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Energy Demand and Financial Growth

The recovery and growth of the U.S. economy depends on reliable and cost-effective electricity. This is particularly important as local economies and companies struggle to regain their prerecession footing. AEP strives to serve as a partner in these efforts. For example, AEP Ohio worked with regulators, state officials and Ormet Aluminum, our largest customer, to structure an economic development contract that helped the company to continue operating through the economic downturn. The competitive rates offered by AEP Ohio enabled Ormet to return to full production this year. That is good news for the people and economy of eastern Ohio, where Ormet’s increased business is putting people back to work. It is good for AEP because it means our largest customer is expected back on line at full capacity this year.

Over time, demand for electricity naturally increases. The EIA projects residential electricity use will increase 24 percent between 2008 and 2035. As electronics proliferate and more people move to warmer climates where cooling needs are higher, this trend is likely to continue.

The hotter-than-normal summer of 2010 demonstrated how weather affects electricity use. The PJM Interconnection, the grid operator for our eastern states, recorded a 12 percent increase in electricity consumption compared with the summer of 2009, led partly by greater use of air conditioning.

Measuring Growth
Customer counts are one measure of our company’s financial strength. Through 2010 we had about 5.3 million customers on our system. Residential and commercial customers increased slightly, but the gains were offset by modest decreases in the industrial sector. This was true across all of our service territory.

AEP Operating Company Profiles

Sales growth varied by sector: Residential (weather-normalized) sales were relatively flat in 2010, increasing 0.6 percent. We are forecasting a 1.9 percent increase this year. Commercial sales also remained relatively flat, down by 0.4 percent. We’re forecasting a modest recovery of 0.7 percent in 2011.

We experienced significant sales growth of 5 percent in the industrial sector, the hardest hit in 2009. The five sectors that comprise 60 percent of our industrial sales increased their consumption in 2010. Led by primary metals, these sectors include chemical manufacturing, petroleum and coal products manufacturing, mining (except oil and gas) and paper manufacturing. The primary metals sector grew by 6.5 percent, but the recovery was widespread.

Sales grew for all classes of customers by 1.1 percent in 2010, and we are forecasting 1.7 percent growth in 2011. Sales in the western part of our service territory are growing faster than in our eastern service territory, and we expect that to continue.

  • For more data, please see indicators EU10 of AEP's Global Reporting Initiative Electric Utility Sector Supplement.

Consolidated Income