AES Corp., the Arlington-based power producer with operations in 29 countries, is selling four coal-fired plants in the state of New York, CEO Paul Hanrahan said. The plants, which sell power under short-term contracts and on the spot market, would be better owned by a closely held company, Hanrahan said Monday on an earnings call for investors. The company has multiple-year contracts for most of the output from its U.S. plants, according to a filing.
AES wrote down the value of AES Eastern Energy, owner of the New York plants, by $827 million, citing falling power prices, prospects for lower prices and a credit-rating cut for the unit by Standard & Poor’s. The four can produce a total of 1,169 megawatts, according to AES. That’s enough for about 935,000 average American homes, according to Energy Department statistics.
“I wouldn’t be surprised for them to get $500 million to $600 million for those plants, based on comparable sales,” Jeff Bodington, CEO of Bodington & Co., a power-plant sales consultant based in San Francisco. Bodington has consulted with AES on plant deals, although he said he’s not familiar with the four New York plants.
Standard & Poor’s on Jan. 26 cut its rating on AES Eastern Energy to B-, six levels below investment grade and five levels lower than the S&P rating on July 8.
Profit from the New York plants narrowed after AES, wary of potential cost of carbon-dioxide allowances that allow the plants to operate, cut back on forward sales, S&P said in its report.
