AltaGas buying Blythe plant, power line from LS Power unit

Calgary-based AltaGas (TSX:ALA) hopes to close its U.S. $515m purchase of the 507-MW Blythe Energy Center in California during the second quarter.

AltaGas said March 25 that subsidiary AltaGas Power Holdings (U.S.) has entered into a purchase and sale agreement with affiliates of LS Power Equity Advisors to buy both the natural gas combined-cycle power plant that started operation in 2003 as a related 230 kV 67-mile electric transmission line in Southern California.

Blythe is contracted under a power purchase agreement (PPA) through to July 2020 with Edison International (NYSE:EIX) subsidiary Southern California Edison (SCE). Contract provisions match PPA revenues to all major plant costs, AltaGas said in a statement.

The gas plant in Blythe, Calif., is run under an operating and maintenance agreement with a NextEra Energy (NYSE:NEE) subsidiary. NextEra commissioned the plant in 2003.

Blythe employs proven Siemens technology and has a low base load heat rate in the range of 7,000 to 7,500 Btu/kWh, low emissions, responsive start times and flexible ramp rates., AltaGas said.

“The acquisition of Blythe is an important addition to our power business,” said AltaGas Chairman and CEO David Cornhill . “The power purchase agreement provides stable earnings and cash flow and with the infrastructure in place today, the facility is well positioned to access two premium power markets in California and Arizona in the future. The addition of natural gas-fired power generation to our energy infrastructure portfolio in the US provides another platform for growth to meet the increasing demand for clean sources of energy,” Cornhill said.

The facility is directly connected to Southern California Gas and interconnects with SCE and the CAISO via a 67-mile transmission line. The transmission line is capable of transmitting 1,100 MW and has excess capacity to meet future load growth.

The facility is also interconnected with the El Paso Natural Gas system and is situated to re-connect to the Western Area Power Administration (WAPA), providing market access optionality upon expiration of the power contract in 2020.

Blythe Energy Center will provide a significant US geographic footprint for AltaGas’ power business, with opportunities for future growth.

The transaction is subject to customary approvals including regulatory approvals from the Federal Energy Regulatory Commission of the United States government, and filings and approvals including the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The acquisition is expected to close in the second quarter of 2013.

Founded in 1994 to become Canada’s first major independent midstream company, AltaGas now has power infrastructure that includes conventional and renewable power generation in Alberta, British Columbia, Colorado, Michigan and North Carolina.

“We own the rights to power output and ancillary services from 353 MW of coal-fired base-load generation in Alberta until December 31, 2020. We also have 54 MW of gas-fired peaking capacity in Alberta to provide fuel diversity to the conventional power business and partial backstopping to any coal-fired outages,” according to an AltaGas power website.

In the United States, AltaGas has a 30% interest in a 37-MW wood biomass power unit in Michigan and a 50% working interest in a 48-MW wood biomass power unit in North Carolina, the company said. The company also has significant renewable energy holdings, including hydro, in Canada.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.