Welcome to the Algonquin Power & Utilities Corp. call relating to the announced acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. At this time, I would like to turn the conference over to Amelia Tsang, Vice President, Investor Relations at Algonquin Power & Utilities Corp. Please go ahead.
Thank you everyone for joining us today for our exciting announcement of the pending acquisition of two regulated utilities in the state of Kentucky. Presenting on the call today are Arun Banskota, our President and CEO, Arthur Kacprzak, our Chief Financial Officer, and Jeff Norman, our Chief Development Officer. To accompany our announcement today, we have a supplemental webcast presentation available on our website at algonquinpowerandutilities.com. Before continuing the call, we would like to remind you that our discussion during the call will include certain forward-looking information, including but not limited to our expectations regarding the announced transaction and its expected benefits. At the end of the call, I will read a notice regarding both forward-looking information and non-GAAP financial measures.
Please also refer to our preliminary prospectus filed today as well as our most recent MD&A, each available on SEDAR and EDGAR for additional important information on these items. Unless otherwise noted, dollar amounts referred to on this call are in U.S. dollars. On our call today, Arun will provide an overview of the acquisition, the strategic rationale, and recap our M&A track record. Jeff will follow with an overview of Kentucky Power and the regulatory landscape, future Greening the Fleet opportunities, and the combined business profile. Then Arthur will follow with the financing plan, key milestones, and expected timelines. Arun will conclude with the concluding remarks. Please note there will not be a Q&A session on today's call following our prepared remarks. With that, I'll turn it over to Arun.
Thank you, Amelia, and good day, everyone. We are excited today to be here to discuss the announced acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. Today, Algonquin and American Electric Power Company entered into a stock purchase agreement pursuant to which Algonquin will acquire Kentucky Power Company or Kentucky Power and AEP Kentucky Transmission Company, Inc. or Kentucky Transco. Kentucky Power is a vertically integrated electric utility that services over 200,000 customer connections and is state and FERC-regulated, while Kentucky Transco is an electric transmission utility operating in the PJM integrated market and is FERC-regulated. We are excited to welcome the Kentucky Power employees into the Liberty family.
The total enterprise value of the acquisition is approximately $2.8 billion, comprised of assumed debt of approximately $1.2 billion and a cash purchase price of approximately $1.6 billion. From our perspective, this represents an attractive valuation multiple of 1.3x rate base, which is based on an estimated midyear 2022 rate base of approximately $2.2 billion. We expect to close the transaction in mid-2022, subject to customary closing conditions, including the receipt of various state and federal regulatory and governmental approvals. With respect to the financing plan, and you'll hear more from Arthur later on in the presentation, we have designed a financing plan intended to maintain our investment-grade credit ratings.
A key component of the plan involves proceeds from the common share bought deal offering announced today, which we expect will satisfy Algonquin's common equity funding requirements through mid-2022, being the anticipated timing for closing the acquisition. We believe we have a high degree of flexibility to fund the remainder of the cash purchase price with a variety of funding sources that Arthur will go into greater detail on. We view Kentucky Power as an ideal fit for Algonquin. As outlined in our last Investor Day, we are pursuing disciplined growth in our regulated services group through acquisitions at a compelling value, combined with opportunities to employ our Greening the Fleet capabilities. First, this transaction checks both boxes with the added benefit of increasing our pro forma regulatory business mix to nearly 80% of our portfolio from nearly 70% currently.
Further increasing our service territory and regulatory jurisdiction diversification with a supportive regulatory framework. Once complete, we expect to have approximately $9 billion of rate base, increasing our pro forma electric rate base from 63%- 72% of our total expected pro forma rate base. Second, we have significant Greening the Fleet experience with a strong track record through the transition of our utilities such as Empire and CalPeco. We plan on leveraging this experience at Kentucky Power. In particular, the Kentucky Power business offers significant opportunities for us to transition the existing fossil fuel generation to renewables, which would reinforce our leading role in the transition to a low carbon economy. I am pleased to note that the acquisition is consistent with our 2050 net zero greenhouse gas emissions target that we introduced in early October.
I am excited about this transaction and I further highlight that Algonquin's regulated businesses are well-positioned to contribute to and benefit from the energy transition. Lastly, as I touched on in my earlier remarks, we view this transaction to be of compelling value and expect this transaction to be accretive to adjusted net earnings per share in the first full year of ownership, generate mid-single digit accretion to adjusted net earnings per share thereafter, and support growth in our adjusted net earnings per share over the long term. I would like to spend a few minutes touching on Algonquin's extensive experience in managing the acquisition, approval, and integration of multi-modality utilities such as Kentucky Power and Kentucky Transco. We have a successful track record of identifying securing regulatory approval and closing acquisitions.
