AEP Venture Awaits PUCT Nod - Analyst Blog


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Electric Transmission Texas ("ETT") - a joint venture between the subsidiaries of American Electric Power Co. Inc. ( AEP ) and MidAmerican Energy Holdings Company - and Sharyland Utilities L.P. have jointly requested the Public Utility Commission of Texas (PUCT) to amend their Certificates of Convenience and Necessity (CCN) to construct the Cross Valley Project.

The Cross Valley Project is a proposed 345-kilovolt transmission line. The project costs in the range of $314 million to $405 million and is expected to be completed in mid 2016. The line will extend from AEP Texas North Edinburg Substation in Hidalgo County, will move south to a location near the existing AEP Texas South McAllen Substation and then head east to the Brownsville Public Utilities Board Loma Alta Substation in Cameron County near the Brownsville Ship Channel. Therefore, this 345-kilovolt transmission line will be crossing portions of Hidalgo and Cameron counties in the Lower Rio Grande Valley of Texas.

Based on this route the length of the transmission line would range from 96 miles to 125 miles. However, the final length would depend on the route approved by PUCT. ETT is responsible for the western portion of the line while Sharyland will be constructing the eastern portion.

Besides promoting economic growth, this transmission line will allow the customers of lower Rio Grande Valley to experience continued reliable electric service.

We note that in May this year, ETT received approval for the construction of another 345-kV transmission line. 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.

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. However, tepid economies in a number of its service states restrict opportunities for growth. Also, we remain concerned about the uncertainty surrounding pending regulatory cases, its predominantly fossil fuel based generation assets and lower wholesale sales. The company presently retains a short-term Zacks Rank #4 (Sell).

Stocks that are well placed in the industry are Black Hills Corp. ( BKH ), Companhia Paranaense de Energia ( ELP ), CPFL Energia S.A. ( CPL ), all with a Zacks Rank #2 (Buy).

AMER ELEC PWR (AEP): Free Stock Analysis Report

BLACK HILLS COR (BKH): Free Stock Analysis Report

CPFL ENERGI-ADR (CPL): Get Free Report

COPEL-ADR PR B (ELP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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