Allegheny Power 2010 Annual Report Download - page 27

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We have taken a leadership role in pursuing new ventures and testing and developing new technologies that show
promise in achieving additional reductions in CO2 emissions. These include:
• Sales of over 1 million MWH per year of wind generation.
• Testing of CO2 sequestration to gain a better understanding of the potential for geological storage of CO2.
• Supporting afforestation – growing forests on non-forested land – and other efforts designed to remove CO2
from the environment.
• Reducing emissions of SF6 (sulfur hexafluoride) by nearly 15 metric tons, resulting in an equivalent reduction of
nearly 315,000 metric tons of CO2, through the EPA’s SF6 Emissions Reduction Partnership for Electric Power
Systems.
• Supporting research to develop and evaluate cost effective sorbent materials for CO2 capture including work by
Powerspan at the Burger Plant, The University of Akron and the EPRI.
We remain actively engaged in the federal and state debate over future environmental requirements and legislation,
especially those dealing with global climate change, hazardous air pollutants, coal combustion residues and water
effluent discharges. We are committed to working with policy makers and regulators to develop fair and reasonable
requirements, with the goal of reducing emissions while minimizing the economic impact on our customers. Due to the
significant uncertainty as to the final form or timing of any such legislation and regulation at both the federal and state
levels, we are unable to determine the potential impact and risks associated with future emissions requirements.
We also have a long history of supporting research in distributed energy resources. Distributed energy resources include
fuel cells, solar and wind systems or energy storage technologies located close to the customer or direct control of
customer loads to provide alternatives or enhancements to the traditional electric power system. We are testing the
world’s largest utility-scale fuel cell system at our Eastlake power plant to determine its feasibility for augmenting
generating capacity during summer peak-use periods. Through a partnership with EPRI, the Cuyahoga Valley National
Park, the Department of Defense and Case Western Reserve University, two solid-oxide fuel cells were installed as part
of a test program to explore the technology and the environmental benefits of distributed generation.
We are also evaluating the impact of distributed energy storage on the distribution system through analysis and field
demonstrations of advanced battery technologies. FirstEnergy’s EasyGreen® load-management program utilizes two-
way communication capability with customers’ non-critical equipment such as air conditioners in New Jersey and
Pennsylvania to help manage peak loading on the electric distribution system. FirstEnergy has also made an online
interactive energy efficiency tool, Home Energy Analyzer, available for its customers to help achieve electricity use-
reduction goals.
RISKS AND CHALLENGES
In executing our strategy, we face a number of industry and enterprise risks and challenges, including:
• risks arising from the reliability of our power plants and transmission and distribution equipment;
• changes in commodity prices could adversely affect our profit margins;
• we are exposed to operational, price and credit risks associated with selling and marketing products in the
power markets that we do not always completely hedge against;
• the use of derivative contracts by us to mitigate risks could result in financial losses that may negatively impact
our financial results;
• financial derivatives reforms could increase our liquidity needs and collateral costs;
• our risk management policies relating to energy and fuel prices, and counterparty credit, are by their very nature
risk related, and we could suffer economic losses despite such policies;
• nuclear generation involves risks that include uncertainties relating to health and safety, additional capital costs,
the adequacy of insurance coverage and nuclear plant decommissioning;
• capital market performance and other changes may decrease the value of the decommissioning trust fund,
pension fund assets and other trust funds which then could require significant additional funding;