content_image/34759.jpg
AEP uses more coal than anyone else in the nation  – some 75 mil- lion tons annually on average. Approximately 73 percent of our 36,000-megawatt generating capacity is fired by coal and lignite. Continued use of coal is impor- tant for the energy security and economy of our nation, and for the interests of our stakeholders. 

Keeping coal as a viable energy option will require advanced technolo- gies. That is why we are continuing our tradition of technological innovation by pioneering construction of the largest Integrated Gasification Combined Cycle (IGCC) plant in the world. We announced this clean-coal project  last year and will finalize site selection and seek cost recovery in 2005. We anticipate comple- tion by 2010. 

While other companies remain focused on supercritical coal-fired genera- tion – pioneered by AEP nearly 50 years ago – we are moving to the next level of generation technology. 

We believe increasingly stringent air-quality regulations and the possibility of eventual constraints on carbon dioxide emissions make IGCC the right invest- ment and the most environmentally responsible choice for future coal-fired gen- eration. IGCC technology has the potential to provide the environmental benefits of a high-efficiency, natural gas-fired, combined-cycle facility while capitalizing on the comparatively low and stable fuel costs associated with coal. I invite you to read more about IGCC technology later on in this report. 

AEP also expects to invest approximately $3.7 billion through 2010 and an- other $1.5 billion through 2020 in improvements at our existing coal-fired plants.  This will extend their productive lives, keep them operating profitably and improve air quality for those living nearby. Technology already in place at some AEP plants will be added to other facilities to reduce emissions of sulfur dioxide, nitrogen oxide and mercury. AEP has invested roughly $2 billion in en- vironmental enhancements at our generating facilities since the mid-1990s. 

Even after electric rates that allow us to recover our planned expenditures are approved, our customers’ costs will remain among the lowest in the regions we serve. AEP also will stay competitive in wholesale power markets. These are enormous advantages that we intend to keep. 

AEP will continue as an industry leader in addressing global climate change. As a founding member of the Chicago Climate Exchange, the first voluntary platform for trading greenhouse gas emission credits, we have committed to re- duce or offset greenhouse gas emissions a cumulative 10 percent between 2003 and 2006. This is in addition to our widely recognized tree-planting program and our efforts to preserve forests to sequester carbon dioxide. 

A diverse fuel mix that includes renewable energy is important for our na- tion and our company. AEP operates nearly 900 megawatts of hydroelectric gen- eration and is one of the largest generators of wind energy in the United States with more than 300 megawatts operating in Texas. We are exploring opportuni- 

Last summer, AEP dispatched hundreds of employees and contractors to Florida to assist utilities ravaged by several hurricanes. 

<img src='content_image/34759.jpg'>

AEP has invested roughly $2 billion in environmental enhancements at our generating facilities since the mid-1990s. 

