Electric Transmission Texas ("ETT"), a joint venture between
the subsidiaries of
American Electric Power Co. Inc.
) and MidAmerican Energy Holdings Company, has received approval
for the construction of a 345-kV transmission line.
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Electric Transmission Texas received a unanimous approval from
the Public Utility Commission of Texas ("PUCT") for a Certificate
of Convenience and Necessity ("CCN"). It had filed a request for
a CCN approval in Oct 2012.
The line will extend from the Laredo area into the Rio Grande
Valley. The project with an estimated cost of $318 million
includes construction of approximately 156 miles of 345-kV
transmission lines that will connect ETT's Lobo Substation near
Laredo with substations north of Edinburg.
The projects will also add two new substations along the line
route. The transmission line from the Laredo to the Edinburg area
will cross parts of Webb, Zapata, Jim Hogg, Brooks, Starr and
Hidalgo counties. ETT plans to construct the transmission line on
steel single-pole structures. This approach has been appreciated
Besides approving the CCN application, the federal body also
approved a unanimous settlement with approximately 100 landowners
that fall under the route, the PUCT staff and the Texas Parks and
With the approval clinched, the joint venture plans to begin
detailed engineering for the project with actual construction to
begin in 2014 and completion in 2016.
Currently, there are only two 345-kV transmission lines running
through the Rio Grande Valley. Both the existing lines import
power from the Corpus Christi area and run parallel to the Gulf
Coast, and are thereby vulnerable to hurricanes and severe
weather conditions. However, work to upgrade those lines is in
progress and is expected to be completed very soon.
American Electric Power is one of the largest investor-owned
utility holding companies in the country, catering to over 5
million customers spread over 11 states. This provides stability
to the revenue stream and insulates the company from adverse
regulatory decisions and detrimental effects of lower sales in
any particular service area.
Furthermore, the company's diversified geographical presence
opens it to opportunities with better returns. The selective
focus on transmission expansion will allow the company to attain
its 5% - 7% long-term EPS growth target, coupled with an
attractive dividend yield.
Last month, American Electric Power announced that its Board of
Directors has increased its quarterly dividend by 4.3%, bringing
the annualized dividend to $1.96 per share from the previous
payout of $1.88 per share. The company presently retains a
short-term Zacks Rank #2 (Buy).
Other stocks to consider are
CPFL Energia S.A.
Empresa Nacional de Electricidad S.A.
). While CPFL Energia and Empresa Nacional de Electricidad carry
a Zacks Rank #1 (Strong Buy), ALLETE, Inc. holds a Zacks Rank #2