About Our Business

Transmission Growth

Our transmission business continues to be a major growth engine for AEP as changes in the electric industry present more opportunities for AEP Transmission, inside and outside of our service territory. We have a proven track record of building, operating and maintaining transmission systems and are continuously seeking new ways to do it better. Our employees have developed innovative solutions that reduce our physical and environmental impacts, are more cost effective, increase our operational efficiency and reliability, and support our efforts to make the grid more resilient. We are now building and expanding our transmission business in 13 states.

transmission tower photo

In 2012 and 2013, our transmission business secured $3.3 billion of new investment opportunities through the three regional transmission organizations (RTOs) in which we operate. A large portion of these investments are tied to the retirement of coal-fueled generating units across our system that were announced within the PJM Interconnection region, as well as the infrastructure to support the integration of large-scale wind resources in the Southwest Power Pool (SPP) and Electric Reliability Council of Texas (ERCOT) regions. Many of our coal-fueled plants play a critical role in maintaining regional transmission grid reliability, and without these resources, new transmission is needed to ensure continued reliability.

AEP Transmission Holding Co.’s (AEPTHCo) contribution to company earnings in 2013 totaled $80 million, exceeding a $66 million target. On an earnings-per-share basis, that equates to $0.16 per share vs. a target of $0.14 per share. AEPTHCo’s $890 million in capital spending and joint venture equity contributions in 2013 exceeded a target of $747 million.

AEP Transmission’s growth strategy focuses on four types of projects built by its Transcos, joint ventures and operating companies:

Regional projects: The retirement of an unprecedented number of coal-fueled power plants across the United States over the next few years will have a significant impact on the performance of the transmission grid. As AEP prepares to retire approximately 6,600 MW of its own coal-fueled units, we will make significant investments to support the grid by reconfiguring and enhancing regional transmission assets to ensure continued reliability. In addition, both SPP and ERCOT have launched major initiatives to enhance the capacity and capability of their transmission grids.

Local reliability plans: Local transmission facilities that are 100-kV and lower account for the majority of AEP Transmission facilities. This infrastructure tends to be older and more susceptible to reliability threats. Local reliability projects are focused on reducing the frequency and duration of customer outages served by these facilities

Aging infrastructure: Addressing aging infrastructure is another focus, as 65 percent of AEP’s transmission lines were built more than 40 years ago. This can result in significant operations and maintenance costs and reliability issues as these physical assets reach the end of their useful life. AEP Transmission plans to evaluate and prioritize the targeted replacement of these assets, resulting in a potential $9 billion to $11 billion investment over time.

Customer-driven projects: In addition to addressing the aging infrastructure and improving reliability, AEP Transmission is responding to the accelerated demand for service from shale gas customers. Our transmission system is surrounded by major shale plays, such as the Marcellus and Utica shale formations in the East and Eagle Ford in the West. Oil and gas processing facilities are rapidly being developed that require quick, reliable transmission service. AEP Transmission’s technology strategy has supported this growth by accelerating the execution of infrastructure projects, enabling oil and gas customers to begin operations in as short a time as six weeks.

Based on approved projects, the infrastructure improvements our transmission business will make between 2014 and 2018 will result in approximately 280 new or enhanced stations, more than 1,000 line miles of new transmission lines and 2,700 miles of rebuilt transmission lines.

Our Strategy for Growth

AEP's strategy for growth is to invest capital in our regulated companies. Our investments in transmission and distribution improve reliability for customers and operational efficiencies of the grid, and provide a pathway to market for renewable energy.

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