AEP, MidAmerican Texas Transmission Joint Venture Begins Operation
COLUMBUS, Ohio, Dec. 21 -- American Electric Power (NYSE:AEP) and MidAmerican Energy Holdings Co. (MidAmerican) today completed the transaction establishing Electric Transmission Texas, LLC (ETT) as a joint venture to build transmission projects within the Electric Reliability Council of Texas (ERCOT).
The joint venture also was approved today to operate as a transmission- only utility in ERCOT by the Public Utility Commission of Texas (PUCT). The PUCT order established rates for transmission service for ETT with a 9.96 percent return on equity. J. Calvin Crowder will head the entity as president, Electric Transmission Texas.
As part of forming the joint venture, AEP transferred approximately $70 million of assets from AEP Texas Central Company to ETT, including a 100- megawatt variable frequency transformer in Laredo that allows reliable power transfer between Mexico and ERCOT.
"We've determined that there is significant value in moving forward with capital transmission investments in ERCOT, given the regulatory mechanisms in place that support timely recovery of that investment," said Michael G. Morris, AEP chairman, president and chief executive officer. "The ERCOT transmission grid has critical expansion needs to ensure reliability, meet growing electricity demand, reduce congestion and support renewable generation. ETT, backed by the expertise of AEP and MidAmerican, both leading utilities in the transmission realm, will help ensure that the much-needed additional transmission infrastructure in ERCOT is brought on line expeditiously."
AEP has identified approximately $1 billion of additional transmission projects within its ERCOT footprint eligible for potential assignment to ETT. ETT will evaluate on a case-by-case basis potential future investment in these projects and anticipates identifying the first projects to pursue by the second quarter of 2008. Those projects not pursued by ETT may be built by AEP independent of the joint venture.
AEP is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning more than 38,000 megawatts of generating capacity in the United States. AEP also owns 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 United States transmission systems combined. AEP's transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP's utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP's headquarters are in Columbus, Ohio.
Source: American Electric Power
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