AEP must manage a combination of economic, business, social, environmental, political and regulatory risks at the federal, state and local levels. These include a slower than expected economic recovery, intense competition in the competitive parts of our business and burdensome government regulations that will necessitate the premature retirement of coal-fired generating units in six states, causing further economic hardship. We must, at the same time, diversify our fuel mix and address aging plants and facilities across our system. This will be costly and require rate increases, which will affect our customers.
Incorporating sustainability throughout our business enhances our ability to deliver profits to shareholders, meet our obligations to lenders and fulfill our environmental and social commitments. Improving our environmental and social performance, in turn, contributes to our financial well-being. Our balance sheet is the strongest it has been in many years. We believe investments in our regulated businesses will support annual earnings growth. This growth, coupled with our stable and attractive dividend and combined with our business strategy and fiscal discipline, positions AEP as a positive return investment.