American Electric Power and Liberty Utilities Co. on Monday terminated their $2.65 billion deal calling for AEP to sell its Kentucky operations to Liberty.
“We are working diligently to reimagine our strategy with the goal of not just supporting Kentucky, but being an essential part of its economic and energy future,” Julie Sloat, AEP president and CEO, said in a statement.
AEP will focus its efforts in Kentucky on economic development, reliability and controlling customer costs, she said.
Uncertain economic conditions were a factor in the deal’s demise, according to Arun Banskota, president and CEO of Algonquin Power & Utilities Corp., of which Liberty Utilities is an indirect subsidiary.
“After careful consideration, and in light of the evolving macro environment, our board of directors and management team have determined that continuing with the transaction is not in the best interest of the company,” he said in a statement.
The deal to sell Kentucky Power and AEP Kentucky TransCo to Liberty was announced in October 2021. The Federal Energy Regulatory Commission rejected it last December, saying the companies failed to show it wouldn’t lead to increased transmission rates.
The Kentucky Public Service Commission and others late last month urged FERC to reject a revised application. They said AEP and Liberty again failed to show how the sale would affect transmission rates.
AEP and Liberty faced a contractual April 26 deadline to complete the deal. The companies had asked FERC to approve their revised application by March 31.
AEP is developing a “refreshed” long-term strategy for its Kentucky operations, according to the Columbus, Ohio-based utility company. In the short-term, AEP plans to file a base rate case in Kentucky in June with new rates expected to take effect in January.
The company also plans to “right-size” its rate base, including by securitizing retired coal-fired power plants to reduce rates for customers.
AEP on Monday named Cindy Wiseman as Kentucky Power president and CEO. She had been serving as interim president and chief operating officer.
AEP’s equity financing plan remains unchanged, the company said. Proceeds from AEP’s unregulated wind and solar sale that is expected to generate $1.2 billion, will replace previously forecasted proceeds from the Kentucky sale process, it said.