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Yahoo - AEP, LCRA plan $500 mln Texas power grid expansion
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Yahoo - AEP, LCRA plan $500 mln Texas power grid expansion
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Wednesday May 23, 6:30 pm Eastern Time

AEP, LCRA plan $500 mln Texas power grid expansion

SAN FRANCISCO, May 23 (Reuters) - A public power company and investor-owned 
American Electric Power (NYSE:AEP - news) plan to pump $500 million over the 
next five years into a program designed to upgrade the power grid serving 
southern and western Texas.



The joint venture between AEP and the Lower Colorado River Authority (LCRA), 
approved on Wednesday by LCRA's board of directors, aims to reach a final 
agreement on financing and implementing the plan in June.

``We expect to have a final negotiated contract in June and hope to start 
construction on specific projects by the end of the summer,'' LCRA spokesman 
Robert Cullick said.

Projects in the program, which require approval by the Texas Public Utilities 
Commission (PUC), include boosting the voltage on existing transmission 
lines, building new lines, upgrading substations, and hooking up new power 
plants.

According to the PUC, Texas currently has 27 new power plants under 
construction that will put nearly 14,000 megawatts on the grid when completed 
over the next few years, roughly enough electricity to supply 14 million 
homes.

The boom in power plant construction responds to a surge in energy demand 
from rapidly growing cities in the region like Corpus Christie and Larado in 
southern Texas, which have seen their populations grow by 40 percent over the 
past decade.

While the generation side of the industry has been aggressively expanding, 
the Texas grid needed to carry that electricity to consumers has been cited 
in the power industry as cause for concern.

Earlier this month the North American Electric Reliability Council (NERC) 
warned the Texas transmission network -- though in far better shape than 
California's struggling system -- was nevertheless in dire need of upgrades, 
and lumped it together with other potential hot spots like New England and 
New York City.

``There are some bottlenecks. By expanding existing lines and building new 
ones we hope to relieve some of these bottlenecks,'' Cullick said.

Under the agreement with Columbus, Ohio-based AEP, LCRA will own the new 
lines and AEP will maintain them. This will effectively lower the program's 
cost since LCRA is a public, not-for-profit power company exempt from federal 
income tax. 

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