A new US utility is due to be formed following the acquisition by American Electric Power (AEP) of Central and South West Corp. in a share exchange deal reported to be worth $6.6 billion. The deal, which may face regulatory barriers, promises to bring together power generation operations from Michigan, Texas and other US states.

The merged company has an estimated customer base of 4.6 million in 11 states and a further 4 million outside the USA, mainly in the UK. AEP owns 50 per cent of Yorkshire Electricity while Central and South West controls Seebord.

However, the merger is expected to face scrutiny from both federal and state regulatory bodies. Some analysts have speculated that the deal will fall foul of the 1935 Public Utility Holding Company Act which requires utility holding companies to merge only with others in contiguous states of along linked transmission lines.

The transmission networks of the two utilities are separated by 240 km.