COLUMBUS, Ohio -- American Electric Power Company (NYSE: AEP) and the Lower Colorado River Authority (LCRA) have announced the formation of an innovative partnership to construct a 150-mile portion of a proposed high-voltage power line in West Texas. The agreement between AEP and the LCRA calls for AEP to manage construction of the line, perform local field operations and maintain the line and related facilities. The LCRA will handle the construction financing and will own the project’s transmission assets.

The 345-kilovolt power line will improve the reliability of the Texas transmission system. The line will be able to move power from natural gas-fired power plants in the Permian Basin to other parts of the state to meet growing demands for electricity. It also will serve as a major conduit of power from wind power farms that have been constructed or are planned in West Texas to meet the state’s renewable energy goals.

The entire proposed line will stretch from Morgan Creek, east of Big Spring, to Comanche, southwest of Fort Worth. The proposed AEP/LCRA portion will run 150 miles from the Mitchell County line to the Brown County line, at a cost of approximately $90 million. All electric consumers who use the power grid share the cost of the Texas transmission system.

“AEP has been a world leader in the development of high voltage power line technology and has built and operates the world’s most extensive high-voltage network,” said Richard Verret, AEP’s senior vice president, Transmission. “We are excited that we can leverage our experience and skills to build, operate and maintain new transmission facilities. We believe that this partnership will benefit consumers in terms of a more reliable and more economic transmission network.”

“Because of its location in the center of Texas, the LCRA has for 60 years owned transmission facilities used by all Texas utilities,” said LCRA General Manager Joe Beal. “We’re relatively small, but we have built a solid reputation for providing utilities with reliable, cost-effective transmission through rural Texas. Because of our favorable cost structure, LCRA ownership and financing of this project will mean lower costs for all consumers. The project is a significant step in exercising our ability given by the Texas Legislature in 1999 to be a statewide transmission supplier.”

The joint AEP/LCRA project is a continuation of the longtime excellent working relationship between AEP companies and the LCRA, Beal added. Central Power and Light (CPL) and West Texas Utilities (WTU), both owned by AEP, have had agreements for many years with the LCRA to interconnect systems because they have contiguous service areas.

The Independent System Operator (ISO) of the Electric Reliability Council of Texas (ERCOT) has recommended the project. The ISO promotes the construction of transmission facilities that it considers necessary to relieve transmission constraints in the state and provide enhanced power reliability. The Morgan Creek to Comanche line will increase the ability to transfer power between West Texas and East Texas, thus distributing power when and where it is needed.

ERCOT requires the proposed line’s new service by the summer of 2003. The project will bring increased tax revenues to government bodies and its construction will bring a boost to local economies.

Approval is needed from the Texas Public Utility Commission before the line can be built. The siting process is under way.

As part of the complete Morgan Creek to Comanche project, TXU Electric & Gas (TXU) will build and own 19 miles to the north of the AEP/LCRA segment as well as approximately 50 miles of line to the east of the AEP/LCRA portion. The entire project will connect the TXU’s Morgan Creek Power Station in Mitchell County to a proposed switching station that AEP will build at Twin Buttes in Tom Green County. From Twin Buttes, the line will connect to WTU’s existing Red Creek Station in Tom Green County, and will continue to TXU’s Comanche Switching Station near Comanche in Comanche County.

WTU, an AEP subsidiary, will manage the construction of the AEP/LCRA portion of the project. Employees of AEP’s Texas affiliates will manage the facilities’ local field operations and maintenance.

American Electric Power is a multinational energy company based in Columbus, Ohio. AEP is one of the United States’ largest generators of electricity with more than 38,000 megawatts of generating capacity. AEP is also one of the nation’s leading wholesale energy marketers and traders. AEP delivers electricity to more than 4.8 million customers in 11 states – Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. Through holdings in Australia, Brazil, China, Mexico and the United Kingdom, AEP serves more than 4 million customers outside the U.S. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.

The LCRA is a nonprofit, self-funded conservation and reclamation district dedicated to providing public services to the people of Texas. The LCRA produces, sells and transmits wholesale electricity to cooperatives and city-owned utilities that serve more than 1 million people. The LCRA also sells water; develops and operates water and wastewater utilities; manages the lower Colorado River; protects the river’s water quality; owns and operates parks; promotes soil, water and energy conservation; and offers economic and community development assistance to rural communities.