AEP sells four power plants to joint Blackstone and ArcLight venture
American Electric Power (AEP) sold four power plants to joint venture partners Blackstone and ArcLight Capital Partners, LLC, on Wednesday, in a $2.17 billion agreement for the operation and ownership of the 5,200-megawatt (MW) facilities.
The agreement included two natural gas power plants in Ohio, a natural gas plant in Indiana and a coal plant in Ohio.
The AEP announced that it was seeking strategic alternative to these power plants in Jan. 2015, including a potential sale. All four plants provide service to the PJM Interconnection (PJM).
“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,” AEP President, Chairman and CEO Nicholas K. Atkins said. “This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets.
“Our employees have done an incredible job operating these power plants in PJM, and I’m confident that they will contribute to the future success of Blackstone and ArcLight. We will continue to operate these plants safely in the coming months while working closely with the Blackstone and ArcLight teams to obtain the regulatory approvals necessary to complete the sale. We also will be working with employees and community leaders to ensure a smooth transition.”
The sale is expected to close in the first quarter of 2017. AEP predicts a net gain of approximately $1.2 billion after taxes, as well as repayment of associated debt and transaction fees.
AEP expects an after-tax gain of approximately $140 million from the agreement, which is subject to inventory true-ups, income tax and other adjustments.
