The joint venture was approved to operate as a transmission-only utility in Electric Reliability Council of Texas (ERCOT) by the Public Utility Commission of Texas (PUCT). The PUCT order established rates for transmission service for Electric Transmission Texas (ETT) with a 9.96% return on equity.
As part of forming the joint venture, American Electric Power (AEP) transferred approximately $70 million of assets from AEP Texas Central Company to ETT, including a 100MW variable frequency transformer in Laredo, Texas, that allows reliable power transfer between Mexico and Texas.
American Electric Power said that it has identified approximately $1 billion of additional transmission projects within its ERCOT footprint eligible for potential assignment to ETT, which will then evaluate 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.
Michael Morris, AEP’s chairman and CEO, said: 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.
