American Electric Power sells contracts to SSE

American Electric Power sold two UK coal-fired power plants and related commodities contracts to Scottish and Southern Energy for $456m (£251m) on Friday. With more than three million electricity customers and one-and-a-half million gas customers in England, Scotland and Wales, Scottish and Southern is one of the UK’s largest energy suppliers.

The transaction comprised Fiddler’s Ferry – a four-unit, 2,000MW station on the River Mersey; Ferrybridge – a four unit, 2,000MW station on the River Aire; and commodity contracts, which include electricity sales contracts, coal purchase and sales contracts and freight contracts.

A sum of $248m (£137m) was agreed for the generating units and related stocks and $208m (£114m) for the commodities contracts. Proceeds from the sale will be used to reduce debt and improve AEP’s balance sheet.

AEP chairman, president and chief executive officer Michael Morris said: “We’re pleased at the value we received for these plants in a very difficult UK energy marketplace. This sale removes operations that have been a drain on earnings and resources.

“We still have some smaller assets on the market, including natural gas storage in Louisiana and a 50% interest in a power plant in Mexico. But it’s clear that our strategic focus is on what we do best: operating our transmission and distribution grid and the nation’s largest generation fleet to provide reliable, affordable electricity to our customers and to others in the wholesale market.”

AEP is the United States’ largest electricity generator and owns more than 36,000MW of the nation’s generating capacity. The company is also one of the largest electric utilities in the United States, with over five million customers linked to AEP’s 11-state electricity transmission and distribution grid.