Edison Mission Energy yesterday sold two UK coal-fired power stations to its fellow US group American Electric Power for £650m, half the price it paid for the assets just two years ago.
The drop in the price of electricity generation plants has followed a steep decline in the price of wholesale electricity, which has fallen by some 30 per cent during the past few years. The harsh regulatory regime, the new electricity trading arrangements and over-supply are blamed for reshaping the electricity generation market.
Edison International, the parent company, has also been caught in the California power crisis, where its Southern California Edison subsidiary was saved from bankruptcy last week. The subsidiary is faced with a $3.5bn (£2.4bn) shortfall.
Al Fohrer, EME's president, said: "This [UK] investment has been a major disappointment. While the plants have run well, given the market conditions, the operating losses and cash requirements likely to result in the foreseeable future from the existing debt structure were too large to maintain our ownership structure."
In 1999 EME paid Powergen £1.3bn for the plants, Fiddler's Ferry in Cheshire and Ferrybridge in Yorkshire, which provide 2,000 megawatts of power each. EME appointed Goldman Sachs to sell the stations earlier this year.
Dynergy, another US energy company, was thought to have been interested in acquiring them. ScottishPower, Scottish & Southern Energy and Electricité de France, which owns London Electricity, have also been linked with the sale of these assets. The jobs of the 400 workers at the plants are safe. E Linn Draper Jr, chairman of AEP, said: "This acquisition allows us to replicate our successful US wholesale model in the UK."
Edison will retain some UK generation assets, which include a hydroelectric plant in Wales, a gas-fired station in Cumbria and an offshore windfarm.