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Aquisitions and Dispositions
9 Months Ended
Sep. 30, 2012
Acquisitions and Dispositions

4. ACQUISITION AND IMPAIRMENTS

 

ACQUISITION

 

2012

 

BlueStar Energy (Generation and Marketing segment)

 

In March 2012, we completed the acquisition of BlueStar Energy Holdings, Inc. (BlueStar) and its independent retail electric supplier BlueStar Energy Solutions for $70 million, subject to working capital adjustments. This transaction also included goodwill of $14 million, intangible assets associated with sales contracts and customer accounts of $59 million and liabilities associated with supply contracts of $25 million. These amounts are subject to revision once further evaluations are complete. BlueStar has been in operation since 2002. Beginning in June 2012, BlueStar began doing business as AEP Energy. AEP Energy provides electric supply for retail customers in Ohio, Illinois and other deregulated electricity markets and also provides energy solutions throughout the United States, including demand response and energy efficiency services.

 

IMPAIRMENTS

 

2012

 

Turk Plant (Utility Operations segment)

 

In 2012, SWEPCo recorded a pretax write-off of $13 million in Asset Impairments and Other Related Charges on the condensed statements of income related to unrecoverable construction costs subject to the Texas capital costs cap portion of the Turk Plant.

 

2011

 

Muskingum River Plant Unit 5 FGD Project (MR5) (Utility Operations segment)

 

In September 2011, subsequent to the stipulation agreement filed with the PUCO, management determined that OPCo was not likely to complete the previously suspended MR5 project and that the project's preliminary engineering costs were no longer probable of being recovered. As a result, in the third quarter of 2011, OPCo recorded a pretax write-off of $42 million in Asset Impairments and Other Related Charges on the condensed statements of income.

 

Sporn Plant Unit 5 (Utility Operations segment)

 

In the third quarter of 2011, management decided to no longer offer the output of Sporn Unit 5 into the PJM market. Sporn Unit 5 is not expected to operate in the future, resulting in the removal of Sporn Unit 5 from the Interconnection Agreement. As a result, in the third quarter of 2011, OPCo recorded a pretax write-off of $48 million in Asset Impairments and Other Related Charges on the condensed statements of income.

Appalachian Power Co [Member]
 
Acquisitions and Dispositions

4. ACQUISITION AND IMPAIRMENTS

 

ACQUISITION

 

2011

 

Dresden Plant – Affecting APCo

 

In August 2011, APCo purchased the partially completed Dresden Plant from AEGCo, at cost, for $302 million. The Dresden Plant was completed and placed in service in January 2012. The Dresden Plant is located near Dresden, Ohio and is a natural gas, combined cycle power plant with a generating capacity of 580 MW.

 

Ohio Power Co [Member]
 
Acquisitions and Dispositions

4. ACQUISITION AND IMPAIRMENTS

 

 

IMPAIRMENTS

 

 

2011

 

Muskingum River Plant Unit 5 FGD Project (MR5) – Affecting OPCo

 

In September 2011, subsequent to the stipulation agreement filed with the PUCO, management determined that OPCo was not likely to complete the previously suspended MR5 project and that the project's preliminary engineering costs were no longer probable of being recovered. As a result, in the third quarter of 2011, OPCo recorded a pretax write-off of $42 million in Asset Impairments and Other Related Charges on the condensed statements of income.

 

Sporn Plant Unit 5 – Affecting OPCo

 

In the third quarter of 2011, management decided to no longer offer the output of Sporn Unit 5 into the PJM market. Sporn Unit 5 is not expected to operate in the future, resulting in the removal of Sporn Unit 5 from the Interconnection Agreement. As a result, in the third quarter of 2011, OPCo recorded a pretax write-off of $48 million in Asset Impairments and Other Related Charges on the condensed statements of income.

 

Southwestern Electric Power Co [Member]
 
Acquisitions and Dispositions

IMPAIRMENTS

 

2012

 

Turk Plant (Utility Operations segment) – Affecting SWEPCo

 

In 2012, SWEPCo recorded a pretax write-off of $13 million in Asset Impairments and Other Related Charges on the condensed statements of income related to unrecoverable construction costs subject to the Texas capital costs cap portion of the Turk Plant.