As with our previously acquired utilities, we strive to share learnings and best practices among our utilities with the aim of driving consistent improvement in our key performance metrics that provide value for our customers and investors. A number of these acquisitions have been utility acquisitions from large entities, and our stewardship of those utilities as part of our Liberty family has helped us to create value for our shareholders. This will mark our seventh utility acquisition in the past five years, and we look forward to welcoming Kentucky Power and Kentucky Transco into the Algonquin Liberty family. I will now pass it over to Jeff to take us through the Kentucky Power business.
Thank you, Arun, and good day, everyone. I am pleased to provide an overview of Kentucky Power and Kentucky Transco and the many opportunities we are excited about for this business and our commitment to the Kentucky community. Kentucky Power was founded in 1919 and is a fully integrated, regulated electric utility serving over 200,000 customer connections in 20 Eastern Kentucky counties with an estimated mid-2022 rate base of approximately $2 billion. Kentucky Transco is a regulated electric transmission business that serves the PJM power market and has an estimated mid-2022 rate base of approximately $200 million for a total acquired rate base of approximately $2.2 billion.
We see significant opportunities to reposition the business with the improvement of realized ROEs to authorized levels and improved regulatory outcomes, as well as transitioning over 1 gigawatt of regulated fossil fuel generation to renewable resources, both of which I will go over in greater detail on the next couple of slides. I will, however, note that these opportunities demonstrate our plans to ensure reliable, clean electric services to Kentucky Power's customers and that we plan to maintain Kentucky Power's headquarters in Ashland, along with supporting investments in the local community. Kentucky Power is primarily regulated by the Kentucky Public Service Commission or KPSC, which we view as a constructive regulatory jurisdiction. The jurisdiction is rated highly by S&P and is one of the top states ranked from a regulatory perspective.
In addition, the jurisdiction has several attractive attributes that can allow regulated utilities to earn their authorized returns and reduce regulatory lag. We see a number of opportunities for regulatory enhancements at Kentucky Power and improved regulatory outcomes. One key example of a constructive regulatory feature is the forward test year, which I will note are not currently being employed by Kentucky Power and will provide for more timely recovery of costs and expenditures. We look forward to working with the commission on implementing certain improvements to help us deploy the necessary investments to improve the services we can deliver for our customers. Kentucky Power is a utility that has historically realized ROE below the authorized levels when compared to peers in Kentucky.
We see a strong path forward to improving the earnings profile to achieve an ROE that is closer to the authorized amount of 9.3% for the distribution base through the availability of a number of key regulatory features in Kentucky that we touched on in the prior slide. Now turning back to Greening the Fleet opportunity. Kentucky Power's generation fleet is currently fueled by fossil fuel generation and represents an opportunity to transition this fleet to renewable energy. This would represent our largest Greening the Fleet opportunity to date, and is aligned with our target to achieve net zero Scope 1 and 2 emissions by 2050.
We see a pathway to decarbonize this business that would substitute the comparatively high fuel and operating costs for fossil fuel facilities into the potential for capital investment for renewable facilities that have no fuel costs and much lower operating costs, therefore providing benefits for the planet and our customers. The unit power agreement and the Rockport Coal-Fired Plant expires in 2022, and we expect to allow that contract to expire, with the expected transfer of Kentucky Power's 50% interest in the Mitchell Coal-Fired Plant from operations by 2028. Based on recent discussions by the Kentucky Public Service Commission, Kentucky Power is expected to have the opportunity to replace these fossil fuel generation sources with renewable generation. To replace the lost electricity supply from Rockport and Mitchell, we see an opportunity to add over 1 gigawatt of renewable generation.
We look forward to partnering with the KPSC through the integrated resource planning process and leveraging our greenfield development expertise to deliver low-cost, clean energy solutions to Kentucky Power's customers as part of our demonstrated Greening the Fleet capabilities. As Arun mentioned earlier, we have accumulated a significant amount of experience and in-house expertise with our Greening the Fleet capabilities we plan to leverage going forward. We recently completed three Midwest wind facilities with an aggregate capacity of 600 MW as part of Greening the Fleet for the Empire District Electric Company, representing an investment of over $1 billion. In March 2020, we also successfully retired the Asbury Coal Plant 15 years ahead of schedule, thereby reducing the carbon dioxide emissions by nearly 1 million metric tons. In total, we have reduced Empire's emissions intensity by 33% since 2017.
At CalPeco, our regulated electric utility in California, we have reduced annual emissions by over 38% since 2017. We are continuing to drive forward further greening initiatives, including the Luning Expansion Project that would add approximately 60 MW of solar and 240 MW of battery storage at the existing Luning solar site. Our successful track record and experience with Greening the Fleet of regulated generation positions us well to support the transition of Kentucky Power to a lower carbon footprint. The acquisition of Kentucky Power is expected to enhance the scale of Algonquin's regulated business, increasing the pro forma regulated rate base to approximately $9 billion, while increasing the pro forma regulatory business mix to nearly 80% and the pro forma electric regulated rate base contribution to 72%, reflecting the company's stable cash flow generation.
