Fitch Ratings has published a report on the U.S. Department of Energy's (DOE) two draft designations of National Electric Transmission Corridors (NIETC). The DOE created these designations on April 26, 2007.

The draft NIETCs cover two separate geographic areas: the Mid-Atlantic Area National Corridor and the Southwest Area National Corridor. Plans for large multi-state transmission lines had been previously announced for the eastern draft NIETC region. Three of these projects were proposed by the PJM Interconnection (PJM), which acts as the transmission planning organization for the market covered by the Mid-Atlantic NIETC. The three projects are Allegheny Energy, Inc., Trans-Allegheny Interstate Line (TrAIL), the Dominion Resources, Inc. Loudoun Line, and the Allegheny Energy and American Electric Power Co., Inc. joint-venture line.

While the TrAIL/Loudoun project sponsors continue to work with various state and local authorities to obtain certificates of public convenience and need and other permits for the construction of the projects, Fitch believes the NIETC designation increases the probability that the projects will eventually reach fruition. Over the longer run, completion of the projects would be expected to result in more robust competition in congested areas within the PJM generation market and could reduce the disparity in prices between congested and un-congested regions.

From a credit perspective, Fitch views investments in electric transmission as being relatively low risk as a result of currently supportive regulation by the Federal Energy Regulatory Commission (FERC), the reimbursement for capital expenditures from Regional Transmission Organization (RTO) members, the absence of volumetric risk and low operating risk. It is expected that the participants in the large transmission projects would be able to finance their capital expenditures in a manner that is consistent with their current ratings and thus would be credit neutral. Fitch expects that the projects would provide sources of steady, stable cash flow once commercial operation is achieved.