Electric Transmission Texas, LLC (‘’ETT’’) – a joint venture between the subsidiaries of American Electric Power Company (AEP - Free Report) and MidAmerican Energy Holdings Company – has entered into master agreements with three construction firms for transmission and infrastructure services associated with the Competitive Renewable Energy Zone (‘’CREZ’’) projects.
Electric Transmission Texasplans to invest approximately $1.4 billion in CREZ projects by 2013. These projects were assigned to ETT by the Public Utility Commission of Texas (‘’PUCT’’).
The three construction firms, namely Quanta Services Inc. (PWR - Free Report) , MYR Group, Inc. (MYRG - Free Report) and TIC Holdings Inc., have displayed proven capabilities, strong safety focus and commitment to the ETT CREZ program.
The agreement ensures that ETT has significant construction resources committed to help complete its CREZ program in west Texas. As a result of the agreement, the three firms will have enough resources available to construct 450 miles of transmission lines and facilities.
The three construction firms will work under the direction of ETT and URS Corporation . In 2010, ETT had made a contract with URS to serve as overall program manager for ETT's CREZ projects.
The PUCT has approved the required Certificates of Convenience and Necessity for ETT's CREZ projects over the last several months. Acquisition of rights-of-way from property owners will be completed over the next 18 months. Specific pricing and terms for the project will be further refined with the start of construction.
American Electric Power has high earnings exposure to industrial customers and has a major presence in Ohio. Going forward, the company offers stable earnings through consistent performance in core regulated operations, growth through transmission network expansion and an above average dividend yield.
However, tepid economies in a number of its service states restrict opportunities for growth. Also, its predominantly fossil-fuel based generation assets and lower wholesale sales continue to weigh on the valuation of the stock. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.
Based in Columbus, American Electric Poweris one of the largest electric utilities in the U.S., delivering electricity to more than 5 million customers in 11 states. The company has extensive experience building extra-high-voltage 765-kV transmission lines and owns the nation's largest electricity transmission system, a nearly 39,000-mile network that includes 2,100 miles of 765-kV transmission lines, more than all other U.S. transmission systems combined. Electric Transmission Texas acquires constructs, owns and operates transmission facilities within the Electric Reliability Council of Texas, primarily in and around the AEP Texas Central Company and AEP Texas North Company service territories.