The acquisition increases Algonquin's footprint and builds scale adjacent to its existing Midwest service territory. Overall, the transaction represents double-digit percentage increases to a number of Algonquin's key utility metrics. With that, I'll pass the call over to Arthur.
Thanks, Jeff. Before I dive into slide 13, I would like to reiterate that this acquisition is expected to have important financial benefits for our shareholders, along with being a strategic fit for us. We expect the transaction to be accretive to adjusted net EPS in the first full year of ownership and generate mid-single-digit accretion to our adjusted net EPS thereafter, while being supportive of our long-term growth trajectory. Our business mix is also expected to shift to nearly 80% regulated business mix on a pro forma basis. As Arun highlighted earlier, we designed a financing plan that is intended to maintain our investment-grade credit ratings.
The stacked bar on the left-hand side of the page represents the total enterprise value of the transaction, which is approximately $2.8 billion and is comprised of approximately $1.2 billion of assumed debt at the Kentucky Power level and a cash purchase price of approximately $1.6 billion, which is represented by the second bar to the right. Concurrent with the announcement of the Kentucky Power acquisition, we announced the bought deal offering of common shares, which is expected to satisfy Algonquin's common equity funding needs through mid-2022, being the anticipated timing for the closing of the acquisition.
Algonquin intends to use the proceeds of the offering to partially fund the cash purchase price for the acquisition. As for the remainder of the cash purchase price funding, we have significant optionality for funding sources that may include a combination of hybrid debt, equity units and/or the monetization of non-regulated assets or investments. While we expect to have the majority of our permanent financing in place at or near transaction close, we have also secured an approximately $2.7 billion acquisition financing commitment from CIBC and Scotiabank to support the transaction. Moving on to slide 14. I'd like to spend a bit of time talking about the expected timeline for the transaction. There are a number of customary filings and approvals that we will need in order to complete the transaction.
In particular, we will need to secure approvals from the state commissions in Kentucky and West Virginia. Algonquin looks forward to meeting and engaging with the regulators as we seek their approvals. We have extensive experience with state regulatory approval processes and believe that being in a compelling proposition as to the responsible utility operator expecting to maintain a strong local presence in all of our service territories, as mentioned earlier. Our approach to Kentucky Power's community will be no different. We expect to continue Kentucky Power's historic levels of community involvement, charitable contributions and local support in the Eastern Kentucky region. With that, I'd like to hand the call back over to Arun for closing remarks.
Thank you, Arthur. I'll wrap up today's call with four summary points. First, the acquisition of Kentucky Power is expected to increase our regulated utility business mix and offer greater diversification of our service territory and regulatory jurisdictions. Second, the Kentucky Power business has significant opportunities for us to employ our proven Greening the Fleet initiatives to achieve further growth and reconfirm our leadership role in the energy transition. Third, the transaction is expected to be accretive and supportive of our long-term growth outlook, bringing value to our shareholders. Finally, we have designed a prudent financing plan for the transaction that is intended to maintain our investment-grade credit ratings. Thank you everyone for attending today. With that, please stay on the line for the following cautionary statement.
Our discussion during this presentation contains certain forward-looking information, including, but not limited to, our expectations regarding the announced acquisition and its expected benefits and impacts, the anticipated timing for closing Algonquin's Greening the Fleet plans and sustainability targets and concurrent common share offering and Algonquin's financing plans for the remainder of the acquisition purchase price. This forward-looking information is based on certain assumptions, including those described in our preliminary prospectus filed today as well as in our most recent interim MD&A, each available on SEDAR and EDGAR. In addition, this forward-looking information is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.
Forward-looking information provided during this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions, and assumptions of management as of today's date. There can be no assurance that forward-looking information will prove to be accurate, and you should not place undue reliance on forward-looking information. We disclaim any obligation to update any forward-looking information or to explain any material difference between subsequent actual events and such forward-looking information, except as required by applicable law. In addition, during the course of this call, we may have referred to certain non-GAAP financial measures, including, but not limited to adjusted net earnings and adjusted net earnings per share or adjusted net EPS.
There is no standardized measure of such non-GAAP financial measures, and consequently, Algonquin's method of calculating these measures may differ from the methods used by other companies and therefore they may not be comparable to similar measures presented by other companies. For more information about both forward-looking information and non-GAAP financial measures, please refer to our most recent MD&A filed on SEDAR and EDGAR and also available on our website. Thank you. That concludes the call.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.