American Electric to Tap Fed Funds

American Electric Power Co. Inc. (AEP - Analyst Report) yesterday requested for $75 million in federal stimulus funds for its Ohio gridSMART Demonstration Project. The $150 million project is intended to make the electricity distribution network more efficient, reduce emissions and create at least 500 new jobs over a three-year period.

The company’s utility subsidiary AEP Ohio expects the project to reduce energy consumption by 18,000MWh, peak demand by 15MW and lower consumer cost by $5.75 million. The project was initiated in response to the US Department of Energy’s (DOE) bid to increase the application of smart grid technology for optimizing the use of energy delivery on a regional and national level through creation of regional smart grid demonstration projects.

AEP Ohio will deploy the project in northeast central Ohio in fiscal 2010. It will involve customers of urban and rural residential communities spread over 150 square miles, including parts of Columbus, Gahanna, New Albany, Bexley, Whitehall, Reynoldsburg, Westerville, Blacklick, Johnstown, Alexandria, Minerva Park and Pataskala. AEP Ohio will install about 110,000 advanced electricity meters, new distribution grid technology, distributed energy sources, plug-in hybrid electric vehicles, smart appliances, consumer systems and products for better utilization of electricity and minimization of costs.

AEP Ohio has roped in General Electric Co. (GE - Analyst Report), Pacific Northwest National Laboratory, Lockheed Martin Corp. (LMT - Analyst Report), S&C Electric and others for the project.

Columbus, Ohio-based American Electric Power is a public utility holding, which generates, transmits and distributes electricity, natural gas and other commodities through its directly and indirectly owned subsidiaries. The company is one of the largest integrated utilities in the U.S., serving more than 5 million customers in 11 states with more than 38,000MW of primarily coal-fired generating capacity and nearly 39,000 mile electricity transmission system network. It derives revenue mainly from power-generating activities. We maintain our market Neutral recommendation on the shares.

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