AEP Completes Sale of AEP OnSite Partners

Rhea-AI Summary

American Electric Power (Nasdaq: AEP) has successfully completed the sale of its distributed resources business, OnSite Partners, to funds advised by Basalt Infrastructure Partners The transaction, which was initially announced in May 2024, has resulted in AEP netting approximately $318 million in cash after accounting for taxes, transaction fees, and other customary adjustments.

The sale received all necessary regulatory approvals, including clearance from the Federal Energy Regulatory Commission and federal clearance under the Hart-Scott-Rodino Antitrust Improvement Act of 1976. This divestment marks a significant move for AEP in streamlining its business operations.

Positive

• AEP netted approximately $318 million in cash from the sale
• Successfully completed the divestment of OnSite Partners business
• Received all necessary regulatory approvals for the transaction

Negative

• None.

Insights

Financial Analyst

AEP's sale of OnSite Partners for $318 million net cash is a strategic move that strengthens the company's balance sheet and aligns with its focus on core regulated utility operations. This divestiture will likely improve AEP's financial flexibility and potentially reduce debt or fund capital investments in its regulated business.

The transaction's completion, following regulatory approvals, removes uncertainty and allows investors to assess the impact on AEP's financials. While the sale may slightly reduce AEP's revenue diversity, it's unlikely to significantly affect overall earnings given the relatively small size of OnSite Partners compared to AEP's $54 billion market cap.

Investors should monitor how AEP allocates the proceeds, as this could signal management's priorities for capital deployment and future growth strategies. The sale also reflects a broader industry trend of utilities streamlining operations to focus on regulated assets, which typically offer more stable returns.

Energy Sector Analyst

The divestiture of AEP OnSite Partners marks a strategic shift away from distributed energy resources (DER) for AEP, aligning with a trend among large utilities to refocus on their core regulated businesses. This move could be seen as a response to the challenges in scaling and profiting from DER operations in a rapidly evolving energy landscape.

Basalt Infrastructure Partners' acquisition of OnSite Partners suggests continued investor interest in the DER sector, despite challenges faced by utility-owned models. This transaction may indicate a belief that specialized infrastructure investors can better manage and grow these assets outside the constraints of a large utility structure.

For the broader energy sector, this deal highlights the ongoing recalibration of utility business models in response to the energy transition. It underscores the complexities of integrating new energy technologies within traditional utility frameworks and may prompt other utilities to reassess their DER strategies.

COLUMBUS, Ohio, Sept. 30, 2024 /PRNewswire/ -- American Electric Power (Nasdaq: AEP) has completed the sale of its distributed resources business, OnSite Partners, to funds advised by Basalt Infrastructure Partners LLC. AEP nets approximately $318 million in cash after taxes, transaction fees and other customary adjustments.

The sales agreement was announced in May 2024. The sale received necessary regulatory approval from the Federal Energy Regulatory Commission and federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

About AEP

At American Electric Power, based in Columbus, Ohio, we understand that our customers and communities depend on safe, reliable and affordable power. Our nearly 16,000 employees operate and maintain more than 40,000 miles of transmission lines, the nation's largest electric transmission system, and more than 225,000 miles of distribution lines to deliver power to 5.6 million customers in 11 states. AEP also is one of the nation's largest electricity producers with nearly 29,000 megawatts of diverse generating capacity, including approximately 6,000 megawatts of renewable energy. AEP is investing $43 billion over the next five years to make the electric grid cleaner and more reliable. We are on track to reach an 80% reduction in carbon dioxide emissions from 2005 levels by 2030 and have a goal to achieve net zero by 2045. AEP is recognized consistently for its focus on sustainability, community engagement and inclusion. AEP's family of companies includes utilities 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, east Texas and the Texas Panhandle). AEP also owns AEP Energy, which provides innovative competitive energy solutions nationwide. For more information, visit aep.com

 

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SOURCE American Electric Power

FAQ

What business did AEP sell in September 2024?

AEP sold its distributed resources business, OnSite Partners, to funds advised by Basalt Infrastructure Partners in September 2024.

How much did AEP net from the sale of OnSite Partners?

AEP netted approximately $318 million in cash from the sale of OnSite Partners, after taxes, transaction fees, and other customary adjustments.

When was the sale of AEP OnSite Partners initially announced?

The sale of AEP OnSite Partners was initially announced in May 2024.

What regulatory approvals did AEP receive for the OnSite Partners sale?

AEP received regulatory approval from the Federal Energy Regulatory Commission and federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976 for the OnSite Partners sale.