Kentucky officials ask FERC to nix AEP’s $2.6B sale of Kentucky operations (NASDAQ:AEP)

Kentucky state officials have pushed back against the proposed $2.6bn sale of American Electric Power’s (AEP) Kentucky operations to Algonquin Power’s Liberty Utilities, filing a joint complaint with federal regulators over the lack of information provided concerning the proposed deal. The state regulators and attorney general believe the two companies have failed to show how the sale would impact transmission rates, the same issue which caused the Federal Energy Regulatory Commission (FERC) to reject the initial application in December. American Electric Power has previously noted that a contractual deadline to complete the sale is approaching at the end of April.
 
In one analysis of the proposed sale, Blake Downer writes for Seeking Alpha that AEP’s margin contraction is temporary and that, after restructuring, the company will be stronger. However, other issues, such as the effectiveness of rate mitigation commitments and regulators’ opinions, have caused pushback around this deal. Kentucky was one of nine states that participated in AEP East. The company’s average capital spending plan over the next three years will see half of the funds allocated to its transmission and distribution segments, according to S&P Global Market Intelligence.
 
This follows a report which revealed that wind generation, as well as improvements in energy efficiency and natural gas power, had surpassed coal power as a source of energy in the US, if only temporarily, due to coronavirus lockdown restrictions. It has been suggested that this situation may significantly impact the coal industry in the future, particularly if green energy companies’ momentum in the US continues.
 
On the other hand, research from the University of Chicago suggests that while green energy jobs are more expensive to create than traditional energy jobs, they offer more high-quality positions. The research shows that the average green job comes with a higher salary, a higher union rate, and a greater potential for upward mobility. However, green energy jobs remain fewer in number than traditional energy jobs, although this could change with an increase in adoption.
 
According to a report from Moody’s, profits across public power utilities in the US slipped last year for the second year in a row. Moody’s found that public power utilities’ median operating margin had dropped 30 basis points, to 26.3%, down from a high of 27.6% in 2017. Factors cited include declining sales due to weather patterns, increasing costs, and rising debts.



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