American Electric Power to sell four Midwest power plants for $2.17 bn

American Electric Power Co (AEP) yesterday struck a deal to sell four Midwest power plants to a new joint venture formed by private equity firms Blackstone Group and ArcLight Capital Partners for $2.17 billion.

Under the deal, AEP, one of the largest electricity generators in the US, is selling four power plants generating about 5,200 megawatts in Ohio and Indiana, and the sale is expected to close in the first quarter of 2017.

The Ohio plants include the gas-fired Waterford Energy Center, Darby Generating Station, the coal-fired James Gavin Plant, and the gas-fired Lawrenceburg Generating Station in Indiana.

AEP said that it expects to net about $1.2 billion in cash after taxes, repayment of debt and transaction fees.

AEP had in January 2015 announced that it was exploring strategic alternatives for these power plants, including a potential sale.

''AEP's long-term strategy has been to become a fully regulated, premium energy company focused on investment in infrastructure and the energy innovations that our customers want and need,'' said, AEP CEO, Nick Akins.

''This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets,'' he added.

''Blackstone and ArcLight are focused on energy infrastructure, with significant investments owning and operating power generation in North America and Europe.

Combined they have owned and operated more than 38,000 megawatts of power generation globally, including operations in the PJM Interconnection, New York ISO and Electric Reliability Council of Texas.

The sale is subject to approval by the US Federal Energy Regulatory Commission, the Indiana Utility Regulatory Commission and antitrust clearance.

With annual revenues of $16.5 billion, AEP is one of the largest electric utilities in the US, owning or operating more than 60 generating stations in the US, with a capacity of approximately 31,000 megawatts serving nearly 5.4 million customers in 11 states.
It owns more than 40,000-mile electricity transmission network – the largest in the nation, more 765-kilovolt extra-high voltage transmission lines than all other US transmission systems combined, and around 31,000 megawatts of generating capacity.

The Ohio-based company said that it is continuing an independent strategic evaluation of that generation while also working on the restructuring of Ohio electricity regulations to allow those assets to be acquired by AEP Ohio for the benefit of its customers.

AEP also is continuing a separate strategic review of its 48 MW hydroelectric Racine Plant in Racine, Ohio.