American Electric Power (AEP) entered into an agreement to sell its Kentucky operations, which include Kentucky Power and AEP Kentucky Transco, to Liberty, the regulated utility business of parent company Algonquin Power & Utilities Corp. for $2.846 billion enterprise value. The sale is expected to close in the second quarter of 2022, pending regulatory approvals.
In April, AEP announced that the company was conducting a strategic review of its Kentucky operations, including a potential sale, and held a competitive process as part of the review.
“Liberty’s commitment to safety and operational excellence will allow Kentucky Power employees to continue their critical work producing and delivering reliable power for customers and communities,” AEP Chairman, President and CEO Nicholas K. Akins said. “At the same time, the sale will strengthen AEP’s ability to invest in projects that will support a resilient, cleaner energy system.”
Kentucky Power serves approximately 165,000 electricity customers in 20 eastern Kentucky counties. AEP Kentucky Transco is a regulated transmission business with assets exclusively in Kentucky.
The sale directly impacts 360 employees, including 315 who work for Kentucky Power and 45 from AEP whose roles directly support Kentucky operations. These employees will transfer to Liberty when the sale is completed.
“We’ve been proud to serve Kentucky Power customers for more than a century, and the commitment of our employees will remain strong throughout this transition and beyond,” said Brett Mattison, Kentucky Power president and chief operating officer. “We are working closely with Liberty to ensure a seamless transition for our customers and communities. Through their focus on safety, reliability, customer service and sustainability, Liberty is well-positioned to serve Kentucky customers. The same skilled and experienced employees who work to keep the lights on for our customers will continue to do so as part of Liberty.”
Liberty provides regulated electricity, natural gas, water and wastewater services to more than 1 million customer connections, mainly in 13 U.S. states and Canada.
Upon close of the sale, Liberty will acquire AEP’s Kentucky operations by purchasing all the stock of Kentucky Power and AEP Kentucky Transco. AEP expects to net approximately $1.45 billion in cash after taxes and transaction fees. The proceeds from the sale will be used to eliminate AEP’s forecasted equity needs in 2022 as the company invests in regulated renewables, transmission and other projects. Liberty will acquire all assets and assume liabilities of the Kentucky operations except for pension and other post-retirement benefit obligations for the period the impacted employees were employed by AEP. AEP expects to provide customary transition services to Liberty after the closing.