Ferrybridge could soon be in new hands as part of a �300m deal

IP is understood to have been granted preferred bidder status for the plants at Ferrybridge in West Yorkshire and Fiddler's Ferry in Cheshire.

The deal would cheer IP's shareholders after the failure earlier this month of the group's attempt to buy a stake in Drax, the UK's biggest coal-fired power plant at Selby, North Yorkshire.

US energy giant American Electric Power (AEP) put the two stations up for sale after a 40% slump in UK wholesale energy prices since 1998.

Market recovery

Selling the power plants would enable AEP to follow other US energy groups, which once owned nine of the UK's 14 regional supply companies, in retreating across the Atlantic.

The plants at Fiddler's Ferry and Ferrybridge generate a total of 4,000 megawatts, representing 6% of the generating capacity in the UK.

A spokesman for IP said: "We have made no secret of the fact that we are looking at acquiring assets in the UK and other markets."

Optimism has been fuelled by a recovering energy market in the UK, with forward prices for 2005 up by as much as 40% on levels seen just a few months ago, making power stations an attractive investment again.