Electric Companies to Pursue Creation of Regional Transmission Entity.

AKRON, Ohio--(BUSINESS WIRE)--Nov. 6, 1998--American Electric Power (NYSE:AEP), FirstEnergy Corp. (NYSE:FE) and Virginia Power (NYSE:D) announced today that they would move forward with a proposal to prepare a Federal Energy Regulatory Commission (FERC) filing as early as March 1999 for a regional transmission entity. These companies own 34,500 miles of transmission lines and serve 17 million people in 88,500 square miles of nine states.

"As a result of the Transmission Alliance Phase II development process, we have an agreement to develop the details of a regional transmission entity that could enable the formation of a regional TransCo or a TransCo-Lite," said Stan Szwed, chairman of the Transmission Alliance and FirstEnergy vice president. "During the Phase III process, Alliance members would continue the consensus building effort with interested parties and other transmission owners."

The regional transmission entity would be designed to meet the goals of reducing transmission costs that result from pancaked rates -- accumulated access fees resulting from transferring power over several transmission systems. The regional transmission entity also would ensure transmission reliability and provide non-discriminatory access to the transmission grid.

The proposal for the regional transmission entity will be based on the Phase II review, which was completed in September. The review was a cooperative effort of nine investor-owned electric companies, regulatory staff members, transmission customers, and representatives from public power companies, municipal systems and rural electric cooperatives. This process provided the diverse input necessary to form a comprehensive structure for a regional transmission entity.

The proposal will include governance and organizational structures for both an Independent System Operator (ISO) and a Transco-Lite model. It will detail the mechanisms needed to transition from an ISO to a TransCo-Lite in the event that the entity does not operate initially as a TransCo-Lite. It also will address tariff, congestion management, operations and planning issues, as well as encourage and assist development of a market approach to providing ancillary services.

"While the three companies are crafting the proposal, we are receptive to meeting with other regional transmission entities to discuss mutual business perspectives as well as ways to expand the potential market," Szwed said.

American Electric Power is headquartered in Columbus, Ohio, and serves portions of Ohio, Indiana, Michigan, Kentucky, Tennessee, Virginia and West Virginia. FirstEnergy is headquartered in Akron, Ohio, and serves portions of Ohio and Pennsylvania. Virginia Power, headquartered in Richmond, Virginia, serves portions of Virginia and North Carolina.