American Electric Power recently has made two moves in accordance with their future and the businesses that fall underneath it.
The first will be retaining its retail energy business, AEP Energy. The company’s 2024 operating earnings of guidance will be raised from $5.53 to $5.73 per share, long-term growth rate of 6% to 7% and FFO/Debt target of 14% to 15%.
Due to this, there is no change to AEP’s equity financing plan.
"We determined that AEP Energy fits into our current portfolio and strategy by providing value to our customers and investors," said Ben Fowke, AEP interim chief executive officer and president. "As load continues to grow in our deregulated states, AEP Energy keeps us closely connected to opportunities to support this demand and provide tailored energy solutions to customers."
The second decision being that they entered into an agreement to sell its distributed resources business, AEP OnSite Partners (“OnSite”) to funds advised by Basalt Infrastructure Partners LLC.
AEP expects to profit $315 million in cash after taxes and transaction fees with that subject to customary closing adjustments. Pending regulatory approvals, this sale is expected to close in the third quarter of 2024. The financial advisor and legal counsel for AEP for the sale process were RBC Capital Markets and Morgan Lewis & Bockius LLP, respectively.
With federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the sale is subject to regulatory approval from the Federal Energy Regulatory Commission.
The selling of AEP OnSite Partners directly impacts 45 employees, from the business’ employees to other AEP employees who support the business, however Basalt plans to keep all 45 employes.
"I'm grateful to the AEP OnSite Partners team and thank them for their contributions to AEP over the past decade. This sale will allow the distributed resources business and its valued employees to continue to succeed," said Ben Fowke, AEP interim chief executive officer and president. "AEP is focused on a strong balance sheet as we direct capital to our regulated operations to provide reliable, affordable energy to our customers. The proceeds from the sale will be used to support our financing plan as we make these investments to benefit customers and deliver value to all of our stakeholders."
