
lower-voltage lines that transport it to our
customers. We have a responsibility to
deliver electricity to our 5.2 million homes
and businesses saely, reliably and cost
eectively. While the system we operate is
complex and aging, it is vital to the econ-
omy and to our quality o lie.
Demand or electricity is growing despite
energy eciency programs, largely due to
population growth and the rising number o
electronic appliances, industrial equipment
and other devices that people rely on or
everything rom entertainment to health
care. Although the pace o growth has
slowed due to the recession, we must plan
or these needs. As the demand or electric-
ity increases, so does the expectation that
we will deliver uninterrupted power wher-
ever and whenever it is wanted. We invest
signicant resources in new equipment
and processes to meet that expectation.
We use a variety o uels to reduce emis-
sions and to ensure reliability. Coal is
our primary uel because it is a low-cost,
abundant, reliable and secure domestic
resource that is oten located near our
power plants. We also use nuclear, wind,
hydro, natural gas, biomass and solar
power to generate electricity.
We have begun to lay the oundation to
transorm our energy delivery system to
lower emissions, improve eciency and
reliability, give customers more control
over their usage and costs, and ensure
energy security. This oundation is being
built through our gridSMART initiative,
construction o power plants, diversication
o our resources and investments in trans-
mission and advanced coal technologies.
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Having the real-time reporting means
I can actively monitor which items in
my house are the worst energyconsumers and do something about
them, right there.
PAUL ROSS, GRIDSMART PILOT
PARTICIPANT, SOUTH BEND, IND.
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Ensuring an adequate supply o energy at any
given time requires determining the demand or
power today, anticipating short-term demand in
the days and weeks ahead, and predicting long-
term demand in the years to come. The stakes are
high in getting this right because o the signicant
capital and construction costs o new power
plants and transmission and distribution systems,
not to mention the time it takes or siting new
inrastructure and getting regulatory support or
cost recovery.
Underestimating uture demand could create
power constraints and higher rates or customers
as we scramble to secure power in a tight market.
Overestimating demand could burden customers
with paying or unneeded and underusedinrastructure. Planning or long-term generation
is complicated by the potential or legislative and
regulatory actions on climate change. We are
uncertain about these possibilities and related
uture costs. Current environmental regulations are
also in a state o fux and could change the way we
produce or transmit electricity.
It is thereore dicult to determine with certainty
whether we can meet uture demand with our own
generation or will need a combination o our own
generation and electricity we purchase. We aredeveloping tools that will help inorm this planning
process. One component o our gridSMART
initiative will allow us to evaluate our inrastructure
needs rom the power plant to the customer meter.
This technology, known as a virtual power plant,
helps us to better understand what we will need i
we are to deploy a robust smart grid system. It also
will allow us to modernize the grid cost-eectively
by showing us what we need or dont need.
ENERGY SECURITY
2009 OPERATING COMPANY EA RNINGS CONTRIBUTIONS
OHIO P OWE R22%
CS P20%
I NDIA NA M ICHIGA N
P OWE R16%
A P P A LA CHA IN P OWE R
COMP A NY16%
S WE P CO9%
T E X A S7%
OTHE RS6%
PS O5%
K E NTUCK Y P OWE R2%
We already have some generation projects under
way that anticipate a lower-carbon uture, including
the 600 megawatt (MW) John W. Turk Jr. ultra-
supercritical coal plant under construction in
southwest Arkansas, which is scheduled to be in
service by late 2012. The plant was designed to
allow or the uture installation o carbon capture
and storage technology. Read more about this
plant in the Environmental Perormance section.
Work also continues on the J. Lamar Stall Plant,
a 500-MW natural gas combined-cycle acility in
Shreveport, La., that will begin operation in 2010.
Our use o natural gas has grown; we consume
approximately 100 billion cubic eet per year.
Between 2005 and the end o 2010 we will have
added more than 4,600 MW o natural gas to our
system, urther diversiying our uel mix.
