* Removes chief executive
* Slashes annual dividend by 70 pct
* Says looking to cut expenses by about $7 mln annually
* Toronto, U.S.-listed shares fall more than 30 pct (Adds details, background, analyst quotes; updates share)
By Shubhankar Chakravorty
Sept 16 (Reuters) - Shares of Atlantic Power Corp fell by about a third on Tuesday after the struggling utility removed its chief executive and decided against selling itself.
Faced with mounting debts in a volatile power market, the company also slashed its annual dividend by 70 percent, the second time since February 2013 that it has cut the dividend.
Boston-based Atlantic Power has been caught between falling demand in a volatile wholesale power market and a recovery in the price of the natural gas that feeds its plants in several U.S. states and Canadian provinces.
Several utilities have been selling assets to lower their exposure to this market. Duke Energy Corp agreed last month to sell its non-regulated Midwest commercial generation business to Dynegy Inc for $2.8 billion.
In May, Atlantic hired Goldman Sachs and Greenhill & Co to explore a sale or merger. The company said on Tuesday, however, that its best option would be to continue as an independent company.
Barry Welch, who ran the company for 10 years, stepped down as president and chief executive by "mutual agreement," Atlantic said. Ken Hartwick, a director, took over as interim president and CEO but will not be a candidate for the permanent job.
Atlantic Power also said it would consider selling assets or entering joint ventures to raise capital and reduce its debt.
The company's long-term debt almost quadrupled between 2010 and the end of June, Thomson Reuters data shows. At about $1.8 billion, the debt is equivalent to about three times its annual revenue for 2013.
The stock shed more than two-thirds of its value in the same period.
Atlantic Power did not specify which assets it would consider selling. Analysts identified the company's wind assets and some hydro plants in the United States as candidates.
"They'd fetch the highest value and therefore could be more likely to be sold," said National Bank Financial analyst Rupert Merer.
Atlantic Power also said it was looking to cut expenses by about $7 million annually.
The company's shares were down 30.9 percent at C$2.91 in afternoon trading on the Toronto Stock Exchange. Its U.S. shares were down 30.4 percent at $2.65. (Reporting By Shubhankar Chakravorty in Bangalore; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)