Being a responsible corporate citizen goes beyond the fence line of our property to the heart of the communities and economies in which we operate or that we serve. Our investments range from the thousands of hours our employees volunteer locally, to corporate financial support for important community programs and initiatives, to economic training and development efforts. The need for our support is greater than ever as many areas continue to struggle economically while several of our coal units prepare to retire, eliminating jobs and other economic support as a large employer.
AEP's Economic and Business Development group has been making inroads across our service territory, working with local communities to attract and retain business.
Eastern Kentucky is one of the regions that has been negatively affected by the economic downturn and is bracing for the retirement of AEP’s Big Sandy Plant Unit 2. The plant’s Unit 1 is expected to be converted from a coal-burning unit to a natural gas-fueled unit, effectively ending the use of coal at the plant.
The end of coal operations at Big Sandy Unit 2 will result in the loss of some local tax revenues and jobs. In response, Kentucky Power Company hired InSite Consulting, LLC, a nationally known economic development consulting firm, to analyze and evaluate Eastern Kentucky’s economic development opportunities. The results of this study were a catalyst for the beginnings of a multi-state effort called the Kentucky Central Appalachian Economic Recovery Region. In addition, the study was a catalyst for a joint effort by Kentucky Governor Steve Beshear and Congressman Hal Rogers called Shaping Our Appalachian Region. Both of these efforts are regional collaborations between public and private entities to create jobs and other investments in the eastern Kentucky region.
The analysis found that Eastern Kentucky has much to offer potential businesses, including a skilled work force, easily accessible roads and a robust inventory of potential development sites. However, these selling points are not well-known or promoted. With the goal of creating a successful regional economic development organization and bringing jobs back, AEP and Kentucky Power will lead the effort by providing consulting and other resources to advance these two initiatives, as well as assisting local economic development organizations.
AEP’s Economic and Business Development (E&BD) group has been making inroads across our service territory, working with local communities to attract and retain business to help soften the impact of the economic downturn. This group works strategically with businesses, communities, and state and local officials through our operating companies to identify potential sites for business relocation and expansion.
Multiple local and regional economic development initiatives also took place throughout 2013. Two of our operating companies, AEP Texas and Public Service Company of Oklahoma (PSO), teamed up with regional and local banks to raise capital via senior unsecured term loans to finance capital investments that support efforts to meet our customers’ needs. Our Indiana Michigan Power Company is also engaged in this type of financing. Allowing local banks to provide financing for large-scale capital expenditures expands more traditional financing strategies used by AEP.
Historically, the opportunity to finance assets was limited to large national financial institutions with global portfolios and traditional capital markets. Raising capital within our service territory allows us to build liquidity and diversify our lender base. It also allows us to do business with local banks, promoting stronger local ties and strengthening the economies in the communities we serve.