AEP taking offers on four power plants, with bids due in Q3 2016

American Electric Power (NYSE: AEP) said in its July 28 quarterly Form 10-Q filing with the SEC that it is taking bids for several power plants, including the big Gavin coal plant in Ohio.

AEP said it is evaluating strategic alternatives for the merchant generation fleet of AEP Generation Resources (AGR), included in the Generation & Marketing segment, as well as AEP Generating Co.’s (AEGCo) Lawrenceburg Plant, all of which operate in the PJM Interconnection market. Potential alternatives may include, but are not limited to, continued ownership of the merchant generation fleet or a sale of the merchant generation fleet.

In March 2016, AEP said it initiated a process to explore the sale of the Darby, Gavin, Lawrenceburg and Waterford plants totaling 5,326 MW. Binding bids are anticipated in the third quarter of 2016. As of June 30, 2016, the net book value of these assets, including related materials and supplies inventory and construction work in progress (CWIP), was $1.7 billion.

Management has not made a decision regarding the potential alternatives for AGR’s remaining 2,732 MW of merchant generation, nor has management set a specific time frame for a decision, the Form 10-Q added. As of June 30, 2016, the net book value of these assets, including related materials and supplies inventory and CWIP, was $2 billion.These alternatives could result in a loss which could reduce future net income and cash flows and impact financial condition, the company added.

The AEP website says that AEP Generation Resources owns more than 7,800 MW of generating capacity, with the four plants up for sale being:

  • Darby Plant – located at Mt. Sterling, Ohio, gas, 510 MW (maximum net);
  • Gavin Plant – located at Cheshire, Ohio, coal, 2,670 MW (maximum net);
  • Lawrenceburg Plant (power purchase agreement) – located at Lawrenceburg, Indiana, gas, 1,186 MW (maximum net); and
  • Waterford Plant – Waterford, Ohio, gas, 840 MW (maximum net).
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.