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June 30, 2009

RICHMOND, Va., June 30, 2009 – In a  response filed today with the Virginia State Corporation Commission (SCC), Appalachian Power, a subsidiary of American Electric Power (NYSE: AEP), agreed that programs can be put into place that could reduce energy consumption in the Commonwealth.
The filing was required of the state’s largest electric utilities as part of legislation adopted by the 2009 General Assembly seeking  how best to develop energy efficiency or demand reduction programs to slow or reverse the growth of energy consumption in Virginia. An SCC report on direction and development of efficiency programs is to be delivered to the Governor and legislature later this year. It is to address the development of public policy goals or targets for utility-based Demand Side Management (DSM) programs which consist of both energy efficiency and demand—or peak reduction—programs.
Dana Waldo, Appalachian Power president and chief operating officer, said, “Our research shows that DSM programs can be implemented in Virginia and achieve a range of results. The effects of the programs must be balanced and practical for the company and our customers.
"Changing technologies and a myriad of state and federal standards mean we must thoughtfully review all energy efficiency efforts to make sure they are cost-effective and produce actual energy reductions,” Waldo said. “These efforts must not be allowed to jeopardize reliability of service.”
Following a study conducted by an outside consultant, Appalachian concluded that within an initial five-year program it is practical for the company to achieve a savings of about two percent of its 2008 customers’ energy consumption and approximately five percent of 2008 peak load. Costs to achieve that level of savings would be about $80-$100 million for direct programs and administrative costs during this period.
Appalachian noted that in order to achieve levels of savings higher than the two and five percent it recommends customers would have to bear more risks and pay higher costs over a longer period of time. 
In its filing, the company supports a DSM plan for the state’s electric utilities that is achievable, cost-effective and realistic. It believes that these and other guiding  principles for assessing and developing  programs can be applied to all electric utilities in the state, but that specific programs, strategies and goals must be assessed individually.
Appalachian also noted that it undertook an independent market-based study in order to determine the appropriateness of implementing its own DSM program for Virginia customers. In its filing, it said that the development of a precise portfolio of available programs and measures for its customers would be based upon further clarification from the Commission.
The proceeding by the SCC is Case No. PUE-2009-00023.
Appalachian Power is a long-time supporter of wise energy use and management by consumers. A year ago it established a consumer outreach effort and Web site that explains and provides energy efficiency tips and assistance. Watt, Why and How information is available at www.wattwhyandhow.com
Appalachian Power provides electricity to 1 million customers in Virginia, West Virginia and Tennessee (as AEP Appalachian Power). It is a unit of American Electric Power (NYSE: AEP), one of the largest electric utilities in the United States, with more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
“Demand Side Management” is a power industry term generally used to describe activities, programs and hardware on the customer’s side of the meter to manage customer load and reduce the consumption of energy.

John Shepelwich
Corporate Communications


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