September 14, 2016 / 12:31 PM / 3 years ago

American Electric to sell four power plants to newly formed JV

(Reuters) - Power plant operator American Electric Power said it would sell four of its power plants with a total capacity of about 5,200 MW for about $2.17 billion as it focuses on its regulated power business.

Falling electricity demand due to increased energy efficiency is pushing many utilities to cut their exposure to volatile power prices in unregulated markets.

The trend has led to several deals in the sector as utilities look to cut costs and diversify their portfolios.

American Electric said a joint venture of Blackstone Group LP and ArcLight Capital Partners LLC would buy the plants, three of which are in Ohio and one in Indiana.

Arclight, which invests mainly in energy infrastructure assets, has spent about $16.8 billion on 99 deals since its inception in 2001.

American Electric’s long-term strategy has been to become a fully regulated energy company, Chief Executive Nicholas Akins said in a statement on Wednesday.

The utility also said it was evaluating options for the rest of its operations in Ohio.

American Electric said it expects to receive about $1.2 billion in cash and record a gain of about $140 million from the deal.

Reporting By Sudarshan Varadhan and Arathy S Nair in Bengaluru; Editing by Saumyadeb Chakrabarty

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