The Federal Energy Regulatory Commission (FERC)
granted a 30-year extension o the license or
the Smith Mountain 586-MW pumped storage
hydroelectric plant on the Roanoke River in Virginia
in December 2009. The plants initial license was
granted in 1960 and expired in March 2010. We
worked closely with area groups, communities
and regulators to address concerns about water
level, shore erosion, sediment and endangered
species. Hydro-electric power is an important part
o our resource base; we operate 16 hydroelectricplants plus Smith Mountains pumped storage
acility on six rivers in ve states, generating
approximately 1,549-gigawatt hours (GWh) each
year. Approximately 940 GWh o that is ree o
carbon emissions.
$3,914
2007
$3,522
2006
$3,852
2008
$2,393
2009
$2,044
2010
$1,961
2011
UTILITY CAPITAL INVESTMENTS (in millions)
Utility Capital Investments or 2010 and 2011 are estimated.
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Our electric generation and delivery systems must
be modern, reliable and able to handle diverse
uels and technologies. They also must be able to
keep up with customer demand. Overall reliability,
as recorded by the average number and duration
o sustained outages on our distribution system,
improved systemwide in 2009. SAIFI, the average
number o interruptions a customer experiences,
declined to 1.369 in 2009 compared with 1.507
in 2008. SAIDI, the average number o minutes o
each outage, also decreased, to 187.3 rom 211.1
in 2008.
Rather than ocusing on single-year numbers, we
have begun using a three-year rolling average,
which evens out weather-related outages. We
believe this is a more meaningul measure thatbetter refects changes in the overall status o the
system. The three-year SAIFI average was 1.470 in
2009, compared with 1.526 in 2008. The SAIDI
average in was 198.1 in 2009 versus 201.0 the
previous year.
Distributionthe inrastructure and the pro-
cesses that deliver electricity rom high-voltage
transmission lines to customers homes and busi-
nessescontinues to improve as we develop better
tools and processes to manage our system. Several
challenges remain, however.
ENERGY RELIABILITY
AEP is more than 100 years old, and many o our
assets are at or near the end o their useul and
depreciable lie. For example, we have more than 5
million distribution poles in service, some o which
are more than 40 years old, increasing the likeli-
hood o ailure when stressed by wind, snow or ice.
To prevent this, we have a pole inspection program
to continually evaluate the status o all distribution
poles. In addition, 21 percent o our distribution
station power transormers and 22 percent o our
distribution line transormers are beyond their
expected operational lie. New, higher eciency
equipment is available that we will use to begin
replacing these aging assets while also achieving
demand and energy eciency goals.
Our generation and transmission businesses acesimilar challenges as equipment ages. We conduct
regular operational risk audits in our Generation
business unit to assure equipment reliability, as
well as inspecting, testing and monitoring equip-
ment. However, at no time are we compromising
saety and health. We also ormed an aging asset
task orce to develop a long-term plan to address
the issue in each state in our ser vice territory.
New tools and processes enhance our ability to
manage the system. For example, we began using
a Line Equipment Analysis Device (LEAD), anelectronic snier developed in our own labs, that
detects intererence caused by cracked insula-
tion or other dicult-to-detect ailures. Combined
with GPS technology, this allows crews to check
the status o equipment more easily and accu-
rately by driving along our lines. The LEAD can
nd electrical leaks that the human eye cannot,
providing us with advance warning about potential
imminent ailure.
2 00 5 20 06 20 07 2 00 8 20 09
SAIFI1 1.502 1.527 1.547 1.526 1.470
SAIDI2 210.8 202.9 198.9 201.0 198.1
THREE-YEAR AVERAGE ROLLING RELIABILITY PERFORMANCE
1. System Average Interruption Frequency Index is the average number o
interruptions a customer experiences
2. System Average Interruption Duration Index is the average outage duration or
each customer served
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I NDUS TRIA L30%
COMME RCIA L27%
2009 RETAIL LOAD
RE S IDE NT IA L32%
WHOLE S A LE *11%
* Wholesale includes sales tomunicipal and cooperative power
systems, other wholesale, and
miscellaneous retail sales
AEP remains committed to developing an extra-
high voltage transmission superhighway that
would acilitate the movement o power among
regions o the country. This system would reduce
congestion and costs and enable the transmission
o renewable power such as wind and solar rom
where it is generated to where it is needed. We
believe that widespread use o renewable energy
depends on the ability o the transmission system
to transport it.
