American Electric Power and GE Energy will pursue the development, integration and deployment of advanced energy delivery infrastructure and metering technologies in an agreement that will enhance the consumer's ability to control and reduce electricity costs as well as improve the overall efficiency of electricity use.

The companies have signed a memorandum of understanding and are continuing discussions to reach a definitive agreement to develop technology platforms and programs that will transform how electricity is delivered to -- and used by -- consumers.

The AEP-GE initiative "is the first in the industry to address the full energy pathway from the power plant to the home," said Michael G. Morris, AEP's chairman, president and chief executive officer.

AEP will deploy advanced metering (often referred to as smart meters) and the enhanced infrastructure technology resulting from the partnership with GE in two regions -- representing approximately 200,000 customers -- by the end of 2008, if necessary regulatory approvals are received. The advanced metering, combined with special rate plans, will allow customers to better understand their energy consumption and, by using signals indicating time-of-day prices, reduce their electricity costs. AEP will select specific locations for this initial deployment after evaluating potential sites in its 11-state service area. Primary selection criteria will be urban/suburban areas with 50,000 to 100,000 customers.

AEP plans to have the advanced metering and enhanced infrastructure technologies in use to serve a million of its customers by the end of the decade and in use to serve its entire customer base of more than 5 million by the end 2015, pending appropriate regulatory approvals in the states where AEP operates. Customers in areas where the technologies are deployed will have direct control over their electricity usage, and delivery of electricity to the consumer will be more efficient. The metering and infrastructure technologies each can reduce electricity demand.

"Many in our sector are moving toward deployment of smart meters, but our strategy goes far beyond that," Morris said. "We're working with GE, a world leader in electronics and infrastructure, to integrate the smart meters necessary to provide options for our customers with enhancements to the distribution and transmission backbone necessary for our utilities to benefit. We're addressing the full energy pathway from the power plant to the home.

"By integrating the customer device -- a smart meter -- with behind-the- scenes technology to improve efficiency and control of the flow of electricity, we can reduce both customer demand and energy wasted as heat from equipment that delivers the electricity," Morris said. "This increased efficiency by customers and by our own grid translates to a reduction both in fuel used and greenhouse gas emissions released by our power plants. It also helps delay the need for new generation to keep up with the growth in demand.

"We see this agreement with GE as being a winner for our customers, our company and for the environment," Morris said.

AEP and GE each have been in business for more than a century and have a long-standing customer-supplier relationship.

"GE was built on innovation," said John Krenicki, Jr., president and chief executive officer of GE Energy. "We have a long history of developing technologies that enable our customers to improve and advance. AEP has a long history of engineering excellence, often driving the development of technology to improve the generation and delivery of electricity. Our two companies bring a tremendous amount of expertise to this initiative.

"From GE's perspective, this agreement with AEP goes well beyond customer- supplier," Krenicki said. "We will be working together on the development, integration and deployment of the technologies. And GE will join with AEP in the effort to educate regulators and customers on the benefits and longer-term potential of the technologies."

AEP and GE plan to deploy advanced metering for use by customers, supported by enhancements to technologies on the energy delivery infrastructure. Expected enhancements include:

• automating controls on electrical equipment.
• integration of existing decentralized distribution automation  monitoring systems and supervisory control and data acquisition  (SCADA) systems that collect data from sensors on remote equipment for  use by central control systems.
• implementation of GE's portfolio of software to integrate,  visualize and provide analytics for monitoring and operating  transmission and distribution assets, as well as to provide direct  control of distributed resources.

Once the enhanced infrastructure and advanced meters are in place, the combined systems will:

• enable customers to respond to price signals that vary with time,  providing customers with the opportunity to make decisions on energy  use that can reduce their costs and reduce or avoid greenhouse gas  emissions from power generation; for example, a potential innovation  from the AEP-GE initiative could include developing an energy wall  display unit with real-time consumption feedback which could provide  consumers with information at their fingertips to decide how to use  energy in the most cost effective way. 
• reduce the size and duration of outages by detecting the cause and  specific location of the problem, isolating that area and  automatically restoring as many customers as possible before the first  service crew arrives; this allows service crews to focus on repairs as  soon as they arrive.
• enable the integration of distributed energy resources such as  generators and batteries owned by the utility or the customer into  grid operations; these resources can provide energy capacity when  needed to restore or potentially island critical loads during  outage conditions.
• better enable new technologies such as plug-in hybrid vehicles, fuel  cells, and smart appliances to be brought to market by allowing  utility system operators to see the impact of the devices, adjust the  system performance to better accommodate the devices and accurately  credit customers for demand-side management actions.
• improve operational efficiencies of utility activities by shifting  time currently spent on inspections to focus more on repairs that have  been identified through new monitoring capabilities.
• improve safety by reducing exposure of meter operations personnel to  field hazards, allowing remote isolation of situations that could be  hazardous to the public before a service crew can respond, and  providing remote confirmation that switching operations have been  accomplished safely.