AEP, MidAmerican Texas Transmission Joint Venture begins operation
Columbus, Ohio - Dec. 21, 2007 - American Electric Power 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.
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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.
Manager, Corporate Media Relations