COLUMBUS, Ohio, July 15, 2008 – Electric Transmission America (ETA), a joint venture of American Electric Power (NYSE: AEP) and MidAmerican Energy Holdings, has formed a joint venture company with OGE Energy Corp. (NYSE: OGE) to build and own new electric transmission assets in Oklahoma.
The joint venture, Tallgrass Transmission LLC, will build approximately 170 miles of extra-high voltage 765-kilovolt transmission from the Kansas-Oklahoma border north of Woodward, Okla., that will link into OGE’s station at Woodward and then extend west into the Oklahoma panhandle to a new station that will be built near Guymon, Okla.
Southwest Power Pool’s (SPP) estimated cost for the project is approximately $500 million based on SPP’s Extra-High Voltage Overlay Study, but final costs will depend on the routing of the line, equipment and commodity costs. Anticipated completion would be in 2013. AEP’s ownership share of the joint venture will be 25 percent.
“This collaboration with Oklahoma Gas and Electric will build a segment of a larger extra-high voltage transmission highway that has been proposed by the Southwest Power Pool to enhance reliability and support development of the sizable renewable generation resources available in the region,” said Michael G. Morris, AEP chairman, president and chief executive officer. “Delivering power from the most viable regions for wind generation to large population centers requires a bigger, stronger transmission system. Long-term regional transmission planning as well as broad allocation of costs will allow the Southwest Power Pool, and the United States as a whole, to rely on more diverse generation resources in the future.”
“The Southwest Power Pool has recognized that EHV transmission can reduce the cost of transmission investments, both economically and environmentally,” said Susan Tomasky, president, AEP Transmission. “One 765-kV line on a 200-foot right of way can carry as much electricity as six 345-kV single-circuit lines requiring 900 feet of right of way. And, the 765-kV line would cost less than half as much to build. EHV transmission lines also operate more efficiently than lower-voltage lines, reducing the amount of electricity that needs to be generated by reducing line loss – electricity lost during transport. The new 765-kV designs that would be used for this project have line losses of less than one percent, compared with losses as high as 10 percent for a 345-kV alternative.”
The ETA-OGE joint venture anticipates filing for the necessary state and federal regulatory approvals for the project in the coming months.
ETA also has formed a joint venture with Westar to build 765-kV transmission in Kansas that will connect with the OGE project at the Kansas-Oklahoma border. The combined projects encompass the first two phases of the Extra-High Voltage Overlay Study plan released March 3 by SPP.
OGE Energy is the parent company of Oklahoma Gas and Electric Co. (OG&E), which serves more than 765,000 customers in a service territory spanning 30,000 square miles in Oklahoma and western Arkansas, and of Enogex LLC, a midstream natural gas pipeline business with principal operations in Oklahoma.
MidAmerican Energy Holdings Co., based in Des Moines, Iowa, is a global provider of energy services. Through its energy-related business platforms – PacifiCorp, MidAmerican Energy Co., CE Electric UK, Kern River Gas Transmission Co., Northern Natural Gas Co., and CalEnergy – MidAmerican provides electric and natural gas service to more than 6.9 million customers worldwide. MidAmerican Energy Holdings Co. subsidiaries PacifiCorp and MidAmerican Energy Co. own and operate more than 18,000 miles of electric transmission lines.
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 nearly 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 American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the registrants 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 and performance 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 (including the company’s ability to obtain any necessary regulatory approvals and permits) 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 of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including 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; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing AEP’s ability to refinance existing debt at attractive rates; 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, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and the allocation of costs within regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust; 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.