COLUMBUS, Ohio, Oct. 26, 2021 /PRNewswire/ -- American Electric
Power (Nasdaq: AEP) has entered into an agreement to sell its
Kentucky operations, which include
Kentucky Power and AEP Kentucky Transco, to Liberty, the regulated utility business of
parent company Algonquin Power & Utilities Corp. (NYSE: AQN),
for $2.846 billion enterprise value.
The sale is expected to close in the second quarter of 2022,
pending regulatory approvals.
AEP announced in April 2021 that
the company was conducting a strategic review of its Kentucky operations, including a potential
sale, and held a competitive process as part of the review.
"Kentucky Power and its employees are an important part of the
communities in eastern Kentucky,
and I am grateful for their valuable contributions to AEP," said
Nicholas K. Akins, AEP chairman,
president and chief executive officer. "Liberty's commitment to safety and operational
excellence will allow Kentucky Power employees to continue their
critical work producing and delivering reliable power for customers
and communities. At the same time, the sale will strengthen AEP's
ability to invest in projects that will support a resilient,
cleaner energy system."
Founded in 1919 and headquartered in Ashland, Kentucky Power serves approximately
165,000 electricity customers in 20 eastern Kentucky counties. AEP Kentucky Transco is a
regulated transmission business with assets exclusively in
Kentucky.
The sale directly impacts 360 employees, including 315 who work
for Kentucky Power and 45 from AEP whose roles directly support
Kentucky operations. These
employees will transfer to Liberty
when the sale is completed.
"We've been proud to serve Kentucky Power customers for more
than a century, and the commitment of our employees will remain
strong throughout this transition and beyond," said Brett Mattison, Kentucky Power president and
chief operating officer. "We are working closely with Liberty to ensure a seamless transition for
our customers and communities. Through their focus on safety,
reliability, customer service and sustainability, Liberty is well-positioned to serve
Kentucky customers. The same
skilled and experienced employees who work to keep the lights on
for our customers will continue to do so as part of Liberty."
Liberty provides regulated
electricity, natural gas, water and wastewater services to more
than 1 million customer connections, mainly in 13 U.S. states and
Canada.
Upon close of the sale, Liberty
will acquire AEP's Kentucky
operations by purchasing all the stock of Kentucky Power and AEP
Kentucky Transco. AEP expects to net approximately $1.45 billion in cash after taxes and transaction
fees. The proceeds from the sale will be used to eliminate AEP's
forecasted equity needs in 2022 as the company invests in regulated
renewables, transmission and other projects. Liberty will acquire all assets and assume
liabilities of the Kentucky
operations except for pension and other postretirement benefit
obligations for the period the impacted employees were employed by
AEP. AEP expects to provide customary transition services to
Liberty after the closing.
AEP expects the sale to have an immaterial, one-time impact to
after-tax book earnings. The transaction will be $0.01-$0.02
accretive to 2022 ongoing earnings.
The sale is subject to regulatory approvals from the Kentucky
Public Service Commission and the Federal Energy Regulatory
Commission. The transaction is also subject to federal clearance
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and clearance from the Committee on Foreign Investment in
the United States.
Kentucky Power owns 1,075 megawatts of generation including
Big Sandy, a 295-megawatt natural
gas-fueled plant located in Louisa,
Kentucky. Kentucky Power also operates the 1,560-megawatt
coal-fueled Mitchell Plant located
in Moundsville, West Virginia, and
owns 50% of the plant. Separate from the transaction approval
process, Kentucky Power and AEP's Wheeling Power subsidiary plan to
file for approval of new ownership and operating agreements for
Mitchell Plant consistent with
recent orders issued by the Kentucky and West Virginia Public Service
Commissions. These filings will request that Mitchell Plant be operated by Wheeling Power,
which owns the remaining 50% of the plant. The 200 employees who
operate Mitchell Plant will be
transferred from Kentucky Power to Wheeling Power upon approval.
The filings also will address environmental compliance cost
allocations and plant ownership arrangements for the period after
Dec. 31, 2028. Liberty will own
and obtain power from Kentucky Power's 50% portion of Mitchell Plant through 2028.
Barclays and Goldman Sachs and Co. served as AEP's financial
advisors for the strategic review of the Kentucky operations. Morgan Lewis & Bockius LLP served as legal
counsel to AEP.
