AEP Sustainability - Reliability Investments

Reliability Investments

The Regional Transmission Organizations (RTOs) in which AEP operates often determine upgrades to the transmission grid to address region-wide reliability, market efficiency and public policy needs. RTOs will then assign these projects to transmission owners such as AEP to build the lines and facilities.

We plan to invest $24.9 billion between 2019 and 2023 on transmission and distribution infrastructure to strengthen and modernize our network to address critical system reliability risks and protect the grid from physical and cyber threats. AEP will direct a large portion of this investment to improve local reliability issues, many of which are the result of our aging system. In 2018, AEP invested roughly $4.5 billion in these infrastructure improvements.

The primary direct benefit that customers receive from these investments is improved reliability and resiliency. To ensure every dollar we invest counts, we conducted a system-wide audit to identify our least reliable facilities and equipment at the greatest risk of failure and scheduled these for expedited upgrade or replacement. Based on a sampling of 14 completed transmission line rebuild projects, customer outage duration was decreased by 97 percent from pre-investment levels.

A more robust transmission grid also supports economic and job growth. According to an AEP-commissioned study, between 2017 and 2019, our planned $9 billion transmission investment will produce an estimated $12.7 billion in economic activity and support roughly 34,000 jobs. In addition, the new transmission developments will provide more than $600 million in additional state and local tax revenues.

In the same study on the direct and indirect impact of our transmission investments, we applied this historical effectiveness to a sample of 62 transmission local reliability upgrades targeted for completion in the 2012–2019 capital budget. The report concludes these investments will yield an estimated customer outage reduction benefit of approximately $75 million per year and a net present value of $1.4 billion of benefits over the lifetime of the investments.

AEP Texas submitted two major 345-kV double-circuit transmission lines for approval to the Public Utility Commission of Texas (PUCT) in October 2018. The new transmission lines are the Bakersfield to Solstice Project and the Sand Lake to Solstice Project in Pecos, Reeves and Ward counties. The Electric Reliability Council of Texas (ERCOT) recommended both projects as critical to the reliability of the region’s transmission system, and we expect a decision to be made on the proposed projects in 2019. If approved, the projects are scheduled to be in-service by December 2020.

In 2018, AEP Transmission became a member of the Midcontinent Independent System Operator (MISO) RTO, bringing to four the number of RTOs within which AEP has assets. A project mandated by MISO in northern Indiana was the $347 million Greentown-to-Reynolds Project, which went into service in 2018. The project was built by Northern Indiana Public Service Company (NIPSCO) and Pioneer Transmission, a joint venture between AEP Transmission and Duke Energy. The 70-mile line links Greentown Station with NIPCSO’s Reynolds Station. The new line improves reliability in that region and assures access to regional sources of competitively priced power. The Greentown-Reynolds line is the first phase of Pioneer Transmission’s 290-mile plan to connect the Greentown Station to AEP’s Rockport Station, east of Evansville, Indiana.

Public Service Company of Oklahoma (PSO) is upgrading the electric transmission grid in McCurtain and Choctaw counties in southeast Oklahoma. The Hugo – Fort Towson – Valliant Transmission Line Rebuild Project upgrades the existing transmission infrastructure to provide a reliable flow of electricity to our customers. The project provides additional electric capacity to better serve local customers and accommodate future growth. The estimated investment on this project is $27 million.

AEP Ohio has more than 30 transmission projects in process to enhance reliability, replace or rebuild aging infrastructure and accommodate future growth across the state. For example, about 13 miles of 69 kV transmission lines between Flushing and Smyrna Stations in Belmont and Harrison counties in Ohio is being rebuilt. In the Findlay area, AEP Ohio is rebuilding approximately 30 miles of 34.5 kV transmission line to 69 kV. This Findlay area improvement project is an example of infrastructure that has reached an age where it needs to be replaced to improve reliability in that region.

Competitive Transmission

Transource® is a partnership between American Electric Power (AEP) and Great Plains Energy (GPE) focused on the development and investment in competitive electric transmission projects across the U.S. Transource is a member of three regional transmission organizations - the PJM Interconnection, the Midwest Independent System Operator (MISO) and the Southwest Power Pool (SPP) - which together serve all or part of 28 U.S. states, the District of Columbia and the province of Manitoba in Canada.

The Transource West Virginia Clendenin-Walton Area Improvements transmission line project is located in an area north of Clendenin, West Virginia. This project was identified in PJM’s 2014 Regional Transmission Expansion Plan (RTEP) as key to ensuring continued reliable electric service in Kanawha and Roane counties in West Virginia. The project provides an interconnection with First Energy and brings a second 138kV power source into the Clendenin area. The project is scheduled to go in service by June 2019.

Transource is also developing the Independence Energy Connection (IEC), a new project to increase consumer access to more affordable power in the PJM region, including Pennsylvania and Maryland. The project will be built in two segments, with approximately 45 miles of transmission line in Pennsylvania and Maryland. The project also includes construction of two new substations in Pennsylvania and upgrades to two existing substations in Maryland.

The need for this project stemmed from transmission congestion impacting the delivery of electricity into the region. Following a competitive bidding process, PJM awarded construction of the project to Transource in August 2016. These new lines and substations are due to go in-service in November 2020.

Electric Transmission Texas (ETT), a joint venture between AEP and Berkshire Hathaway Energy Company, is piloting an initiative to expedite the ability to interconnect generation with the transmission grid. In September 2018, the Public Utility Commission of Texas (PUCT) issued a final order approving a new transmission line to serve the Foard City Wind Project in Foard County, Texas. Without the new line, the wind farm could not connect to the grid. ETT’s new approximately 2.7 mile 345-kV line will provide the interconnection needed and is expected to be placed in service in May 2019.