Business Performance

Fostering A Culture For Reliability Compliance

Overheated transmission lines, inadequate vegetation management, insufficient equipment and lack of training were root causes of the 2003 Northeast blackout that left 55 million people in the dark in the United States and Canada and slammed the brakes on international travel and financial markets. Since then, the North American Electric Reliability Corporation (NERC) has been authorized by the Federal Energy Regulatory Commission (FERC) to enact and enforce rules protecting the U.S. bulk power system. These rules and standards are constantly evolving, and they affect virtually everything we do in operating the grid day to day.

The reliability standards require us to document every process and procedure considered critical to bulk electricity system reliability. We also must demonstrate a strong culture of compliance, including the ability to readily access these documents, which compliance enforcement authorities use as key pieces of evidence during audits. Noncompliance with reliability standards can lead to serious financial consequences as well as reputational risk.

In June 2012, NERC completed an audit of AEP’s compliance with FERC Order 693 reliability standards. This audit was the largest of the year’s four NERC audits. Our employees spent nearly a year preparing for the audit; more than 100 employees received training that incorporated techniques similar to those we use to prepare for state regulatory commission hearings. This level of preparation is an ongoing process that helps to heighten compliance understanding and awareness. Later in 2012, we participated in three more audits – the Texas Reliability Entity (TRE) Critical Infrastructure Protection (CIP) audit of Electric Transmission Texas, the TRE Transmission Operations audit of AEP and the AEP Energy audit.

Overall, our performance in the 2012 audits was good. The positive outcomes were the result of significant efforts by many dedicated resources across the company to improve our compliance culture and to identify and then address compliance issues as they arise. We engage employees at all levels of the company by:

  • Establishing centralized coordination of the program by executive and management governing committees
  • Providing ongoing education to all employees
  • Establishing working groups to develop and implement improvements in areas that need attention

We expect future audits to be more forward-looking and focused on the standards that present the greatest risk to the bulk power system.

Closing Bell at the NYSE

AEP CEO Nick Akins was among a group of executives to ring the closing bell at the NYSE at the close of 2012 COMMIT!Forum in New York City.

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