ASHLAND — American Electric Power is selling its Ashland-based Kentucky Power Co. and other Kentucky operations to Liberty, the regulated utility business of parent company Algonquin Power & Utilities Corp., for $2.846 billion.
AEP announced the sale after stock markets closed Tuesday afternoon.
The sale directly affects 360 employees, including 315 who work for Kentucky Power and 45 from AEP whose roles directly support Kentucky operations. Those employees will transfer to Liberty when the sale is completed. The sale is expected to close in the second quarter of 2022, pending regulatory approvals.
AEP announced in April that it 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 owns 1,075 megawatts of generation including Big Sandy, a 295-megawatt natural gas-fueled plant located near Louisa, Kentucky.
Kentucky Power also operates the 1,560-megawatt coal-fueled Mitchell Plant near 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, according to AEP.
“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.”
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. Algonquin is based in Ontario, 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 Kentucky Transco is a regulated transmission business with assets exclusively in Kentucky. AEP expects to net approximately $1.45 billion in cash after taxes and transaction fees.
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.