Changing Policy Models

Becoming the energy company of the future requires a review of current rules that govern today’s Regulatory Compact. Current rules do not allow for much collaboration with customers or personalization of products, programs and services. Yet, the changes occurring due to policy shifts, the emergence of new technologies and changing consumer demands are putting pressure on traditional policy models to change as well.

As our industry undergoes an unprecedented transformation, we are working with our regulators and policymakers at the federal, state and local levels to ensure the appropriate regulatory and legislative reforms are in place.

Historically, our industry’s value chain of one-way flow of energy and information worked well during an era of building and growing large assets such as central generating stations. But today the value chain includes a new relationship with consumers that is both active and participatory, and distributed resources that allow power and information to flow in multiple directions. These are the forces changing our business and necessitating an evolution of policy models to keep pace.

Our challenge is to align rate structures and public policies with our strategic vision, allowing for increased grid investment, customer collaboration, and policies that support this paradigm shift.

We are exploring new rate alternatives and revenue streams to support the technical energy solutions, products, programs and services that customers want. For example, through the use of data analytics, we have identified as many as eight segments, or types, of residential customers based on their preferences, tendencies to participate in certain types of programs and ways they want to conduct business with AEP. Traditionally, residential customers were thought of as a single group without specific needs. When you consider the eight customer segments and all of the potential touchpoints they have with AEP, you begin to appreciate that there are dozens of unique customer journeys and experiences for which we are responsible.

Today, customers have choices, and we want to be their provider of choice and their trusted energy advisor. We will continue to work with all of our stakeholders to enact the types of changes to tax, regulation and infrastructure policies that support the changing needs of our business and deliver reciprocal value to our customers and shareholders.