After PATH and with industry in flux, AEP focuses on short-term

In the aftermath of the cancellation of the Potomac Appalachia Transmission Highline (PATH) project, and with the transmission industry in flux as it seeks to comply with FERC Order 1000, American Electric Power (NYSE:AEP) plans to focus in the near-term on projects in its service territory.

After an Aug. 9 staff recommendation that PATH be removed from the PJM Interconnection’s regional transmission expansion plan (RTEP), PJM’s board on Aug. 24 officially removed PATH from the RTEP.

“Certainly it’s unfortunate with PATH,” Lisa Barton, executive vice president for AEP Transmission, told TransmissionHub. “It was interesting with PATH because [in] three consecutive RTEPs, it came up as being needed, and with the recession and decrease in load in the East, PJM determined the project was no longer necessary. Sometimes with big projects [planned], smaller projects will come in and when there is a dramatic shift in load, as there was in the last couple of years, some of these kinds of things can happen.”

The demise of the PATH project provides an example for how RTOs should look at the transmission planning process more holistically – and proactively, rather than reactively, Barton said. Transmission planning in many regions across the country is reactive, meaning that the industry responds to demand changes and new generation projects instead of acting as the framework around which new generation is sited.

However, PJM, in part at the prompting of Order 1000, is changing its planning process to evaluate projects not only for reliability but for economic and public policy-type benefits, such as integrating renewables, Barton noted.

“So we do think that PJM in terms of how it’s going to be planning the system on a forward-looking basis is in the right place,” she said.

Meanwhile, AEP is undeterred, she said, from its investing in the transmission space. The company recently was awarded $500m of projects in its service territory as a result of generation retirements in PJM.

“We are the largest transmission owner in the country and we have a lot of need within our existing territory – in the short term that’s where we really plan on focusing a lot of our efforts,” Barton said. “We’re continuing to pursue projects with the JVs that we have,” including the Prairie Wind project, which is being executed by Electric Transmission America, a joint venture with MidAmerican Energy Holdings. Prairie Wind is currently under construction. 

AEP has struck several joint ventures, including Pioneer Transmission, a JV with Duke Energy (NYSE:DUK); Electric Transmission Texas, another JV with MidAmerican; and most recently Transource Energy, a JV with Great Plains Energy (NYSE:GXP). The latter venture AEP has designated as the one that will pursue competitive transmission projects across the country, but specifically in the Southwest Power Pool (SPP), Midwest ISO (MISO) and PJM, for the foreseeable future.

A benefit to focusing on investments in its own service territory is the ability to wait out the fluctuations in the industry caused by compliance with FERC Order 1000, Barton said.

“When you look at the horizon, there are changes certainly with what’s been going on at the federal level,” she said. “With FERC’s issuance of Order 1000, that is fundamentally going to change the playing field.”

Regional compliance filings with Order 1000 are due in less than a month, on Oct. 11.

“As an industry, we’re rolling up our sleeves and figuring out how we get the work that needs to be done, done,” Barton said. “The best way to do it is as part of a longer term review – what might be coming on and off in terms of generation. Are we going to get it exactly right? No, but as an industry, we are better off not having high-cost surprises.”

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.