This paper introduces the concept of perpetual options theory to analyze merchant transmission investment through an approved rate. Since the electric usages and the associated revenue is stochastic in nature, applying the perpetual options theory allows an investor to determine the most opportunistic time to start a transmission project and obtain the maximum revenue returns or let the option expire when the economic incentive is not sufficient. In today's environment, this decision approach is more appropriate since it provides transmission investors a better projection of its return on investment and an exit strategy for an investment decision.