TransCanada signs deal to develop 900-MW gas plant in Ontario

Gas pipeline company TransCanada Corp. (TSX: TRP) (NYSE: TRP) said Dec. 17 that it has signed a contract with the Ontario Power Authority (OPA) to develop, own and operate a new 900-MW natural gas-fired power plant.

The facility will be located at Ontario Power Generation‘s Lennox power plant property in the town of Greater Napanee in eastern Ontario.

“The contract signing will allow TransCanada to move forward with our plans to provide a reliable source of electricity to the people of Ontario,” said Russ Girling, TransCanada’s president and CEO. “We will take the necessary steps to ensure this is an environmentally responsible project and will also focus on the safety of the community, our employees and being a good neighbour.”

Construction of this 900-MW facility will mean an investment of millions of dollars in the local community, with approximately 600 construction jobs and an expected 25 long-term jobs.

The details of the contract are based on terms of the memoranda of understanding that were signed in late September. The Napanee power plant will act as a replacement facility for one that was planned in the community of Oakville. It will operate under a 20-year power purchase arrangement with the OPA that will generate stable earnings and cash flow over the next two decades, TransCanada noted.

OPA said in its own Dec. 17 statement that it and TransCanada Energy Ltd. (TCE) have finalized a Clean Energy Supply Contract for the 900-MW plant. The terms of the contract are consistent with the terms in the Memorandum of Understanding (MOU) the OPA and TCE signed on Sept 24. The MOU set a deadline of Dec. 14 for finalizing the contract. TransCanada also finalized agreements with OPG to acquire land at the Lennox site based on an independent market appraisal, as set out in the MOU between TCE and OPG.

This is another major piece of a broad plan to both meet Ontario’s future power needs and to support a provincial mandate for OPG to phase-out its coal-fired power plants by the end of 2014 to reduce greenhouse gas emissions.

TransCanada currently operates the 683-MW Halton Hills plant in Ontario, has a 50% ownership in the 550-MW Portlands Energy Centre on the Toronto waterfront and has agreed to purchase nine Ontario solar plants that would produce 86 MW of clean energy. It also owns a large portion of the Bruce Power nuclear facility – 49% of Bruce A and 32% of Bruce B. Bruce Power consists of two generating stations (Bruce A and B), with each station housing four nuclear reactors with an overall power output of 6,200 MW.

TransCanada said it is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and oil pipelines, power generation and gas storage facilities. It operates a network of natural gas pipelines that extends more than 42,500 miles, tapping into virtually all major gas supply basins in North America. A growing independent power producer, TransCanada owns or has interests in over 11,800 MW of power generation in Canada and the U.S.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.