Reliability Investments

Maintaining the approximately 264,000-miles in our transmission and distribution network comes with an array of challenges while we are upgrading the infrastructure to meet demands and changes in our generation portfolio. These include the age of our infrastructure, the threat of external interruptions, the transformation of our generation fleet, the difficulty of siting new facilities, new and future environmental regulations, and the magnitude of investments needed. In response, we are investing in infrastructure and using technology to prevent and mitigate service disruptions and to better communicate with our customers.

Vegetation-related outages and equipment failure are among the biggest challenges to AEP’s service reliability. Managing vegetation on our rights of way is a key to maintaining transmission and distribution system reliability. AEP manages the trees and vegetation around power lines using a combination of performance-based (such as targeting low performing circuits) and cycle-based maintenance strategies. Maintaining a regular tree-trimming cycle is a significant expense that directly affects customer bills and satisfaction.

During the past five years, AEP has invested more than $1.49 billion in vegetation management, including $348 million in 2015. The issue of reliability has prompted several states to consider or implement shorter intervals between tree trimming programs.

Severe weather events have made it clear that electric distribution and transmission systems need to be made more resistant to damage from vegetation during major storms. Over the past several years, AEP and our operating companies have received approvals from state commissions in Virginia, West Virginia and Kentucky to implement vegetation management programs, moving tree-trimming and other vegetation management to a three- four- or five-year cycle, to lessen future storm impacts. Four-year vegetation management cycles have already been established in Oklahoma and Ohio.

At the end of 2015, Appalachian Power concluded its three-year vegetation management pilot program in Virginia. This program allowed the company to trim, remove, or treat trees and brush near electric facilities on 30 distribution circuits across its Virginia service territory. Program work was completed on approximately 2,200 miles of overhead line. Vegetation-related interruptions to customers on these circuits showed a nearly 40 percent improvement in frequency and 31 percent improvement in duration.

In addition to vegetation management, we are investing in new infrastructure to improve reliability for customers. For example, Appalachian Power will begin construction in 2016 on a project to improve reliability in southwest Virginia. The Duffield Area Improvements project is an estimated $14 million investment in transmission upgrades. The need was identified following a period of extreme weather during winter 2014. Extreme weather conditions could create stress on the existing system and lead to power outages. In addition to improving reliability for the region, the project will provide a modern transmission system that can enhance local economic development. The project is expected to be completed by the end of 2017.

A second transmission project will bolster the transmission grid in four Virginia counties. The Roanoke Area Switching Improvements Project is an estimated $30 million investment in the region with upgrades to at least 14 area substations. Construction is expected to be completed in the fall of 2017.