FirstEnergy Corp. announced that it has entered into a revised agreement for the sale of 1,615 megawatts (MW) of competitive natural gas and hydroelectric generation assets located in Pennsylvania and Virginia to a subsidiary of LS Power Equity Partners III, LP. The assets will be sold for an all-cash price of $825 million under the terms of the revised agreement signed on August 30, 2017.
The sale, which was originally announced in January, is consistent with FirstEnergy’s strategy to transition to a fully regulated company and exit from commodity-exposed generation.
The revised agreement affects six power stations that are owned directly or indirectly by FirstEnergy subsidiaries Allegheny Energy Supply Company, LLC, and Allegheny Generating Company. The 20 employees at these plants will be offered employment with the new owner. The transaction includes:
– Springdale Generating Facility Units 1-5 (638 MW natural gas) in Springdale Township, Pa.
– Chambersburg Generating Facility Units 12-13 (88 MW natural gas) in Guildford Township, Pa.
– Gans Generating Facility Units 8-9 (88 MW natural gas) in Springhill Township, Pa.
– Hunlock Creek (45 MW natural gas) in Hunlock Creek, Pa.
– A portion of Allegheny Generating Company’s ownership interest in the Bath County Hydro station (713 MW pumped-storage hydro) in Warm Springs, Va., which represents Allegheny Energy Supply’s competitive interest.
– Allegheny Energy Supply’s indirect interest in a joint venture that owns the Buchanan Generating Facility (43 MW gas) in Oakwood, Va. This facility was not included in the original purchase agreement.
The transaction involving the Springdale, Chambersburg, Gans and Hunlock power stations is expected to close in the fourth quarter of 2017, while the sale of the interests in Bath and Buchanan is expected to close in the first quarter of 2018. The transactions are subject to various customary and other closing conditions, including receipt of regulatory approvals and third-party consents. It is expected that proceeds from the sales will be invested in FirstEnergy’s unregulated money pool and may be used for the repayment of debt and other corporate purposes.
When the sale is complete, FirstEnergy will own or control generating capacity totaling approximately 15,337 MW from nuclear, coal, gas, hydro, wind and solar facilities across Ohio, Pennsylvania, West Virginia, New Jersey, Virginia and Illinois.
Barclays Capital Inc. served as the exclusive financial advisor to Allegheny Energy Supply and Allegheny Generating Company on the transaction.