American Electric Power and ITC Holdings Corp. have released the results of their joint technical study evaluating the feasibility of extending AEP's existing 765-kV transmission infrastructure through Michigan to enhance reliability and support a more efficient generation marketplace. The companies announced the study Nov. 6, 2006.

The study results recommend building three segments of extra-high voltage 765-kV regional transmission in PJM Interconnection and Midwest ISO that would extend AEP's existing 765-kV transmission system in the southwest corner of the Lower Peninsula of Michigan east across Michigan and south to the existing 765-kV infrastructure in Ohio. If built as recommended, the project would total approximately 700 miles, about 420 miles in Michigan and 280 miles in northern Ohio.

The study proposes a 765-kV transmission line entering Michigan from the south up to a new transmission station to be built west of Detroit, followed by a segment that would cross Michigan from west to east connecting the D.C. Cook Nuclear Plant at Bridgman, Michigan, to Detroit, and then a third transmission line that would enter Michigan from the southeast near Canton, Ohio, and extend northwest to Detroit.

"We believe adding significant 765-kV transmission resources in this area and linking them to AEP's 2,100-mile 765-kV transmission network in the Midwest are keys for implementing the comprehensive, long-term energy future envisioned by Governor Granholm's 21st Century Energy Plan," said Michael G. Morris, AEP chairman, president and chief executive officer. "Building a strong transmission network in this region will better utilize existing resources by allowing as much as 5,000 MW of additional power to be transported to and through Michigan, expanding access to additional competitive generation options and reducing the amount of generation necessary for reserve needs. This transmission network would increase efficiency by reducing current transmission line losses by approximately 250 megawatts - the size of a small power plant. Extra-high voltage transmission also will provide a reliable, stable electricity delivery system in the region to enhance economic development and support increased development of renewable generation."

If the entire project were built as proposed in the study, it would cost an estimated $2.6 billion (in 2007 dollars) and would take approximately eight years to complete, assuming three years to site and five years to construct.

"Although the cost of the recommended upgrades sounds significant, transmission costs typically make up less than 10 percent of a customer's electricity bill. If these costs are allocated to all regional customers, this significant transmission improvement would cost less than 50 cents each month on the bill of an average residential customer using 1000 kW hours per month. Even without considering the reliability improvements, this investment can be more than recouped by the savings realized through access to additional generation resources and by reducing the need to bring additional generation on line," Morris said.

AEP and ITC have provided copies of the technical report to PJM and MISO for their independent review and evaluation. PJM and MISO are responsible for planning the transmission system upgrades in their respective regions and for evaluating cross-border facilities. The study also will be shared with the Michigan Public Service Commission, the Public Utilities Commission of Ohio and other interested parties, such as the Indiana Utility Regulatory Commission. If the project is included in the PJM and MISO transmission upgrade plans, actual siting of the lines would be conducted according to Michigan and Ohio siting processes.

AEP and ITC are investigating the feasibility of forming a joint venture that would develop the project pending MISO and PJM review.