Dive Brief:
- Dynegy CEO Bob Flexon told Columbus Business First that American Electric Power will not be inviting his company to bid on power assets for sale in Ohio, and Flexon said he believes Dynegy's opposition to recent power purchase agreements in that state is the reason.
- Flexon also said other independent power producers who opposed the arrangements have been shut out of a potential sale.
- AEP began studying the sale of its merchant power business last year, and appears to be moving forward with the strategy. The company is looking to divest generation not covered by income guarantees recently approved in Ohio.
Dive Insight:
As AEP and FirstEnergy move forward to obtain federal approval for their income guarantee proposals for some of their aging fleet, AEP is likely moving forward with the sale of some of its fleet not under the proposals. But Dynegy might be out of the running as a likely buyer due to the company's outspoken stance against the proposals.
AEP apparently isn't commenting, telling Columbus Business First that the company continues to review its generation portfolio. “We aren’t going to discuss that ongoing process,” a spokesperson told the news outlet.
Dynegy says it could run the plants, but following its opposition to AEP power purchase agreements in Ohio, it won't be given the chance.
“The funny thing there is AEP has specifically excluded anybody that dare speak against them in Ohio,” Flexon told CBF. “My understanding is we’re not invited to the latest bid party for the assets they’re selling."
Last month, 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. The PPAs would also cover the utility's contractual share of Ohio Valley Electric Corp. generation.
Last January, AEP hired Goldman Sachs to help consider a sale. But now it would appear AEP is being choosy about who it will sell to. RTO Insider reports an analyst estimated the sale would generate between $1.9 billion to $2.3 billion.
“This is an ego thing,” Flexon said. “They’re going to exclude any strategic buyer who would pay a higher price to say, ‘We didn’t invite you.’”
But the case over income guarantees for Ohio generation may not be over. Both AEP and FirstEnergy have submitted to federal regulators the power purchase agreements approved by Ohio regulators, but they will likely face opposition from generators and interventions from a host of other groups wary of the arrangements, including Dynegy.
