Our ability to make informed decisions relies on the strength of the relationships we have with our many different stakeholders. To AEP, stakeholder engagement is a business imperative.
During the last decade, we have cultivated a commitment to engagement and transparency by being accessible, responsive, honest and open with those with whom we engage. We seek to foster healthy, trusting relationships that turn conflict into cooperation and, ultimately, into partnership. In 2015, we made progress toward this objective and laid out a plan to expand our engagement efforts in 2016.
Stakeholder engagement in 2015 was largely dominated by carbon, specifically the Clean Power Plan (CPP), and the evolving utility business model. AEP held several meetings with four environmental groups – Natural Resources Defense Council, Environmental Defense Fund, Sierra Club and Clean Air Task Force – over the potential impacts of the CPP to the grid. Although we disagreed on some aspects of the rule, we agreed to try to identify opportunities to work together that would benefit the states we serve as they determine their compliance strategies.
For example, we agreed that renewable energy, energy efficiency and grid modernization initiatives will be critical for the future, regardless of what happens with the CPP. As AEP diversifies its energy portfolio, we will be looking for opportunities to work together to seek state commission support for utility investments in options such as universal solar projects that broaden access to renewable energy to more customers.
In 2015, we saw increased investor interest in AEP’s evolving business model in a low-carbon, high-tech world. This report reflects extensive discussion with some AEP investors to address their concerns about our ability to sustainably grow earnings in the future as more customers seek to self-generate their electricity. They also wanted to know more about the impact of technologies and new regulations that can potentially affect AEP’s long-term growth. For example, we discussed our carbon profile including how we factor carbon into our capital investment strategy. AEP’s Board of Directors approves the capital investment plan, which maps to AEP’s strategy of being a less carbon-intensive company in the future.
In response to investor discussions, we are providing a detailed view – as best we can – of the opportunities and risks, our strategy for growth and our plan for achievement. Sections of AEP’s 2015 Form 10-K were enhanced to reflect these investor discussions and provide a clearer picture of the transformation we are undergoing.
In 2015, Mark McCullough, executive vice president – Generation, took the lead as AEP’s executive champion of stakeholder engagement. To ensure continuity and deepen our relationships, we began meeting one-on-one with the stakeholder groups. This will continue in 2016. In addition, we have begun to implement a plan to increase our outreach to social impact investors and expand the circle of non-governmental organizations (NGOs) with whom we engage. Our experience is that transparency and open, honest communications are important to building trusting relationships, eliminating misperceptions and increasing awareness and understanding of AEP’s transformation.
Another avenue of stakeholder engagement occurs in our integrated resource planning (IRP) process. Most of our states have formal stakeholder processes for developing these resource plans, while others are more informal. In all cases, the intent is to be inclusive, listen to stakeholder ideas and concerns, answer their questions and consider their input as we develop resource plans for our jurisdictions.
In Indiana, Arkansas and Louisiana, for example, the stakeholder process is formalized and includes representatives from customer groups, various industry groups, environmental groups and others. In these states, we share the IRP with the stakeholders before filing it with the state utility commission. In other states, such as Oklahoma, Kentucky, Virginia and West Virginia, the engagement process is less iterative but there are clear communication pathways before and during the process of developing and approving IRPs for those states. While each process is unique, it is still based on the principles of engagement and transparency.
Our stakeholder engagement efforts include our employees.
How we engage our employees