American Electric Power Company

Abstract:

American Electric Power Company (AEP) is one of the largest power generator and distributor in US. In order to identify the most important risks facing by AEP Company and then take specific controls. First, taking overall analysis of industry trends, opportunities and challenges is very important. And then, aiming at the AEP Company, specific objectives, opportunities and risks research should be taken. After identifying strategic objectives and critical risks in AEP businesses, entity-level controls related with each risk need to be discussed in order to mitigate risks and achieve strategic business objectives.

Key words: objectives, opportunities, risks, controls

American Electric Power Company (AEP) Background

American Electric Power (AEP) is one of the largest power generators and distributors and also the top wholesale energy company in the US. The main energy market of American Electric Power Company is eastern US, central US and eastern Canada, where it has about 5.3 million customers in 11 states. (Hoovers Online Company Index, 2012) In addition, AEP owns the nation’s largest electricity transmission systems and has large coal-fired generating capacity.

Since the power demand directly related with economic condition, global and national economic situations can both significantly impact AEP’s business operations, the recovering industrial demand and wholesale power use will give a significant rise in AEP’s net income. (Hoovers Online Company Index, 2012)

After cutting short its unregulated operations and selling its independent power production operations and trading operations, AEP now focuses on regulated businesses and wholesale energy transactions. At the same time, AEP plan to grow its retail business in the US to compensate for the potential output decrease of soon-to-be unregulated power generation in some states.

AEP Objectives and Strategies

According to AEP’s official mission and vision, AEP thinks highly of provide its customers with comfort, safe, reliable and affordable energy products. Also AEP seek to maintain its leadership in electricity generation, transmission and distribution in US. Moreover, AEP will keep investing in technical innovation of power system, environmental technology, and transmission systems in order to promote energy efficiency, to be friendly to environment, and be responsible to community. And, the primary consideration of AEP is safety for all employees, for customers and for the general public. (AEP Mission, 2012)

AEP make strategies to improve safety, efficiency and reliability in electric transmission and distribution system, to innovate in advanced clean energy technologies and programs and to expand renewable energy ration. As