- The Washington Times - Monday, January 1, 2007

Shares of AES Corporation climbed steadily last year as investors were encouraged by its expansions in the electric transmission industry.

The Arlington company is one of the world’s largest power companies, with the capacity to provide electricity to 100 million people in 26 countries.

Its stock rose 46 percent from $16.20 at the beginning of 2006 to a 52-week closing high of $23.72 on Dec. 4. It closed at $22.04 on the New York Stock Exchange on Friday, the last trading day of the year. U.S. financial markets were closed yesterday for New Year’s Day.

“I kick myself every day. … I kept thinking it would go back to 18, and now it’s all the way up. It’s a monster company in a world that needs more power,” stock analyst Jim Cramer, host of CNBC’s “Mad Money” investing program, wrote in his investment advice column recently.

In its latest move announced Dec. 20, AES bought Trans-Elect LLC, an independent electric transmission company in Reston, for an undisclosed amount as a springboard for its entry in the North American electric transmission industry.

Trans-Elect was organized in 1999 and operated a 12,600-mile transmission network in California, Michigan and Alberta, Canada, but sold it off in the fall. AES acquired the rights to the Trans-Elect name and its “development pipeline” of more than 15 transmission line projects.

An independent transmission company operates separately from regular utilities, such as Pepco or Dominion Virginia Power, by providing electricity in places not served by major utilities. Examples include rural areas that fall outside service areas of major utilities, or connections between utilities or specialized operations, such as a transmission line from a wind farm to a city.

“It’s very site-specific,” said Scott Cunningham, AES’ vice president of investor relations.

Only since the 1990s has the regulatory environment opened enough for major independent electric transmission companies to enter the North American market, he said.

Investments in the U.S. electric transmission industry have increased from $2.5 billion in 1998 to $5.5 billion in 2005, according to the Edison Electric Institute, a trade organization for utilities. Transmission investment could reach $8.0 billion per year by 2008 and $10 billion or more by 2010.

As a result, “We’re looking to develop new businesses,” Mr. Cunningham said.

In other recent moves, AES started full operation of its first power plant in Spain in a $920 million project scheduled to generate enough electricity for 300,000 homes. The company also plans to more than double the number of its customers in Cameroon after its subsidiary secured a $340 million financing package to expand operations.

AES owns 124 power plants worldwide and operates with about 30,000 employees.

It has been moving beyond its core power generation business to include wind farms, liquid natural gas regasification and greenhouse gas-reduction projects.

One of its recent projects is a $50 million investment to install emissions control systems on a coal-fired power station near Binghamton, N.Y., during 2007. It also is building a wind farm near Abilene, Texas.

AES can combine power generation with its other projects, “reaping the benefits of both,” said Lasan Johong, industry analyst for the financial firm RBC Capital Markets. “This allows AES more flexibility in siting and developing projects.”

The company reported a $340 million loss (52 cents per diluted share) in the third quarter of 2006 on revenue of $3.1 billion, compared with net income of $244 million (37 cents per diluted share) on revenue of $2.8 billion a year earlier.

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