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Materiality
We define issues material to our sustainability as those that: 1) have or may have a significant impact on the company’s finances or operations; 2) have or may have significant impact on the environment or society, now or in the future; or 3) can substantially influence the assessments, decisions and actions of our stakeholders and shareholders. This report reflects those issues we consider material to our business.

This materiality assessment tracks with the criteria AEP uses to identify what constitutes material risks:

  • Risks with significant potential to affect the company’s strategic plan.
  • Risks having the potential to significantly affect earnings, cash flow, or access to capital.
  • Risks that can affect company operations, resulting in poor asset performance, inability to meet customers’ needs, unsafe operations, and/or negative effects on internal processes, people, or systems.
  • Risks potentially affecting regulatory and legal outcomes and/or damaging the company’s reputation.

Our material issues:

Financial Performance – Our ability to manage business risks and to maintain a strong financial foundation allows us to deliver returns to our shareholders; provide safe, reliable electricity to our customers; and deliver broader economic, environmental and social benefits to society. We have a responsibility to maintain a strong balance sheet, investment-grade credit ratings, access to capital markets and sufficient liquidity. Our business performance has direct impacts on our stakeholders and society that we take into account by ensuring that our business strategy and management systems systematically address material issues and risks, by measuring and reporting our performance with accuracy and transparency, and by holding ourselves accountable for the results.

Energy Reliability, Security & Growth – Our electric generation and delivery systems must be reliable and able to handle a diverse fuel supply as well as diverse technologies. They also must keep pace with customer demand. Collaboration is essential to create and maintain these systems and to ensure adequate and timely cost recovery.

Environmental Performance – Although environmental laws and regulations are complex and changing, we are committed to compliance at all times. Our challenge is to achieve compliance, reduce our impact on the environment, and improve the economic well-being of our communities.

Global Climate Change Power generation using fossil fuels contributes to global greenhouse gas emissions. While AEP’s contribution on a global scale is quite small, we can play an important role in minimizing our portion of these emissions in several ways. Our company’s and our customers’ economic well-being requires us to work cooperatively with regulators and policy makers, our stakeholders, and our communities to reach a reasonable global solution that will protect the environment and foster economic growth.

Regulatory & Public Policy – We must actively engage legislators, regulators, policymakers and other stakeholders to ensure that public policy, laws and regulations enable us to continue to serve our customers, compensate our shareholders and pursue our vision for sustainability. We will continue to work with regulators and legislators on regulatory solutions.

Our People – Protecting the safety and health of our employees and contractors and reducing the severity of work-related injuries is a core value. We seek a skilled, diverse and highly motivated work force to support all aspects of our business.

Stakeholder Engagement – All of the material issues and risks we face and our well-being as a company increasingly depend on working closely with our stakeholders, disclosing our intentions, reporting on our performance and engaging in active and forthright dialogue.

Our primary stakeholders are:

  • Equity shareholders, debt holders, prospective investors and lenders
  • Customers
  • AEP employees and retirees
  • Labor unions
  • Local communities
  • Federal and state legislators, regulators, policymakers and other elected leaders
  • Prospective employees
  • Suppliers and others doing business with AEP
  • Nongovernment organizations (NGOs)
  • Professionals in industry, government, labor and education

Scope of This Report
This is our third integrated report, combining information about our financial performance with data on our environmental, social and governance performance. It also is the sixth year we are reporting on our sustainability performance. We are committed to integrated reporting because it gives a more complete picture of how we operate, the decisions we make, the positions we take, our engagement with stakeholders and the consequences of our actions.

Our intent is to conform to the integrated reporting framework being developed by the International Integrated Reporting Council.

Information contained herein is largely based on calendar year 2011, with exceptions for some early 2012 data as noted. Supporting information can be found on our dedicated sustainability website at www.AEPsustainability.com or on our corporate website at www.AEP.com.

In response to stakeholder interest, we report our progress twice a year. A full update is provided in the spring of each year. A shorter update of key commitments is published on the Web in the fall.

Reporting Principles & Guidance
AEP follows the Global Reporting Initiative (GRI) reporting principles in terms of data quality, report content and organizational boundaries. We use the GRI’s G3.1 guidelines, new in 2012, as well as the GRI Electric Utility Sector Supplement for reporting on industry-specific information. Our report is reviewed by GRI. This year’s report was validated as an Application Level A, which reflects a high level of transparency in our reporting.

Contact for questions about this report
For additional information about this report, the GRI information posted on the company's Web site or the company's sustainability initiatives, please contact us.