American Electric Power (AEP) has formed a joint venture company with a MidAmerican Energy Holdings Company (MidAmerican) subsidiary to build and own electric transmission assets. The joint venture, Electric Transmission America LLC (ETA), will be a 50-50 partnership to identify and invest in high-voltage transmission projects (345-kV or higher) located in North America outside of the Electric Reliability Council of Texas (ERCOT). The two companies have an existing joint venture agreement to build transmission in ERCOT.
Through ETA, the companies intend to invest in transmission projects with a cost of at least $100 million or more. Individual projects and the scope of the future investment will be determined by the ETA board which will include two representatives from AEP and two from MidAmerican. ETA will consider project partners during its evaluation of opportunities.
The companies hope to identify and initiate the approval process for the first ETA project during the first half of 2008. Initially, the parties plan to have AEP act as project manager to develop and build the transmission lines and facilities for ETA.
"This new venture builds on the very positive relationship that we have developed with MidAmerican over the last 10 months. Our companies share many of the same philosophies, including the belief that investment in transmission in the United States has lagged growth in demand and market development over the last few decades. Our country critically needs new transmission investment to enhance reliability, maximize the use of existing electricity and support development of new generation, including renewables," said Michael G. Morris, AEP chairman, president and chief executive officer.
"AEP owns and operates the nation's largest transmission system, and we are the experts in building and operating extra-high voltage transmission. We want to use that expertise to build a significant interstate transmission business and have already identified more than $9 billion in potential transmission opportunities in the regions that we serve. Partnering with MidAmerican, a company with a commitment to transmission investment, extensive transmission assets and a strong capital base, will enable us to grow our transmission business at the same time that we are investing substantial capital in generation and distribution to better serve our 5.1 million customers in our 11-state footprint," Morris said.
AEP and MidAmerican previously agreed to collaborate on transmission expansion in ERCOT through a joint venture agreement announced in November 2006 to form Electric Transmission Texas (ETT). That joint venture is expected to be formalized this fall after ETT receives approval to operate as a utility by the Public Utility Commission of Texas (PUCT). ETT will remain an independent venture focused on Texas transmission investment.