COLUMBUS, Ohio, Aug. 23, 2007 – American Electric Power (NYSE: AEP) has finalized its transmission joint venture with Allegheny Energy (NYSE: AYE). The companies announced plans April 18 to create the joint venture to build a 290-mile, high-voltage transmission line from West Virginia into Maryland.
The Potomac-Appalachian Transmission Highline (PATH) project includes approximately 244 miles of 765-kV extra-high voltage transmission from AEP’s Amos substation near St. Albans, W.Va., to Bedington substation, northeast of Martinsburg, W.Va. Another 46 miles of transmission, consisting of twin-circuit 500-kV transmission, will be constructed from Bedington to a new substation to be built at Kemptown, southeast of Frederick, Md.
The total project is estimated to cost approximately $1.8 billion. AEP’s share of the estimated costs will be approximately $600 million. PJM Interconnection (PJM) identified June 2012 as the system need date for the project.
The joint venture holding company, named Potomac-Appalachian Transmission Highline LLC, plans to file with the Federal Energy Regulatory Commission (FERC) in early fall 2007 on behalf of its operating companies to establish a rate of return and appropriate rates to recover the costs of the project. Work also will begin on a routing study and environmental assessment for the project, which will require about one year to complete. The joint venture’s operating companies will seek regulatory approvals for the project from the utility commissions in both West Virginia and Maryland following the completion of the routing study.
The operating companies of the joint venture will operate as transmission utilities and be subject to the rules and regulations of FERC, PJM and state regulatory authorities in West Virginia and Maryland. AEP will have lead responsibility for engineering, designing and managing construction of the 765-kV elements of the project through a service agreement with the joint venture operating companies. Allegheny will have similar responsibilities for 500-kV elements. Each company will provide services to the joint venture operating companies for siting, acquiring rights-of-way, securing regulatory approvals from the states the line crosses and maintenance of the project.
The joint venture does not include any provisions for the remaining portion of AEP’s I-765 TM
Interstate Project proposal, which remains under study by PJM. Participation in the joint venture also does not preclude either company from pursuing other transmission opportunities in PJM or elsewhere.
American Electric Power 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 U.S. 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 U.S. 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 U.S. 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.
This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.