Blackstone and ArcLight to buy AEP plants for $2.17 billion

• 8 years ago (2016-09-15)
• David Flin

North America 1021

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American Electric Power Co. (AEP) of the USA has agreed to sell a set of power plants in the US Midwest to Blackstone Group and ArcLight Capital Partners for $2.17 billion. Blackstone and ArcLight have formed a joint venture to buy four plants generating 5200 MW in Ohio and Indiana. The sale is due to close in the first quarter of 2017. AEP expects to net about $1.2 billion in cash after taxes, repayment of debt, and transaction fees.

AEP has been trying to refocus its business on regulated assets that offer steady returns, and has been looking to dispose its power plants in Midwest USA. Power generators across the USA that compete in wholesale electricity markets have seen profits squeezed by cheap natural gas, a surge in renewable energy supplies, and weak demand.

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

According to AEP, as of September 7, the company owned unregulated generation units capable of producing about 7900 MW. AEP runs regulated utilities in 11 states in the USA.

Nick Akins, CEO of AEO, said: “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. This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets.”

AEP said that the sale is still subject to approval by the US Federal Energy Regulatory Commission, the Indiana Utility Regulatory Commission, and antitrust clearance.