AEP, Great Plains Energy form new competitive transmission company

Source: American Electric Power

American Electric Power (NYSE: AEP) and Great Plains Energy (NYSE: GXP) have formed a new company to develop and invest in transmission. Through Transource EnergySM LLC (Transource), AEP and Great Plains Energy initially plan to pursue competitive transmission projects in the PJM Interconnection, Southwest Power Pool (SPP) and Midwest ISO (MISO) transmission regions. AEP owns 86.5 percent of Transource. Great Plains Energy owns 13.5 percent. 

“Our nation and utility customers have benefited from the significant transmission investments made by AEP and other utilities decades ago, but it is critical that we move forward with substantial new transmission investment. Transmission infrastructure expansion is essential to ensure that the U.S. continues to have a reliable transmission grid to support both fundamental changes in how we generate electricity and future economic growth,” said Nicholas K. Akins, AEP president and chief executive officer. “Order 1000, issued by the Federal Energy Regulatory Commission last year, creates new opportunities for competitive transmission investment by giving incumbent and non-incumbent transmission developers similar cost-recovery mechanisms for regional and interregional projects. Increased competition in the transmission space will foster cost-effective grid expansion for the benefit of customers.” 

“Our new venture will complement the transmission investments that AEP has been making through our existing transmission partnerships and state-level transmission companies, while giving us the flexibility to focus resources on the competitive transmission opportunities created by Order 1000,” said Lisa Barton, executive vice president of AEP Transmission. “AEP continues to lead the industry in transmission design, engineering and construction innovation. Transmission infrastructure improves reliability, promotes access to renewable energy resources and enhances the efficiency of regional energy markets for the benefit of customers. Our experience and expertise put us in a unique position to provide creative, efficient transmission solutions that will help ensure future access to affordable and reliable electricity.” 

Great Plains Energy will seek regulatory approval to transfer two SPP-approved regional transmission projects, located in Missouri, to Transource. The Sibley-Nebraska City line is a 175-mile, 345-kilovolt (kV) line linking the Nebraska City substation (owned by Omaha Public Power District) near Nebraska City, Neb., with the Sibley substation near Sibley, Mo. Transource would construct and own approximately 170 miles of the project. Omaha Public Power District would construct the remainder of the transmission line. The project, estimated to cost approximately $380 million, has an anticipated in-service date of 2017. 

The Iatan-Nashua line is a 30-mile, 345-kV line from the Iatan substation near Weston, Mo., to the Nashua substation near Smithville, Mo. The Iatan-Nashua project, estimated to cost approximately $54 million, has an anticipated in-service date of 2015. 

Transource expects to file an application with the Missouri Public Service Commission this summer for line certificates granting authority to construct, own and operate the two SPP regional projects. Transource also intends to apply for a FERC formula rate for the Missouri projects later this year. 

“These projects provide a foundation for the future growth of Transource. Great Plains Energy’s strategic location between the SPP and MISO interface and its utility presence in Missouri and Kansas provide Transource with additional growth opportunities,” Barton said. 

Great Plains Energy is a holding company headquartered in Kansas City, Mo. Great Plains Energy owns the Kansas City Power & Light Co. (KCP&L) and KCP&L Greater Missouri Operations Co. Great Plains Energy’s electric utilities serve more than 800,000 customers in 47 counties in Missouri and Kansas with a combined diverse generation platform of approximately 6,600 megawatts. The companies operate more than 3,600 miles of transmission lines.

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