Great Plains Energy (NYSE: GXP) and American Electric Power (NYSE: AEP) today announced they have formed a company to build and invest in transmission infrastructure. The new company, Transource Energy SM LLC (Transource), will pursue competitive transmission projects initially in the Southwest Power Pool (SPP), Midwest Independent Transmission System Operator (MISO) and PJM Interconnection (PJM) regions, with the potential for expanding to other regions in the future. Great Plains Energy owns 13.5 percent of Transource. AEP owns 86.5 percent.
In 2011, the Federal Energy Regulatory Commission (FERC) issued a new rule (Order 1000) that facilitates competition in the transmission sector of the utility industry. By partnering with AEP, a recognized leader in the transmission business, Great Plains Energy will be well positioned to compete in the emerging competitive transmission market.
“Our nation’s bulk electric system requires significant investment in transmission infrastructure to improve reliability, reduce congestion, increase access to renewable energy resources and allow for a smarter and more efficient grid,” stated Mike Chesser, Chairman and CEO of Great Plains Energy. “FERC’s recent order fundamentally changes the way in which transmission will be developed, owned and operated in the United States. As a result, future transmission infrastructure will be built by companies that can successfully compete and provide the most cost-effective solutions for the benefit of the company, our customers, our shareholders and the region.”
Regional transmission infrastructure projects are typically large scale projects requiring significant capital resources to fund and build. Through Great Plains Energy’s partnership with AEP, Transource will be well positioned to build and own large scale projects in the competitive environment by leveraging the combined companies’ scale, scope and expertise. This partnership allows Great Plains Energy the financial flexibility to free up capital to focus on other infrastructure investments which will enhance reliability for KCP&L and GMO’s customers.