Competitive Regulated Transmission
In April 2012, AEP became the first traditional regulated utility to form a competitive business for transmission with the launch of Transource Energy, a joint venture between AEP and Great Plains Energy (GPE). Expanding Transmission’s growth strategy portfolio, Transource is a subsidiary of AEP Transmission Holding Company, the holding company for the transcos and joint venture projects. Transource proactively positions AEP to pursue projects that result from FERC Order 1000 within the PJM Interconnection, SPP and MISO, as well as additional projects.
On Jan. 2, 2014, two projects in Missouri – representing an approximately $398 million investment – were transferred from Great Plains Energy to Transource. The projects were approved by the Missouri Public Service Commission and the SPP. FERC also approved the establishment of a base rate formula and incentives for the projects. The larger of the two projects is a $333 million 175-mile line with an expected in-service date in 2017. The other is a $65 million project that is expected to be in service in 2015.
The main driver behind AEP’s competitive transmission business is FERC Order 1000, which was issued in 2011. It fundamentally changed how transmission facilities will be developed, owned and operated as well as how costs will be supported. We are encouraged by and supportive of FERC’s decision to consider public policy in the transmission planning process, including economic and reliability considerations, the facilitation of the integration of renewable energy into the grid, and environmental regulations. The order mandates that the regional and inter-regional cost allocation methodologies follow a set of principles and requires RTOs and transmission providers to offer evidence in their compliance filings. The key principles require cost allocation methodologies to be closely tied to the benefits that are calculated as part of the transmission planning process.