The Federal Energy Regulatory Commission's (FERC) Order No. 679-A will not reduce investment in transmission by U.S. utilities, as discussed in a Fitch Ratings report. Order 679-A, issued in December 2006, revised and limited financial incentives to new power transmission projects, relative to those in the original Order 679. The amended rule reaffirms incentive-based rate treatments for electric utilities while also introducing several tests indicative of a more cautious approach on new investment incentives.

Fitch believes that cap ex spending by utilities on transmission systems will continue to increase over the next several years, given the need to replace aging infrastructure and reliability concerns. According to the Edison Electric Institute, utilities are planning to invest $31.5 billion in the transmission system between 2006-2009, a 60% increase over the prior three-year period.

Fitch notes that while FERC has backstop sitting authority for new transmission lines, this authority is limited.

The full report "U.S. Power Transmission Projects: Less Candy?" is available on the Fitch Ratings website www.fitchratings.com. Also available is the Fitch report "Frayed Wires: U.S. Transmission System Shows Its Age" published Oct. 25, 2006.