One way we are tackling this is through a col-
laborative eort to develop a master plan or
transmission that supports the development o
renewable energy in the Midwest and enables its
delivery to consumers within the study area. In the
all o 2009, Electric Transmission America (ETA),a joint venture between AEP and MidAmerican
Energy Holdings Co., along with ve other utilities
and transmission operators, began a compre-
hensive study o the transmission system in the
upper Midwest. Called the Strategic Midwest Area
Transmission Study, it will identiy the transmission
needed to enable the harvesting o the vast clean
energy resources in areas such as Minnesota, the
Dakotas and Iowa. Phase 1 o the study has been
completed; it recommends three alternatives or
urther study. Phase 2 will measure the economic
and societal benets and is anticipated to becompleted later this summer.
The sponsors o the study believe that an EHV
transmission network in the upper Midwest will
provide signicant economic, environmental and
reliability benets by ensuring access to new gen-
eration sources and strengthening the transmission
system in the heart o the nation. This study is part
o a process we started in 2008 to develop an EHV
transmission system in that region.
ENERGY GROWTH
We ormed a wholly owned transmission company
to acilitate capital investment within our service
areas. The AEP Transmission Co. (AEP Transco)
will construct, own and operate only new transmis-
sion assets. By setting up a separate company with
its own capital structure, we will relieve some o
the nancing burden on our operating companies
because the transmission company ultimately will
be able to nance transmission projects on its
own. The transmission company already has led a
proposed rate structure with the FERC.
AEPs Transco is just one part o a three-part
transmission strategy. We have entered into sev-
eral joint ventures with other utilities, including
two joint ventures with MidAmerican Energy, ETA
and Electric Transmission Texas (ETT), to build
transmission. Although the Potomac-Appalachian
Transmission Highline project, a joint venture with
Allegheny Energy, had led permits with Maryland,
West Virginia and Virginia or permission to build
the line, we withdrew the Virginia request in January
2010 based on new inormation rom the regional
transmission operator, PJM Interconnection.
The grid operator said that preliminary studies
showed the line would not be needed in 2014, as
originally planned, because o reduced demand
brought on by the recession and energy eciency
projects. We plan to resubmit the request when the
results o PJMs ormal planning process warrant
the line.
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BY WORKING TOGE THER TODAY WE
CAN CHAN GE THE WAY WE W ILL
PRODUCE AND USE ELECTRICITY
IN THE FUTURE.
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ENVIRONMENTAL PERFORMANCE
Environment
4
181
21
43%
NUMBER OF AEP FACILITIES
THAT ARE LEED CERTIFIED
MILLION GALLONS OF
WATER /YEAR USED FOR ASH
HANDLING AT COAL PLANTS
NUMBER OF
ENVIRONMENTAL AUDITS
PERFORMED IN 2009
LAND OWNED BY AEP
SUBSIDIARY COMPANIES
COVERED BY FORESTS
AEP produces and delivers an energy
resource that is essential to society. Our
success is measured by our ability to meet
customers energy needs while making a
prot, doing it responsibly, with respect
or the environment, in compliance with all
laws and regulations, and by engaging with
those who have a stake in our business. We
believe that our environmental perormanceoverall is excellent, but we know there is
room or improvement.
Our $5.4 billion program to retrot many
o our coal-red power plants with environ-
mental controls is already having signicant
positive impacts on our perormance and
the environment. Today, our sulur dioxide
(SO2) and nitrogen oxide (NOx) emissions
are at their lowest levels in two decades.
