Careers at American Electric Power (AEP)
American Electric Power’s mission is to bring comfort to its customers, support business and commerce, and build strong communities.
American Electric Power is a public utility holding company. The firm operates four reportable business segments:
- Vertically Integrated Utilities – Generation, transmission, and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo, and WPCo.
- Transmission and Distribution Utilities – Transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by OPCo, TCC, and TNC.
- AEP Transmission Holdco – Development, construction, and operation of transmission facilities through investments in AEP’s wholly-owned transmission-only subsidiaries and transmission-only joint ventures. These investments have PUCT-approved or FERC-approved returns on equity.
- Generation & Marketing – Non-regulated generation in ERCOT and PJM. Marketing, risk management and retail activities in ERCOT, PJM, SPP and MISO.
In the early 20th century the U.S. electric utility industry was undergoing a change in which small generator plants were consolidating into single systems that served large areas. In 1906 Richard E. Breed, Sidney Z. Mitchell, and Harrison Williams, recognizing the trend, met to discuss forming a holding company to purchase the 23 small companies held by Electric Company of America (ECA).
They launched the company, called American Gas & Electric Company (AG&E). Following much negotiation, ECA decided to sell its assets to AG&E in 1907. The newly acquired firms were diverse geographically, based in New Jersey(four of them), Pennsylvania (nine), and New York, Indiana, Illinois, Ohio, and West Virginia. They offered services in water, steam, ice, gas, and electricity.
Initially, the firm provided poor service, high rates, and faulty equipment. Also, new customers had to invest in it as the operating company did not have the financing to extend its lines. However, over the next few decades its performance strengthened, with various technological breakthroughs and growth through acquisitions. In 1958 it changed its name to American Electric Power Company.
Benefits at American Electric Power (AEP)
Business model of American Electric Power (AEP)
AEP has a segmented market business model, with customers that have slightly different needs. The company targets its offerings at retail and wholesale customers.
American Electric Power offers three primary value propositions: accessibility, innovation, and brand/status.
The company creates accessibility by providing a wide variety of options. It has acquired numerous firms since its founding, including Indiana and Michigan Electric, Appalachian Power Company, Indiana Service Corporation of Fort Wayne, Columbus and Southern Ohio Electric Company, and Central and South West Corporation. This strategy has enabled it to greatly diversify its portfolio.
The company has embraced innovation throughout its history. Its industry firsts include:
- First long-distance transmission line connecting a mine-mouth power plant with a major load center
- First application of carrier-current telephony to transmission lines for system dispatching
- First use of automatic frequency and tie-line load control
- First ultra-high-speed (one cycle or 1/60th of a second), high-voltage reclosing circuit breaker
- First sleet melting of transmission line
- First use of “open loop” shield wire design with gapped insulators on EHV lines to reduce power losses
The company has established a strong brand due to its success. It is one of the largest electric utility firms in the U.S., serving almost 5.4 million customers in 11 states. It has a service territory of over 200,000 square miles and owns the largest electricity transmission network in the U.S. -- more than 40,000 miles. It owns over 765-kilovolt extra-high voltage transmission lines, more than all other U.S. transmission systems combined. It possesses 31,000 megawatts of generating capacity. Lastly, it has won many honors, including the following:
- The Edison Award from the Edison Electric Institute (2013 and 2016)
- Recognition as one of the World’s Most Admired Companies in Electric and Gas Utilities Sector by Fortune (2014 – 2016)
- Recognition as a Top 100 Military Friendly Employer by Victory Media (2006 – 2016)
- Recognition as one of the Best of the Best: Top Veteran-Friendly Companies by U.S. Veterans Magazine (2014-2015)
- The Corporate Caring Award from Columbus Business First (2014)
AEP’s main channel is its direct sales team. The company promotes its offerings through its website, social media pages, TV advertising, and participation in trade shows and conferences.
AEP’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees.
AEP’s business model entails generating, transmitting, and distributing its utility products to customers.
AEP’s key partners are the suppliers who provide it with the equipment and materials it needs to run its operations. The company has also formed numerous joint ventures with other electric utilities with the aim of providing transmission access to remote generation sources in North America. It currently maintains the following joint ventures:
- ETT – Partner is Berkshire Hathaway Energy
- Prairie Wind – Partners are Westar Energy and Berkshire Hathaway Energy
- Pioneer – Partner is Duke Energy
- RITELine IN – Partners are Exelon and Commonwealth Edison
- Transource Missouri – Partner is Great Plains Energy
- Transource West Virginia – Partner is Great Plains Energy
AEP’s main resources are its physical resources, particularly its electricity transmission network, which consists of over 40,000 lines.
AEP has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is likely cost of fuel, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.
AEP has one revenue stream: revenues it generates from sales of its electrical products to its customers.
info: Nick Akins earned Bachelor’s and Master’s degrees in Electrical Engineering at Louisiana Tech. He previously served as VP - Energy Marketing Services and VP – Industry Restructuring at AEP, as well as President and COO of Southwestern Electric Power Co.
info: Robert P. Powers earned a Bachelor’s degree in Biology at Tufts University and a Master‘s degree in Radiological Hygiene at the University of North Carolina. He previously served as President - AEP Utilities and as Executive VP - AEP East Utilities.
info: Brian X. Tierney earned a Bachelor of Arts degree in History at Boston College and an MBA at the University of Chicago. He previously served as Executive VP - AEP Utilities East and as Senior VP of Commercial Operations at AEP.
info: Lana Hillebrand earned a Bachelor of Business Administration degree at the University of Texas at Austin. She previously served as South Region leader – Senior Partner and as U.S. Consulting Client Development Leader at Aon Hewitt.
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