American Electric Co. will form a transmission company, or Transco, to pursue new transmission opportunities within the company’s existing 11-state footprint, a key component in a three-part national transmission strategy.

AEP has existing and planned transmission projects in the Electric Reliability Council of Texas (ERCOT) through its Electric Transmission Texas joint venture with MidAmerican Energy Holdings Company. AEP is also pursuing transmission projects outside its footprint and outside ERCOT through joint ventures with numerous other companies, including Electric Transmission America, AEP’s broader partnership with MidAmerican.

“The Transco will be our vehicle for much of AEP’s future on-system, wholly-owned transmission investment,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “These investments will include a wide range of on-system transmission improvements, things like greenfield projects, station additions and system upgrades. Pursuing these activities in a Transco, with formula rates adjusted annually by the Federal Energy Regulatory Commission (FERC), benefits customers by enhancing AEP’s access to capital. This enables the company to undertake substantial new investment while relieving our operating company balance sheets of the burden of meeting those capital demands, thereby allowing them to put capital to work on distribution and generation needs.”

AEP expects to invest $118 million in Transco activities in 2010.

“We are seeking state utility status for the Transco in states where that designation is required, and we will join both PJM and Southwest Power Pool as a transmission owner,” Morris said. “We plan to file a FERC tariff for the Transco later this year, with rates effective in mid-2010.”