AEP to Pursue Texas Transmission Opportunities

American Electric Power will form a joint venture company to fund and own new electric transmission assets in Texas, the company announced today.

The joint venture company, when created, would include AEP and an outside company. Discussions are ongoing with potential partners. AEP anticipates the transmission joint venture will be active in early 2007.

“Texas faces a significant – and growing – need for transmission investment to address existing areas of congestion and to support the competitive generation market in the state,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “Gov. Rick Perry recognized that last week when he said the state will ensure that sufficient transmission capacity is added to support development of new wind farms.

“As owner of the nation’s largest and most robust transmission system, AEP has extensive expertise in transmission planning, siting, construction and operation, both in Texas and throughout our service territories in 10 other states,” Morris said. “Meeting the transmission needs in Texas is a good business opportunity for us.”

Creating a joint venture company to pursue Texas transmission opportunities allows the participants to share the often significant capital investment necessary to complete these important infrastructure projects. As conceived by AEP, the joint venture company could invest up to $1 billion in new transmission projects in Texas and would own the assets. The company would be created as a utility and would be subject to the rules and regulations governing utilities within the Electric Reliability Council of Texas (ERCOT). AEP would be responsible for developing, building and operating the assets for the joint venture company.

“Texas continues to make strides toward encouraging investment in transmission infrastructure,” Morris said. “The state has a streamlined annual review process for recovery of transmission costs, which reduces regulatory lag while offering a return on equity that is similar to other state regulatory returns. The process is one of the most progressive in the country.”

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