A group of private equity firms have agreed to acquire the AES Corp. for $33.4 billion. That includes its utility companies AES Ohio and AES Indiana.
This comes at a time when data center proposals are cropping up across the Miami Valley, including AES Ohio’s utility territory, increasing the need for power reliability to meet intensifying energy demands.
BlackRock-owned Global Infrastructure Partners and Swedish firm EQT will make up the largest shareholders. Together with co-underwriters California Public Employees’ Retirement System and Qatar Investment Authority, AES refers to them as “the consortium.”
“The Consortium has deep experience investing in energy infrastructure businesses and shares AES’ commitment to safety, affordability and customer service,” AES Corporation said in its announcement of the deal last week.
In a statement, AES said it “will have improved access to capital to invest in critical energy infrastructure assets, deliver reliable energy solutions for its customers and create long-term value for all stakeholders, including its workforce and local communities” with the support of these firms.
WYSO couldn’t reach AES Corp. for comment.
The acquisition will change AES from a publicly traded company to a privately held company. AES Ohio serves 527,000 customers in Western Ohio.
Maureen Willis, director of consumer rights agency Ohio Consumers’ Counsel, said it’s not common for large utility companies in Ohio to be privately held. Ohio Consumers' Council is the state agency that acts as the voice for Ohio residential utility consumers.
“From our perspective, private ownership of a utility can mean less public transparency and different financial incentives. So that's why we emphasize that this strong regulatory oversight is important,” Willis said.
The Ohio Consumers’ Counsel has been reviewing the deal once it became public to identify what consumer protections would be needed if the deal moves forward.
“In Ohio, we're seeing a lot of significant growth in electricity demand through the data centers, and meeting that demand can mean major investments in transmission and distribution,” Willis said.
“...Private investors usually seek higher returns and that can pressure the utility to increase its capital expenditures. So while we know that some capital expenditures are necessary for reliability and growth, we want to look at the investments to make sure that they're carefully reviewed by the regulators.”
Transparency, reporting, and financial safeguards like ring-fencing are some of the measures the office is looking for to help consumers not be exposed to investor risks.
“The bottom line is that this is a financial transaction between investors, but Ohio consumers shouldn't have to pay higher electric bills because of that transaction. So the role of regulators now is to make sure that the cost of the deal stays with investors and not Ohio families,” Willis said.
This sale will not cause an immediate rate increase. AES Ohio and AES Indiana will continue to be locally owned and operated, AES said in a statement.
The sale is subject to the approval of AES stockholders, federal, state and foreign regulatory approvals and the satisfaction of other closing conditions.
AES expects the transaction to be finalized later this year or early next year.
