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EU Commentary on SO1 - Include discussions of programs related to influx of workers and impacts on neighboring communities, changes to land-use, impacts on infrastructure and changes

2.4 Report whether the organization’s programs for managing community impacts have been effective in mitigating negative impacts and maximizing positive impacts, including the scale of persons affected.

As stated in the company's response to EC8, AEP’s investments and services have a major positive impact on the areas where they take place. Many of the company's major projects result in the temporary employment of thousands of workers. The influx in workers provided a boost to the local economies for the duration of the projects and in some cases result in the development of new businesses. The projects also result in the creation of scores of permanent jobs that support the new facilities, plants, equipment and processes that were under construction in 2011.

As part of its sensitivity to community issues, project leaders meet with local civic officials before projects begin -- and at regular points throughout the projects' timeline -- to acquaint them with the nature and scope of the project and respond to questions and concerns they may have. The company’s active and open community relations program has allowed the company to address land-use or community impacts before they become sore points with residents and civic leaders.

For example, prior to announcing its intent to seek public service commission approval to build a $940 million scrubber system on its Big Sandy Power Plant, officials of AEP's Kentucky Power subsidiary sought to inform the public of the situation it faced in complying with federal EPA regulations. While the company understood that the continued use of coal and the installation of a flue gas scrubber system to allow it to do so would not be "controversial" in coal-centric eastern Kentucky, the cost impact of the project on Kentucky Power's 173,000 customers would be a different story. The company is projecting an approximate 31 percent increase in customers' rates to build the system.

To help explain the need for the project and the EPA regulations behind it, company officials undertook a series of public meetings leading up to the announcement in December. Throughout the fall, the company addressed civic groups, chambers of commerce, and other forums. It also held community leader luncheons in select communities to talk about the issue. Additionally, the company discussed the project with area legislators and what it would mean in terms of jobs, the tax base and continued coal use. The media attended several meetings and company officials took time to address their questions. Kentucky Power also used the opportunities to caution participants that the cost of the project (and complying with environmental regulations in general) is extremely expensive and that customers would be seeing future rate increases associated with it -- there was no way around that. By the time the project was formally announced, the pros and cons of the decision had been socialized throughout the company's service territory. While the prospect of a large rate increase is still an unpleasant reality, at least initially, public disapproval has been limited. Of course, any rate increase associated with the project has yet to actually affect customers bills and won't for several years. In the meantime, the company will work through the regulatory process to reach a fair, just and reasonable outcome for its customers, company and shareholders.

Another example involves AEP's Southwestern Electric Power operating subsidiary. In 2011, SWEPCO increased its outreach efforts to support construction of the John W. Turk Jr. Power Plant. By the end of 2011, the project was more than 80 percent complete. At the height of construction in mid-2011, the work force stood at more than 1,800 people. In January, company representatives partnered with other Turk investors to launch the Arkansas Coalition for Affordable and Reliable Electricity (ACARE) and began actively recruiting members. By December, ACARE had 1,947 members publicly listed on the website and had created a database of more than 2,300 supporters, who receive monthly newsletters and updates about the Turk Plant. To recruit supporters, exhibit booths were set up at eight conventions, conferences and events throughout Arkansas, and numerous tours of Turk were provided to elected officials, business leaders and the media. In July and December, SWEPCO announced settlement agreements ending all legal challenges by opponents of the plant, giving the Turk project a green light to continue construction with a goal of completion by late 2012.

(Content for this response was provided by Tom Holliday, Director-Communications Services, Ronn Robinson, Manager-Communications for Kentucky Power [Big Sandy data] and Kacee Kirschvink, Sr. Communications Consultant for SWEPCO [Turk Project])

2012