Blackstone, ArcLight to Buy Midwest Power Plants From AEP -- Update
September 13 2016 - 6:07PM
Dow Jones News
By Matt Jarzemsky and Cassandra Sweet
Blackstone Group LP and ArcLight Capital Partners LLC are
nearing a deal to buy four Midwest power plants from American
Electric Power Co. for about $2.1 billion, according to people
familiar with the matter.
The private-equity firms plan to acquire the coal-fired Gavin
Power Plant in Cheshire, Ohio, and three natural-gas plants in
Indiana and Ohio, the people said. The deal could be announced as
soon as Tuesday, they added.
The deal comes amid a slump in wholesale electricity rates,
sparked by a slide in natural-gas prices and tepid demand for
electricity. That has put pressure on independent power generators
like the ones AEP is selling. Unlike plants that generate power for
customers of regulated utilities, independent plants sell to other
utilities, at market rates.
Wholesale power prices have averaged about $34.10 a
megawatt-hour so far this year in 13 mid-Atlantic and Midwestern
states, 21% below last year's average price, according to a Wall
Street Journal analysis of data from the Energy Department.
AEP is selling the plants as part of a move away from wholesale
power markets and toward its regulated utilities.
The Columbus, Ohio, company owns or operates more than 60 power
plants across the U.S. About 60% of them are fueled with coal and
23% with natural gas, while 5% are run with nuclear reactors and
the rest with wind and hydro power, according to the company.
The private-equity firms' multiyear investment horizon gives
them an opportunity to bet on a rebound in the wholesale power
market. New York-based Blackstone, the largest private-equity
manager by assets, raised one of the world's largest energy funds
in early 2014 and has ramped up spending on oil-and-gas deals in
recent months.
Boston-based ArcLight, an energy-focused private-equity firm
founded in 2001, has invested about $16.8 billion since then,
according to its website.
Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com and
Cassandra Sweet at cassandra.sweet@wsj.com
(END) Dow Jones Newswires
September 13, 2016 17:52 ET (21:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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