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envisioned future utility systems that are more decentralized and
interact more closely with customers, with a focus on enhancing rev-
enues while providing innovative services and technology [4]. Whether
or not carbon policies are imposed, the electric utility industry will
need to invest as much as $2 trillion by 2030 in new generation, trans-
mission, and distribution capacity [5]. Similarly, the traditional liquid
fuel industry will likely be transformed as supply chains shift from a
focus on petroleum to a variety of bio-based feedstocks.
One emerging technology that will contribute to “greening” of
electric power is smart grid software. Today’s electric grid systems,
based on centralized power generation and dispatch, are vulnerable
to service disruptions and bottlenecks, and require standby capacity to
meet peak demand in local areas. Smart grid systems use Internet
connections between power stations, power meters, and appliances
to create a two-way flow of information about the state of the grid
between utilities and consumers. Thus, utilities can be more respon-
sive to changes in load, and installing smart meters at homes and
businesses will enable consumers to make better decisions about
their power usage. Smart grid systems enable a more decentralized
network model where excess power can be transmitted from one area
to another as needed. In addition, energy storage devices such as
plug-in hybrids and power generating devices such as residential
solar panels can supply energy back to the grid during hours of peak
demand. For example, Austin Energy, a Texas power utility, has been
working on an initiative to replace all its power meters with smart
meters by December 2008.
This chapter highlights the DFE-related strategies of two major
U.S. energy companies that are responding proactively to the economic
and environmental challenges of the twenty-first century. American
Electric Power and Chevron have both demonstrated a willingness
to engage in open dialogue about these challenges and to investigate
next-generation technologies, while remaining committed to deliver-
ing value in their core business.

American Electric Power : Keeping the Lights On
The Challenges of Sustainability
American Electric Power, based in Columbus, Ohio, is one of the old-
est and largest electric utilities in the United States, serving more than
5 million customers in 11 states. AEP owns nearly 36,000 megawatts
of generating capacity in the U.S., and operates the nation’s largest
electricity transmission system, a nearly 39,000-mile network that
includes more 765 kilovolt extra-high voltage transmission lines than
all other U.S. transmission systems combined.
AEP is primarily a coal-burning utility and takes a candid ap proach
toward addressing the sustainability of fossil fuel combustion. It was