American Electric PowerCompany Inc.
) announced that it has formed a new joint venture (JV) with
Great Plains Energy Incorporated
) in order to develop and invest in transmission projects. The
majority of the new company Transource Energy LLC would be owned by
American Electric Power (86.5% stake) while the rest (13.5% stake)
would be owned by Great Plains Energy.
Through Transource, American Electric Power and Great Plains
Energy plan to pursue competitive transmission projects in regional
transmission organizations - PJM Interconnection, Southwest Power
Pool and Midwest Independent Transmission System Operator Inc.
Going forward, Transource would seek approval from the Missouri
Public Service Commission for line certificates granting authority
to construct, own and operate two projects currently under the
purview of Great Plains Energy.
Of the two projects, the Sibley-Nebraska City line is a
175-mile, 345-kilovolt line linking the Nebraska City substation
with the Sibley substation. Transource will construct and own
around 170 miles of the transmission line. The project, estimated
to cost $380 million, has an anticipated in-service date of 2017.
The other project - the Iatan-Nashua line - is a 30-mile,
345-kilovolt line from the Iatan substation near Weston to the
Nashua substation near Smithville. The Iatan-Nashua project,
estimated to cost $54 million, has an anticipated in-service date
Columbus, Ohio-based American Electric Power is a public utility
holding company which, through directly and indirectly owned
subsidiaries, generates, transmits, and distributes electricity,
natural gas, and other commodities. The company derives revenues
mainly from power-generating activities.
American Electric Power is one of the largest electric utilities
in the U.S., delivering electricity to more than 5 million
customers in 11 states. The company ranks among the nation's
largest generators of electricity, owning nearly 39,000 megawatts
of generating capacity in the U.S.
American Electric Power also owns the nation's largest
electricity transmission system, a nearly 39,000-mile network which
includes additional 765-kilovolt extra-high voltage transmission
lines than all other U.S. transmission systems combined. The
company'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).
In recent times, American Electric Power is experiencing growth
in industrial volume. In fiscal 2011, the company saw a 4% jump in
industrial volume owing to increased production. We view the growth
in industrial demand as a significant indicator of a reviving
economy, a fact that will surely benefit the company going
We appreciate the company's decision to focus on shareholder
value through payment of incremental dividends. The company
currently dishes out an annualized dividend of $1.88 with a yield
of 4.8%. American Electric Power presently retains a short-term
Zacks #3 Rank, which translates into a short-term Hold rating. We
have a long-term Neutral recommendation on the stock.
AMER ELEC PWR (
): Free Stock Analysis Report
GREAT PLAINS EN (
): Free Stock Analysis Report
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