Competing For Capital
Compliance with new environmental regulations, modernization of the grid, growth of our transmission business and the high demand for electrical facilities to support economic development and the shale gas boom have thrust capital resources into a tight competition between business units and business needs. Our strategic goals keep us focused to deploy these limited resources where they can be most beneficial for customers, cost effectively ensure compliance with regulations and support the growth areas of our business.
At times, however, taking advantage of new business opportunities requires a system-wide examination of priorities to ensure capital resources are invested in the optimal areas. In 2012, AEP’s Investment Review Committee (IRC) was instrumental in reallocating capital to AEP Texas, to allow the company to invest in infrastructure that supported shale gas development. The decisions were collaborative between the companies and other business units in recognizing that capital could be more beneficially deployed elsewhere in the company at that point in time. The IRC, which meets at least once a year with all operating companies to review their financial performance and long-term capital spending plans, is chaired by AEP’s chief financial officer.
AEP Transmission is engaged in a plan to modernize major infrastructure within the company’s service territory. The plan seeks to improve regional and local reliability while lowering operations and maintenance costs. It includes building new stations and lines as well as re-conductoring and rebuilding existing lines and stations to increase their capacity. Projects are prioritized based on available capital and how critical the improvements are to the system.