Atlantic Power sells gas plants, takes a biomass project commercial

Atlantic Power (NYSE: AT) (TSX: ATP) had a busy first part of this year that included the sale of three power plants in Florida and bringing into operation the Canadian Hills and Meadow Creek wind projects, the company noted in its May 8 earnings statement.

“Our financial results for the quarter improved significantly from a year ago primarily due to the execution of our growth strategy with increased earnings and cash flow from projects we either acquired or built in 2012, particularly Canadian Hills and Meadow Creek,” said Barry Welch, President and CEO of Atlantic Power. “We also closed several pending asset sales subsequent to the end of the quarter and completed the syndication of our tax equity investment in Canadian Hills. This puts us on track to achieve our goal of having $140 to $150 million of cash available by mid-year to invest in operating, early construction or late-stage development projects beginning in the second half of this year.”

Canadian Hills is a 298-MW wind project in Oklahoma that has power sales contracts with Southwestern Electric Power, the Oklahoma Municipal Power Authority and the Grand River Dam Authority. Meadow Creek is a 120-MW facility in Idaho that sells its power to PacifiCorp.  

The company said it recently decided to defer its investment decision on an elective growth project to upgrade the Heat Recovery Steam Generator (HRSG) at its 40-MW, gas-fired Nipigon facility, originally planned for 2013, as the required modification to the air permit has not yet been approved by the Ontario Ministry of the Environment. Although the company is still pursuing these approvals, the timing of the project is uncertain. 

With respect to potential investments utilizing its net available cash in the second half of the year, the company said it is reviewing two types of growth opportunities: natural gas and renewable acquisitions generating operating cash flows and late-stage renewable development projects that would contribute cash flows once they achieve commercial operation. In addition, the company continues to evaluate and advance the renewable development pipeline acquired with its Ridgeline Energy acquisition.

On April 30, the company closed the sale of its interests in Path 15 transmission project. Atlantic Power received net cash proceeds from the Path 15 sale of approximately $56m, including working capital adjustments and a management termination fee. All debt issued by Path 15, totaling $137.2m as of March 31, 2013, transferred with the Path 15 sale. 

On April 12, the company closed the sale of its interests in three gas-fired Florida projects – Auburndale, Lake and Pasco – for net cash proceeds of about $117m. The company used a portion of the net cash proceeds from the sale to fully repay the $64.1m outstanding balance on its senior credit facility. Total generation for Auburndale was 269,394 MWh and 190,186 MWh and availability was 98.8% and 99.1% for thethree months ended March 31, 2013, and 2012, respectively. Total generation for Lake was 240,427 MWh and 118,069 MWh and availability was 97.3% and 98.2% for the three months ended March 31, 2013 and 2012, respectively. Total generation for Pasco was 39,270 MWh and 46,290 MWh and availability was 91.6% and 97.6% for the three months ended March 31, 2013 and 2012, respectively.

On April 2, the company, along with its partners, entered into a purchase and sale agreement to sell to NRG Energy (NYSE: NRG) its 17% interest in the Gregory plant for net cash proceeds of about $33m. Closing of the sale is subject to customary closing conditions and, regulatory and other approvals, and is expected to occur in the third quarter of 2013.

NRG Energy said April 8 that it paid roughly $244m to acquire the 560-MW Gregory cogeneration power plant in Corpus Christi, Texas. NRG entered into an agreement with a consortium of affiliates of Atlantic Power, John Hancock Life Insurance (U.S.A.), and Rockland Capital for the Gregory plant.

In December 2012, Atlantic Power signed a purchase and sale agreement with PNM, a subsidiary of PNM Resources, under which Atlantic has agreed together with its partners in the investment, to sell the gas-fired Delta-Person plant in New Mexico to PNM. The company expects this transaction to close in the third quarter of 2013, subject to regulatory approval, and expects net cash proceeds of about $9m. The Delta-Person plant consists of a GE 7FA combustion turbine (CT)-generator set and associated equipment and related controls. The original nameplate (design) rating on the CT was 171 MW.

New biomass plant in Georgia went commercial on April 19

Atlantic’s 53.5-MW Piedmont Green Power biomass project located in Barnesville, Ga., has a 20-year power purchase agreement (PPA) with Georgia Power. The project declared its Commercial Operation Date (COD) under its PPA on April 19. Further start-up optimization will continue for several months. The project is also working through a dispute with the contractor Zachry Industrial about its performance obligations under the project’s turnkey engineering, procurement and construction contract. 

On the personnel front, on April 2, Ned Hall joined the company as its Executive Vice President–Chief Operating Officer (COO). In this position, Hall is responsible for all of Atlantic Power’s operations, asset management, environmental health and safety and engineering functions, and is focused on driving ongoing Project Adjusted EBITDA performance from the existing fleet. As a member of the executive management team, he also plays a central role in the development and execution of Atlantic Power’s operational and strategic initiatives. Most recently, Hall served as Executive Vice President-COO Global Generation at AES Corp. (NYSE: AES).

Atlantic Power owns and operates a diverse fleet of power generation assets in the U.S. and Canada. Atlantic Power’s power generation projects sell electricity to utilities and other large commercial customers largely under long-term power purchase agreements, which seek to minimize exposure to changes in commodity prices. Its power generation projects in operation have an aggregate gross electric generation capacity of about 3,018 MW in which its aggregate ownership interest is around 2,098 MW. Its current portfolio consists of interests in 29 operational power generation projects across eleven states in the U.S. and two provinces in Canada.

Atlantic Power in December 2012 acquired Ridgeline Energy, a wind and solar development company located in Seattle, Wash., which enhances its ability to develop, acquire and operate wind and solar energy projects in the U.S. and Canada. Atlantic Power also owns a majority interest in Rollcast Energy, a biomass power plant developer in North Carolina.

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.