AEP seeks approval to merge two Texas transmission companies

AEP Texas Central Co. (TCC) and AEP Texas North Co. (TNC) on June 15 applied at the Public Utility Commission of Texas for approval of a merger of the two transmission owners.

They are currently separate legal entities and transmission and distribution utilities (TDUs) operating in the Electric Reliability Council of Texas (ERCOT) region. However, these companies are managed and operated to a great extent as a single business under the brand name “AEP Texas.”

Said the June 15 application: “Applicants now seek approval of the Public Utility Commission of Texas (Commission) to merge each TCC and TNC into their immediate parent company, currently named AEP Utilities, Inc. (AEP Utilities), which will change its name to AEP Texas Inc. (AEP Texas). In essence, the merger will align the legal structure of AEP Texas with its current organizational and operational form.”

TCC and TNC provide transmission and distribution (T&D) service to Retail Electric Providers (REPs) within portions of the ERCOT region. TCC and TNC provide these services to over one million meters located in nearly 400 communities in all or parts of 93 counties in the south and west Texas region.

AEP Utilities, the immediate parent company of TCC and TNC, is a wholly owned subsidiary of American Electric Power (NYSE: AEP).

The application said there are three primary drivers for the proposed merger of TCC and TNC into a single TDU:

  • Access to Financing – With this proposed merger, TCC and TNC will be able to issue one set of financing instruments as AEP Texas. The proposed merger will create a bigger and stronger financial platform from which to access financial markets, which will support the continued and increasing investment in the transmission and distribution grid needed to provide reliable service to customers.
  • Efficiencies in Financial Reporting – The proposed merger will allow the elimination of duplication in the production of financial statements currently filed by TCC and TNC. The elimination of duplication will conserve the resources of TCC and TNC, as well as those of other parties in the review of such filings.
  • Efficiencies of Regulatory Filings – The proposed merger will promote efficiency in regulatory filings (eliminating and consolidating filings), thereby conserving resources of TCC and TNC, the Texas commission, and other parties that participate in regulatory proceedings.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.