Dive Brief:
- American Electric Power CEO Nick Akins told Bloomberg that his company's Midwest generation fleet is up for sale, and that information on the plants has been disseminated to potential bidders, Bloomberg reports.
- Selling the merchant fleet, capable of generating about 5,000 MW, would allow the company to move towards a regulated utility structure Akins said.
- The CEO declined to comment, however, on allegations by Dynegy CEO Bob Flexon that it was shut out of bidding on the plants, in response to a dispute over power purchase agreements in Ohio.
Dive Insight:
Pressured by cheap gas, American Electric Power has been considering selling its merchant fleet for some time. The company hired Goldman Sachs last year, to begin evaluating a sale, and is now following through after scoring income guarantees for some of its Ohio generation.
That's the crux of a dispute with Dynegy, which announced a year ago that the company would be interested should AEP decide to sell its fleet.
In March, Ohio regulators approved income guarantees for a number of AEP's plants: Unit 1 at the Cardinal coal plant, Units 4-6 at the Conesville plant, Units 1-4 at the Stuart plant and Unit 1 at Zimmer. Dynegy opposed those agreements, saying it could provide the power cheaper. Dynegy, along with NRG Energy, have asked FERC earlier this year to rescind a waiver allowing the AEP and FirstEnergy to engage in affiliate power transactions.
The power purchase deals went forward, however, and now some companies are claiming AEP is declining to sell the remainder of its fleet to companies which opposed the arrangements.
"AEP has specifically excluded anybody that dare speak against them in Ohio,” Dynegy CEO Bob Flexon told Columbus Business First . “My understanding is we’re not invited to the latest bid party for the assets they’re selling."
When Bloomberg sat down with Akins, they asked about those allegations. AEP's CEO declined to comment specifically, saying "we will take bids from ones we think are suitable for the assets.”
RTO Insider reports an analyst estimated the sale would generate between $1.9 billion to $2.3 billion.