These reductions refect our compliance
with the Clean Air Act (CAA) Title IV regula-
tions, the NOx State Implementation Plan
Call and the Clean Air Interstate Rule.
Environmental regulation is in fux: the U.S.
Environmental Protection Agency (EPA) is
reviewing or rewriting several key regula-
tions pertaining to air emissions, water
quality and waste storage and disposal.
Many potential changes are aimed directly
at coal-red power plants and could
adversely aect our net income, nancial
position and the cost o electricity.
I, or example, emission limits become
more restrictive, or i additional substances
are regulated, we would ace signicant
additional costs. We have obtained cost
recovery or our environmental program
so ar, and we expect we would continue
to be allowed to do so i new government
mandates are imposed.
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Oten one o the most challenging
parts o my job is trying to explain to
employees why we do what we do inregard to various environmental rules
and regulations.
GINGER MACKNIGHT, ENVIRONMENTAL AND
LAB SUPERVISOR, PHILIP SPORN PLANT
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ENVIRONMENTAL PERFORMANCE
Climate Change
6 %
130
66%
2%
GENERATING CAPACITY
FROM RENEWABLE ENERGY
MILLION METRIC TONS OFCO
2EMISSIONS IN 2009
GENERATING CAPACITY
FROM COAL
SF6
EMISSIONS RATE OF
TOTAL SYSTEM CAPACITY
IN 2009
For more than 100 years, AEP has
produced low-cost electricity by burning
coala plentiul, domestic and cost-
eective source o energy. Coal-red
electricity has played a vital role in
expanding the American economy, creating
well-paying jobs and assuring the saety,
health and well-being o our customers.
Nearly hal o the nations daily electricitycomes rom coal. We rmly believe that
coal will continue to be a signicant
component o Americas energy mix or the
oreseeable uture.
At the same time, we recognize that the
carbon dioxide (CO2) emissions created
through the combustion o ossil uels,
including coal, are a matter o concern. The
AEP system includes the largest portolio
o coal-based generation in the United
States, so we have a responsibility to lead
our industry in proactively addressing
this issue. We are doing so through our
investments in clean-coal technology and
carbon osets and in our vocal support or
responsible ederal legislation, including
cap-and-trade policies.
We are leading in terms o our measurable,
voluntary eorts to reduce our carbon
emissions and use more renewable uels,
and through our eorts to modernize the
electric grid, put more control o energy
use in consumers hands, and increase
energy eciency.
We expect the makeup o our generationportolio to change in response to several
external actors, including global climate
change. The number o coal-red units we
operate in the uture will be determined
by new or more stringent environmental
regulations; greater potential use o natural
gas, including shale gas; the age and
eciency o some o our coal units; and
the outcome o the climate change debate.
The transition to other uel sources will
take time and will be expensive, but we are
preparing or it. The actions that we take
today will determine how well we meet this
challenge.
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When the United States develops
legislation or regulations that require a
reduction in CO2 emissions, there is nodoubt in my mind that CCS will be an
integral part o compliance or the coal-
fred power generation industry. While
efciency improvements to the power
generation process can take us part o
the way toward a lower carbon ootprint,there will be no substitute or advanced
CCS technology deployment.
GARY O. SPITZNOGLE, MANAGER OF IGCC
AND GAS PLANT ENGINEERING
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THE MEN AND WOMEN OF AEP ARE
MOVING FORWARD. WE INVITE
YOU TO JO IN US .
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CONTACT US
VISIT OURSUSTAINABILITY WEBSITE
by mail
AMERICAN ELECTRIC POWER
1 RIVERSIDE PLAZA
COLUMBUS, OH 43215
micro-site
http://grdedev.erris.edu/~drieseb/grde320/aepsustainability
iphone app
http://grdedev.erris.edu/~drieseb/grde320/aepsustainability/iphone.html
by phone
1 (614) 716-1000 OR
1 (800) 277-2177 (24 HOURS)
or online
http://www.aep.com/contact/
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