Pulling out of Britain

American Electric Power today pulled out of the UK with the sale of two coal-fired power plants and related commodities contracts to Scottish and Southern Energy for $456 million.

American Electric Power today sold two coal-fired power plants in the United Kingdom and a number of related commodities contracts to Scottish and Southern Energy plc for $456 million.

Included in the transaction are Fiddler’s Ferry, a four-unit, 2,000-megawatt station on the River Mersey; and Ferrybridge, a four-unit, 2,000-megawatt station located on the River Aire.

The deal also includes commodity contracts, such as electricity sales contracts, coal purchase and sales contracts and freight contracts with a number of different market counterparties for varying contract periods.

The total consideration includes $248 million for the generating units and related stocks at the generating units, plus $208 million for the commodities contracts. Proceeds from the sale, which completes AEP’s exit from the UK market, will be used to reduce AEP’s debt.

“This sale removes operations that have been a drain on earnings and resources,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “We still have some smaller assets on the market, including natural gas storage in Louisiana and a 50- percent 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,” added Morris.