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4/9/2015 Printer Friendly: Exclusive: American Electric Power taps Goldman for power plant sale - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?) <br />Regulated power plants are owned by regulated utilities with rates negotiated between the utility and state utility <br />commission and set at levels to fund plant maintenance and operating costs and provide a retum. <br />Merchant power plants, on the other hand, are unregulated and sell power into the competitive market, and a return <br />is not guaranteed. <br />A sale or spin of this business makes sense now as PJM has made a filing with the Federal Energy Regulatory <br />Commission to propose some rule changes. If FERC approves the changes, it could have significant ramifications <br />for the May 2015 capacity auction, which could, in tum, improve the pricing of AEP's assets. <br />"Everyone in the industry expected AEP to sell or spin the merchant business because of the volatility associated <br />with it so this is not a surprise," said a second industry source, noting that a couple of its peers recently completed <br />similar deals. <br />For example, in June PPL Corp. (PPL) and Riverstone Holdings LLC announced an agreement to combine their <br />unregulated power generation businesses into a new, standalone, publicly traded company called Talen Energy <br />Corp. <br />Duke Energy Corp. (DUK), the Charlotte, N.C.-based electric utility, opted for an outright sale, announcing on Aug. <br />22, that it had sold its Midwest power generation assets to Dynegy Inc. (DYN), the Houston-based independent <br />power producer, in a transaction valued at $2.8 billion. Duke Energy had announced back in Feb. 17 last year that it <br />had retained Morgan Stanley and Citigroup Inc. to shop the assets. <br />However, a third industry source said it is far from clear whether a transaction will ultimately occur as pricing could <br />be an issue. AES Corp. (AES), based in Arlington, Va., tried to exit its merchant business, but then announced on <br />July 14 that it was pulling the sale of Dayton, Ohio-based subsidiary DPL Inc.'s (DPL) generation and retail <br />businesses. That business had been expected to garner $1.5 billion to $2 billion in a sale AEP is one of the largest <br />electric utilities in the U.S., serving more than five million customers in 11 states. It has nearly 38,000 MW of <br />generating capacity and 40,000 miles of electric transmission. <br />http://www.thedeal.com/content/2015/0l/exclusive_american_electric.power_tapsgoldman_for power prant_sale/print/ <br />6,• 1'4 212 <br />