Innovation comes from human curiosity and a natural instinct for people to problem-solve. By giving employees ownership and the freedom to find and implement solutions, we can foster entrepreneurship in our work force that cultivates creativity, innovation and the right amount of risk taking. AEP has a long heritage of innovation, from building central power stations and the first extra-high voltage transmission lines, to being the first to experiment in utility control of customers’ cooling and space heating as a load management tool. We didn’t accomplish these breakthroughs by sitting on the sidelines.
Time and again, our employees have demonstrated their entrepreneurial spirit. Through perseverance and technical expertise, their achievements have improved the efficiency and operation of the electric grid, reduced our environmental impacts, and advanced early research of energy storage. Those first 107 years of our existence set the stage and show us that we have what it takes to succeed in the future.
Through scenario planning, continuous improvement and support for out-of-the-box thinking, we are shaping our culture to be more agile, collaborative and customer focused. At the forefront of this evolution are our employees, who continue to challenge the status quo in pursuit of what’s best for AEP, our customers, the environment and, ultimately, our shareholders.
Entrepreneurship in Action
If we have a problem and need a solution, we’ve learned that all we have to do is ask our employees. From new transmission tower designs to improved environmental technology performance and continuous improvement ideas that have led to sustainable cost savings and new revenues, our employees are leading the way. Here are a few examples of innovation started by employees that are having significant positive impacts:
- AEP was awarded a patent from the U.S. Patent and Trademark Office for the work of five AEP engineers who developed a mitigation technology that prevents large-particle coal ash from building up in the selective catalytic reduction pollution control system (SCR). The buildup led to restricted air flow in the SCR, affecting a plant’s efficiency and the SCR’s ability to reduce nitrogen oxide emissions. The technology is now in service in at least two plants.
- We know that without our employees being engaged, we cannot be successful. To encourage a higher level of involvement, we implemented a repositioning study and a gain-sharing program called Engage to Gain (E2G). The E2G program ran during 2013 and gave employees a forum to share ideas to help us achieve a target of $200 million in sustainable savings and revenue enhancements. Anything over the $200 million would be split with employees 50/50, up to $1,000 per employee. The program exceeded its goal and every employee – except for senior officers – received a $1,000 payout. Here is a sampling of the ideas that led to long-term savings and new revenues:
- The Finance and Accounting team identified $16 million in savings that included renegotiating agreements on banking fees and increasing e-billing of customers.
- Information Technology identified $22 million of sustainable savings. One of the ways they did this was to eliminate approximately 100 low-criticality applications and deploying continuous improvement initiatives throughout the organization.
- The Generation team identified $8 million of operations and maintenance (O&M) savings opportunities through continuous improvement initiatives in power plants. They did this mainly by bringing more work in-house and eliminating the need for as many contractors, and switching to a different scrubber polymer at the Gavin Plant in Ohio.
- In addition to savings, revenue gains totaling $93 million were identified. Among the ideas was a review of an off-peak water heater tariff that was still crediting customers with discounted rates without confirmation that the water heaters were still in use by customers. Other savings came from optimizing generation units by increasing their availability and maximizing energy efficiency programs in our service territory.
- We want our vendors to buy electricity service from us. Our Economic & Business Development team launched an initiative to work with our suppliers that are considering moving or expanding their operations and are not currently located within AEP’s service territory. We want them to move to a location where we can serve them. The team helps the supplier find the right location and identifies tax incentives and infrastructure needs to facilitate the move or expansion. It also brings our supply chain closer to us, reducing costs and environmental impacts, such as emissions caused by long-haul transport of goods. A steel manufacturer relocated from Texas to Ohio and expanded operations in response to AEP’s growing demand for transmission poles and lattice towers.
- A team from Environmental Services, Civil Engineering and the Gavin Plant won approval from the Ohio Environmental Protection Agency to use a geosynthetic clay liner for the Gavin Plant’s landfill expansion. The liner replaces the need for two feet of high-quality clay to line the landfill before using it for ash disposal. By doing this, we eliminated the need to excavate the clay and transport thousands of truckloads over public roads, the cost to repair damaged roads, and the need to stockpile clay at the plant. The team had to prove to regulators that the liner would provide adequate environmental protection. The cost difference between a clay liner and this new liner is significant.
- As the fly ash reservoir at our Cardinal Plant approached full capacity in 2014, AEP engineers, in collaboration with S&ME, Inc. (a consultant), developed an innovative plan to raise the height of the reservoir’s earthen dam. The team engineered a new structure, 1,500 feet long, on top of the existing dam that uses mechanically stabilized earthen walls, vinyl sheet piles and a slurry trench. The vinyl sheets provide an extra measure of protection against seepage from the dam. This design is the first of its kind in the United States. The project provides the plant with enough capacity to continue operating into 2020. It was completed in one year at a cost of about $10 million. The alternative method to rebuild an earthen dam would have required at least three years and cost as much as $20 million. The Ohio Department of Natural Resources played an active role in permitting, inspecting and approving the work.
- AEP Transmission redefined “cutting edge” technology with the design of a new and compact extra-high voltage 345-kV line, called BOLD (Breakthrough Overhead Line Design). In response to the need to minimize right-of-way land requirements and increase the functionality of 345-kV lines and corridors, we challenged our employees to develop a new high-capacity 345-kV line design for long-distance applications. Two design patents were granted and a utility patent is pending. The new compact design provides more capacity, improves the use of rights of way and, with its unique low-profile design, is more streamlined in appearance. AEP Transmission plans to debut the efficient, high-capacity BOLD design when it replaces an existing 138-kV line near Fort Wayne, Ind. Construction is expected to begin in 2014 and will be finished in stages in 2015-2016. The new BOLD line design is an example of the solutions-oriented culture and collaborative leadership at AEP.