Maxim Power works on sale of U.S. plants, growth projects

Canada-based Maxim Power Corp. (TSX: MXG) reported Nov. 7 that it is still working toward the pending sale of its gas-fired power plants in the U.S.

During the fourth quarter of 2012, MAXIM appointed financial advisors to review its investments in the U.S. and France with an eye on ways to maximize shareholder value. Credit Suisse Securities (USA) LLC was engaged as financial advisor for MAXIM’s investments in the United States and HSBC Bank plc was engaged as financial advisor for MAXIM’s investments in France.

MAXIM on Aug. 6 announced an agreement to sell 100% of its ownership interest in Maxim Power (USA) Inc. (MUSA), which holds the U.S. operations, to Patriot Power Holdings LLC, an affiliate of Rockland Capital, for US$112m, including the assumption of US$22m of debt resulting in sales proceeds of US$90m. MAXIM said in its Nov. 7 quarterly earnings statement that it is responding to a regulatory inquiry related to its offers to supply electricity to the ISO New England market, which may give rise to a claim. The sale of these plants is due to close in the fourth quarter.

The Federal Energy Regulatory Commission on Oct. 10 signed off on this deal. The plants to be sold are:

  • The Basin Creek Generating Plant, a 55-MW natural gas-fired power plant located in Silver Bow County, Mont., in the NorthWestern Energy balancing authority area (BAA). All of the capacity and energy of the Basin Creek Facility is sold to NorthWestern Energy under a long-term power purchase agreement.
  • The Forked River Generating Plant, an 87-MW gas-fired combustion turbine plant located in Queen County, N.J., in the PJM Interconnection BAA. The output of Forked River Facility is sold to FirstEnergy Solution Corp. under a long-term power purchase agreement.
  • The Pittsfield Generating Plant, a 181-MW combined cycle power plant located in Pittsfield, Mass. in the ISO New England (ISO-NE) BAA. Pittsfield receives forward capacity payments from ISO-NE, and sells energy from the Pittsfield Facility into ISO-NE’s day-ahead and real-time energy markets.
  • The Pawtucket Generating Plant, a 64-MW natural gas-fired combined cycle cogen located in Pawtucket, R.I., in the ISO-NE BAA. Pawtucket receives forward capacity payments from ISO-NE, and sells energy from this facility into ISO-NE’s day-ahead and real-time energy markets.
  • The CDECCA Generating Plant, a 62-MW natural gas-fired combined cycle cogen located in Hartford, Conn., in the ISO-NE BAA. CDECCA (Capitol District Energy Center Cogeneration Associates) receives forward capacity payments from ISO-NE, and sells energy into ISO-NE’s day-ahead and real-time energy markets.

The evaluation of the France initiative is ongoing with no expectation of outcome at this time, MAXIM said in the Nov. 7 earnings statement.

On Aug. 20, MAXIM announced that it agreed to sell the 1.6-MW Hartland Landfill Project in Canada to the Capital Regional District (CRD) for C$1.8m. The sale closed on Sept. 6.

In the meantime, MXIM is pursuing growth initiatives:

Summit Coal LP Mine 14 Project – This project, which is located north of Grande Cache, Alberta, has current estimates of 18.9 million tonnes of low-mid volatile metallurgical coal reserves with a mine life of 17 years. SUMMIT’s Mine 16S project is located 30 kilometers northwest of the Mine 14 leases and represents 1,792 hectares or 29% of SUMMIT’s total area of leases. A technical report has not been prepared for the Mine 16S property.

In 2013, MAXIM received regulatory approvals to construct and operate a coal beneficiation plant. Early in the third quarter of 2013, SUMMIT’s mine license was amended to increase coal production 2.7 times, from 480,000 tonnes to 1.3 million tonnes per year. SUMMIT now has all the requisite government and regulatory approvals to construct and operate M14.

MAXIM considers the advancement of the M14 and M16S development projects strategic for MAXIM in part because of the value of metallurgical coal and in part due to its nearby Milner coal-fired plant’s ability to utilize tailings and lower quality fuels, which are by-products of the beneficiation of coal, to produce electricity.

Deerland Peaking Station (D1) – MAXIM is actively pursuing commercial arrangements that will allow for the construction of the 190-MW D1 Station. The D1 site is located near Bruderheim in Alberta’s Industrial Heartland adjacent to the existing Deerland high voltage substation. D1 has received all regulatory approvals and MAXIM has entered into an agreement to secure firm natural gas transportation services. D1 is the only permitted peaker project in the province of Alberta as of Nov. 7.

D1 is an attractive project as Alberta is experiencing tighter supply demand fundamentals and increasingly volatile electricity prices, MAXIM noted. Demand for electricity is increasing, baseload supply is expected to contract through retirement of coal-fired units and wind power is intermittent. MAXIM expects that peaking requirements across Alberta will continue to grow as a result of these market drivers.

Milner Expansion (M2) – The Alberta Utilities Commission (AUC) has granted MAXIM approval to develop a 500-MW, coal-fired generating facility adjacent to the existing 150-MW Milner generating facility (M1). A lengthy public consultation and regulatory process culminated in the project’s final approval by the AUC in August 2011. In September 2012, the government of Canada enacted new greenhouse gas legislation that limits the amount of CO2 emitted by coal-fired facilities. MAXIM is examining ways to meet the new standards including the development of a natural-gas fired facility.

Buffalo Atlee (B1) – MAXIM’s B1 Power Project, situated near Brooks, Alberta, has the potential for development of over 200 MW of wind capacity. Wind data has been collected on the site for about five years. MAXIM holds an exploratory Crown land permit with a term of five years, expiring on Jan. 1, 2016. The addition of wind generation to MAXIM’s existing portfolio of assets will diversify MAXIM’s generation fuel types and provide the potential to offset the impact of any new greenhouse gas legislation.

Based in Calgary, Alberta, MAXIM is an independent power producer, which acquires or develops, owns and operates innovative and environmentally responsible power and power related projects. MAXIM currently owns and operates 40 power plants in western Canada, the U.S and France, having 802 MW of capacity.

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.