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AEP, Bechtel, and Siemens Create New Power Quality Solutions and Transmission Enhancement Company

December 13, 1999
December 13, 1999—American Electric Power (NYSE: AEP), Bechtel Enterprises Holdings, Inc. and Siemens Power Transmission & Distribution, Inc. announced that they have formed a joint venture company to provide industrial power quality solutions and transmission network enhancements.

The new company, Lectrix LLC, will provide unique service guarantees to power quality customers, compensating the companies for losses incurred if power quality problems create production disruptions.

Recent reports estimate that power quality problems cost U.S. industry approximately $26 billion a year in lost production or equipment damage, with a single shutdown costing as much as $500,000 per hour. A variety of companies offer equipment to help control voltage and other power quality parameters, but Lectrix is the only one offering cost-effective solutions that guarantee results, while allowing industrial customers to avoid costly equipment investments. Lectrix will build, own, and operate state-of-the-art equipment and provide service guarantees to its customers.

Additionally, Lectrix also will use advanced technology to solve problems within the electric grid. It is estimated that consumers pay a billion dollars per year in extra charges because transmission grid bottlenecks limit access to the lowest-cost electric producers. By removing transmission system constraints, Lectrix will open up the grid to more competition.

"Lectrix is backed by three companies with a global presence and a strong record of success," said Keith Burrowes, president and CEO of Lectrix. "Siemens is a world leader in electric power and distribution systems. Bechtel is a premier project development, engineering, and construction company. And, AEP is a leader in management and analysis of transmission networks and power quality issues."

While Lectrix will provide power quality solutions and transmission network enhancements to all utility and industrial power users, semiconductor fabrication and data centers will be early key markets for the company.

"Semiconductor manufacturers and data centers are especially sensitive to changes in power quality," said Burrowes. "We want to work directly with these companies to place devices at the customers' electric service entrances to condition the power and eliminate problems. We will also work with the high-tech industrial parks to provide similar services for the entire park."

Lectrix will be based in San Francisco. Each of the parent companies will provide a senior officer to serve on the management board for the joint company.

AEP, a global energy company, is one of the United States' largest investor-owned utilities, providing energy to 3 million customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia, and West Virginia. AEP has holdings in the United States, the United Kingdom, China, and Australia. Wholly owned subsidiaries provide power engineering, energy consulting, and energy management services around the world. The company is based in Columbus, Ohio.

Bechtel Enterprises Holdings, Inc. is the development, financing, and ownership arm of the Bechtel organization, a global engineering, construction, and project management company. It is a leader in the privatized infrastructure market with interests in power generation, water and wastewater, transportation, pipelines, telecommunications, and technology ventures. The Bechtel organization has completed more than 19,000 projects in 140 countries on all seven continents, including more than 250,000 megawatts of generating capacity in over 450 power stations.

Headquartered in Raleigh, N.C., Siemens Power Transmission & Distribution, Inc., manufactures and markets equipment and energy solutions for electric utilities, independent power producers, co-generators and other energy-intensive industries. In addition to Raleigh, the company has operations in Charlotte, N.C.; Orlando and Miami, Fla.; Jackson, Miss.; Lafayette, Ind.; Minneapolis, Minn.; and Atlanta, Ga.