AEP produces 2013 Corporate Accountability Report: ‘Energy: Powering America’s Future’

AEP’s 2013 Corporate Accountability Report can be viewed at AEPsustainability.com.

According to the 2013 AEP Corporate Accountability Report, “We Have the Future in Focus.”

“Safe, reliable and affordable energy has long been the backbone of America’s economy, delivering comfort to customers, a competitive edge to businesses and a quality of life that others emulate,” says the introduction to the report. “To ensure a secure energy future, we need a diverse resource mix. At AEP, we have the future in focus.”

The 2013 report once again combines the company’s Annual Report to Shareholders with what was formerly referred to as the Corporate Sustainability Report. It is AEP’s fourth integrated report and seventh year of reporting non-financial performance.

This year’s report — for the first time — is fully web-based and is complimented by an application that makes it available on the Apple iPad. The responsive design of the website makes it available on any desktop computer or mobile device (smartphone, tablet, etc.).  

The 2013 report focuses on four key areas: Leadership & Strategy; Business Performance; Opportunities & Risks; and Partnerships & Engagement.

Highlights of the 2013 report include:

• Results of the company’s first formal survey to identify those issues most important to AEP and its stakeholders;
• The company’s best safety performance in its 107-year history;
• A fleet transformation plan to retire about 5,500 megawatts (MW) of coal units by the end of 2016 and retrofitting or refueling another 11,000 MW by 2020;
• Helping communities affected by coal plant retirements retool their economies;
• The changing dynamics of resources to produce electricity;
• Innovations in transmission, enabling new business opportunities associated with the shale gas boom; and
• AEP exceeded its goals to reduce demand and energy consumption.

This year’s report — for the first time — is fully web-based and is complimented by an application that makes it available on the Apple iPad.

“The energy business is complex, exciting and in the midst of a major transformation,” Nick Akins, AEP president and chief executive officer, says in his message in the report. “We provide a vital service that for more than a century has supported commerce, contributed to quality of life and strengthened our communities. And as the energy business changes, so do we.

“Recently, domestic production of oil and natural gas has increased, the price of natural gas has fallen, and the cost of generating electricity from coal has gone up, a result of increasingly expensive environmental compliance requirements. At the same time, energy demand has remained stagnant because of weakness in the economy and gains in energy efficiency. 

“These changes have led to some positive outcomes that underpin our sustainable growth strategy, including greater fuel diversity, new jobs, grid modernization and a cleaner environment,” Akins continues. “AEP has become a more agile, innovative, adaptive and resilient company and has thus continued to create value for customers, shareholders and other stakeholders. We’ve also worked to strengthen our nation’s energy security and its industrial competiveness in the 11 states where we operate and in which we live.”

View a video of Nick Akins discussing sustainability. (1:45 minutes)

In the Leadership & Strategy section of the report, AEP lists its strategic goals for 2013:

• Optimize regulated utility returns: AEP’s financial objectives are to earn our allowed returns by prudently investing capital for our customers and maintaining our investment-grade credit ratings.
• Grow our transmission business: AEP Transmission’s growth strategy depends on building and cultivating a portfolio of businesses under the AEP Transmission Holding Company. For the year ending Dec. 31, 2013, AEP Transmission Holding Company projects it will contribute $67 million in earnings.
• Transform our generation business: External factors continue to call for significant changes in our generating fleet.
• Build our competitive business platform: AEP formed a new Energy Supply organization in late 2012 to oversee this business unit.
• Improve the health of our organizational culture: Culture is a business imperative to successfully execute on our strategy, yet it is abstract and subjective. It’s our job to reach out to all of our employees, communicate the strategy and vision, and focus on how each business unit can contribute to AEP’s overall strategy and vision so all employees know exactly what their roles are.  

The report also lists the company’s “three pillars of sustainability” — energy, the economy and the environment:

• Energy — In addition to traditional fuels such as coal and natural gas, we also see transmission, smart grid and energy efficiency as vital parts of our resource mix.
• Economy — We are advocating for federal resources to assist in retooling local economies as we also explore ways to reuse retired coal plants or plant sites.
• Environment — Compliance is the foundation of our environmental efforts. We also set voluntary targets. Overall, our performance is very good.

One of AEP’s strategic goals is to grow its transmission business. AEP Transcos plan to construct nearly $1.9 billion in additional transmission facilities through 2015.

“This comprehensive report of AEP’s financial and nonfinancial performance reflects a growing trend in corporate reporting,” said Sandy Nessing, managing director, Sustainability & ESH Strategy & Design. “We provide a broader, more complete view of AEP’s total performance, strategy and goals, connecting the dots to help stakeholders understand how everything works together. We were one of the first U.S. companies to take this path and today many more are also taking this approach of combining financial and nonfinancial performance in their reporting.

“We are really excited about the app. It puts information at your fingertips but also allows us to expand on some topics in different ways,” she added. “For example, the app includes photo essays that help us show customers, regulators and other stakeholders our business. The photos we chose focus on key areas of our business strategy: the importance of Turk Plant to fuel diversity, job growth and energy security; the growth of our transmission business; the challenges of storm restoration; and our commitment to community engagement.

“In today’s hyper-connected world, instant access to information is vital. Our ability to use the tools available to us to communicate the AEP story gives us an edge in the reporting arena and helps to keep us better connected with our many different stakeholders.”