AEP Sustainability - Energy Management

Traditional Programs

For years, AEP has provided customers with a broad array of traditional energy efficiency and demand response programs to help them use energy more efficiently. We have excelled in meeting the requirements and expectations of legislators and regulators, worked cooperatively with a variety of interested stakeholders and delivered exceptional results for our customers.

Today, we are increasingly applying the concept of beneficial electrification to achieve these objectives. Beneficial electrification is the use of electricity to help customers replace fossil fuels to reduce overall emissions and energy costs, improve local environmental conditions and optimize the use of the grid. Electric vehicles, voice-enabled home energy management apps and high-tech industrial technologies are just a few of the many ways we are helping our customers to achieve even better results.

We view energy efficiency as a readily deployable, competitively priced and clean resource that provides many benefits to our customers and the environment. Today, AEP offers customers more than 120 programs across nearly all of our 11-state service territory. In 2019, AEP’s energy efficiency programs resulted in more than 1 million MWh of energy reduction and more than 300 MW of demand reduction. From 2008 through 2019, these programs have cumulatively reduced annual consumption by over 9 million MWh and peak demand by approximately 2,900 MW.

In 2019, the American Council for an Energy Efficient Economy (ACEEE) recognized Southwestern Electric Power Company (SWEPCo) with an Exemplary Program Award based on its effectiveness and innovation in helping Arkansas residential customers achieve greater levels of energy efficiency.

The U.S. Environmental Protection Agency (EPA) announced its 2020 ENERGY STAR® awards for businesses and organizations that have made outstanding contributions to protecting the environment through energy efficiency. AEP Ohio, AEP Texas and SWEPCO were named ENERGY STAR Partner of the Year – Sustained Excellence winners. Appalachian Power Company (APCo) and Public Service Company of Oklahoma (PSO) were recognized with an ENERGY STAR Partner of the Year – Energy Efficiency Program Delivery award. In addition, AEP Ohio was a joint recipient with JadeTrack and Columbia Gas for an Excellence in Data Collection award.

Within our own operations, we take measures to reduce energy consumption. We reduced our kilowatt-hour (kWh) usage, normalized for weather, by approximately 32% in 2019, compared with the 2007 baseline, in more than 290 buildings. This resulted in approximately $6 million in cost savings. We achieved these energy consumption reductions mostly through equipment investments, such as new lighting, heating and cooling systems, along with employee education.

AEP has nine LEED-certified facilities across its service territory. The most recent certifications include our new transmission center in Oklahoma and two service centers in Indiana.

AEP’s demand response programs lower costs and support the power grid by helping to reduce load in periods of peak demand, such as during extreme hot and cold weather. Some programs include special rate structures that encourage our customers to reduce their energy consumption during these peak demand periods. For some customers, we have contracts that allow us to “interrupt” their power consumption during peak times in exchange for reduced rates.

Peak demand is the amount of power used at times of maximum power usage and varies across our service territory. For example, Appalachian Power’s system peak generally occurs on winter weekday mornings, when electric heating and appliance usage are happening at the same time that commercial equipment and industrial machinery are ramping up for the workday. Public Service Company of Oklahoma’s system, on the other hand, typically peaks in the afternoon of a summer weekday, as people get home from work or school and increase their use of air conditioners and fans while the demand from commercial and industrial customers remains high.

Historically, as peak demand grew with the economy and population, new capacity was needed. In the future, the adoption of new technologies, such as distributed resources may affect when peak demand occurs on the system. Therefore, AEP considers the possibility of adding not only new generation resources, but also considers demand response programs as an option for meeting customer peak needs.


The successes of our energy efficiency and demand response programs have reduced overall electricity usage and demand requirements across the power grid. A significant amount of this improvement has come from programs that used low-cost incentives for our customers. However, as lighting and other appliance efficiency standards increase, these cost-effective options are dwindling.

The next generation of energy efficiency options includes relatively expensive and more involved customer decisions, such as improving home insulation or upgrading HVAC equipment. The incentives needed are much higher, making them less cost-effective and putting them out of reach for many customers.

AEP also shares the concern that some legislators and regulators have expressed regarding the impact of higher program costs, especially for our low- and moderate-income customers. We have seen this concern raised by policymakers in several states across our service territory. The key from a policymaking perspective is that capital can be deployed efficiently to reduce customers’ bills and drive efficiency in delivering customer preferences for renewable energy, energy efficiency, and energy management services.