FirstEnergy revises agreement to sell 1,600 MW of generation to LS Power
- FirstEnergy Corp. announced yesterday that it has revised the terms of sale for several generating assets to LS Power Equity Parners III LP, lowering the price and raising the capacity first announced in January.
- FirstEnergy now says it has entered into a revised agreement for the sale of 1,615 MW of competitive natural gas and hydroelectric generation assets located in Pennsylvania and Virginia for an all-cash price of $825 million.
- When the deal was announced in January, the transaction included 1,572 MW of generation capacity being sold for $925 million in cash.
No explanation was given for revisions to the deal, but FirstEnergy says its plan remains the same: transition to a fully regulated company and exit from commodity-exposed generation.
As originally announced, the assets included: Bath County Hydro, a 713-MW pumped-storage hydro plant in Warm Springs, Va.; five units totaling 638 MW of the Springdale facility in Springdale Township, Pa.; two units totaling 88 MW at the Chambersburg plant in Guildford Township, Pa.; two units totaling 88 MW at the Gans station in Springhill Township, Pa., and the 45 MW Hunlock Creek plant in Hunlock Creek, Pa.
The revised deal also includes Allegheny Energy Supply's indirect interest in a joint venture that owns the Buchanan Generating Facility in Oakwood, Va., which accounts for another 43 MW of gas generation. This asset was not included in the original purchase agreement.
The transaction involving the Springdale, Chambersburg, Gans and Hunlock power stations is expected to close in the fourth quarter of 2017. The sale of the interests in Bath and Buchanan is expected to close in the first quarter of 2018, the company said.
Last year, FirstEnergy said it could sell more than a dozen power plants as it shifts back toward a focus on its regulated assets. A series of regulatory approvals will be required for the sales to go through. The utility, along with AEP, has attempted to win income supports from regulators for a group of aging coal and nuclear plants, but were forced to change approach after FERC blocked the subsidies.
FirstEnergy said it expects proceeds from the sale will be invested in its unregulated money pool and may be used for the repayment of debt and other corporate purposes. Once the divestiture is complete, FirstEnergy will own or control generating capacity totaling more than 15,000 MW from a range of technologies across Ohio, Pennsylvania, West Virginia, New Jersey, Virginia and Illinois.
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