American Electric Power, based in Columbus, Ohio, is powering a cleaner,
brighter energy future for its customers and communities. AEP's
approximately 16,800 employees operate and maintain the nation's
largest electricity transmission system and more than 223,000 miles
of distribution lines to safely deliver reliable and affordable
power to 5.5 million regulated customers in 11 states. AEP also is
one of the nation's largest electricity producers with
approximately 31,000 megawatts of diverse generating capacity,
including more than 5,900 megawatts of renewable energy. The
company's plans include growing its renewable generation portfolio
to approximately 50% of total capacity by 2030. AEP is on track to
achieve an 80% reduction in carbon dioxide emissions from 2000
levels by 2030 and has committed to achieve net zero by 2050. AEP
is recognized consistently for its focus on sustainability,
community engagement, and diversity, equity and inclusion. AEP's
family of companies includes utilities AEP Ohio, AEP Texas,
Appalachian Power (in Virginia and
West Virginia), AEP Appalachian
Power (in Tennessee), Indiana
Michigan Power, Kentucky Power, Public Service Company of
Oklahoma, and Southwestern
Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas
Panhandle). AEP also owns AEP Energy, which provides
innovative competitive energy solutions nationwide. For more
information, visit aep.com.
- - -
This report made by American Electric Power and its Registrant
Subsidiaries contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934. Although AEP
and each of its Registrant Subsidiaries believe that their
expectations are based on reasonable assumptions, any such
statements may be influenced by factors that could cause actual
outcomes and results to be materially different from those
projected. Among the factors that could cause actual results to
differ materially from those in the forward-looking statements are:
changes in economic conditions, electric market demand and
demographic patterns in AEP service territories; the impact of
pandemics, including COVID-19, and any associated disruption of
AEP's business operations due to impacts on economic or market
conditions, costs of compliance with vaccination or testing
mandates to AEP, electricity usage, employees including employee
unwillingness to comply with potential vaccination mandates,
customers, service providers, vendors and suppliers; inflationary
or deflationary interest rate trends; volatility in the financial
markets, particularly developments affecting the availability or
cost of capital to finance new capital projects and refinance
existing debt; the availability and cost of funds to finance
working capital and capital needs, particularly during periods when
the time lag between incurring costs and recovery is long and the
costs are material; decreased demand for electricity; weather
conditions, including storms and drought conditions, and AEP's
ability to recover significant storm restoration costs; the cost of
fuel and its transportation, the creditworthiness and performance
of fuel suppliers and transporters and the cost of storing and
disposing of used fuel, including coal ash and spent nuclear fuel;
the availability of fuel and necessary generation capacity and the
performance of AEP's generation plants; AEP's ability to recover
fuel and other energy costs through regulated or competitive
electric rates; AEP's ability to build or acquire renewable
generation, transmission lines and facilities (including the
ability to obtain any necessary regulatory approvals and permits)
when needed at acceptable prices and terms, including favorable tax
treatment, and to recover those costs; new legislation, litigation
and government regulation, including changes to tax laws and
regulations, oversight of nuclear generation, energy commodity
trading and new or heightened requirements for reduced emissions of
sulfur, nitrogen, mercury, carbon, soot or particulate matter and
other substances that could impact the continued operation, cost
recovery, and/or profitability of AEP's generation plants and
related assets; evolving public perception of the risks associated
with fuels used before, during and after the generation of
electricity, including coal ash and nuclear fuel; timing and
resolution of pending and future rate cases, negotiations and other
regulatory decisions, including rate or other recovery of new
investments in generation, distribution and transmission service
and environmental compliance; resolution of litigation; AEP's
ability to constrain operation and maintenance costs; prices and
demand for power generated and sold at wholesale; changes in
technology, particularly with respect to energy storage and new,
developing, alternative or distributed sources of generation; AEP's
ability to recover through rates any remaining unrecovered
investment in generation units that may be retired before the end
of their previously projected useful lives; volatility and changes
in markets for coal and other energy-related commodities,
particularly changes in the price of natural gas; changes in
utility regulation and the allocation of costs within regional
transmission organizations, including ERCOT, PJM and SPP; changes
in the creditworthiness of the counterparties with whom AEP has
contractual arrangements, including participants in the energy
trading market; actions of rating agencies, including changes in
the ratings of AEP debt; the impact of volatility in the capital
markets on the value of the investments held by AEP's pension,
OPEB, captive insurance entity and nuclear decommissioning trust
and the impact of such volatility on future funding requirements;
accounting standards periodically issued by accounting
standard-setting bodies; other risks and unforeseen events,
including wars, the effects of terrorism (including increased
security costs), embargoes, naturally occurring and human-caused
fires, cyber security threats and other catastrophic events; and
the ability to attract and retain the requisite work force and key
personnel.
WEBSITE DISCLOSURE
AEP may use its website as a distribution channel for material
company information. Financial and other important information
regarding AEP is routinely posted on and accessible through AEP's
website at https://www.aep.com/investors/. In addition, you may
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when you enroll your email address by visiting the "Email Alerts"
section at https://www.aep.com/investors/.
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SOURCE American Electric Power