COLUMBUS, Ohio, Aug. 21, 2007
– American Electric Power (NYSE: AEP) has reached an agreement to sell its 50 percent interest in the Sweeny Cogeneration plant in Texas to ConocoPhillips for approximately $80 million, including working capital items and the assumption of project debt.
The transaction, which is contingent on federal clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, is expected to close in the fourth quarter.
Sweeny Cogeneration is a nominal 450-megawatt cogeneration plant located within ConocoPhillips’ Sweeny refinery complex approximately 80 miles southwest of Houston. The cogeneration plant began commercial operations in January 1998. AEP is the managing partner of the plant, which is owned by Sweeny Cogeneration LP, a 50-50 partnership between AEP and GE. Under terms of the agreement, ConocoPhillips will acquire AEP’s ownership interests in Sweeny Cogeneration LP.
Proceeds from the transaction will be used to reduce short-term debt and for general corporate purposes. As a result of the sale of the 50 percent interest in the Sweeny plant, AEP expects to record a non-recurring pre-tax gain of approximately $44 million in the fourth quarter.
“Sweeny is a profitable asset for us, but it is our only remaining cogeneration investment after we divested assets that didn’t align with our core utility businesses,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “We were able to reach an agreement with ConocoPhillips that provides us with a competitive price.”
American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning more than 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.---
This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sell at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.