Blackstone & ArcLight to buy AEP power plants for $2.1b

Blackstone & ArcLight to buy AEP power plants for $2.1b

Blackstone Group LP (NYSE:BX) and ArcLight Capital Partners LLC are close to a deal to buy four power plants from American Electric Power Co. (NYSE:AEP) for US$2.1 billion.

According to the Wall Street Journal, the private-equity companies plan to acquire the coal-fired Gavin Power Plant in Cheshire, Ohio and three natural gas plants in Indiana and Ohio. The deal could be reported as soon as Tuesday.

Wholesale power prices have averaged about $34.10 MWh for far in 2016 in 13 mid-Atlantic and Midwestern states, 21% below last year’s average price.

AEP is selling the plants as part of its move away from wholesale power markets and regulated utilities.

According to AEP, it owns or operates more than 60 power plants across the US and around 60% are fuelled with coal, 23% with natural gas and 5% are run with nuclear reactors and the rest are with hydropower or wind.

Blackstone, the largest private-equity manager by assets had raised one of the world’s largest energy funds in 2014 and is ramping up on oil and gas deals over the past few months.

Boston-based ArcLight, an energy-focused private equity company has invested around $16.8 billion since its establishment in 2001.