Alterra works on Canadian hydro project, Texas wind farm

Alterra Power Corp. said July 8 that it is making progress on new hydropower and wind projects in Canada and Texas.

For the Jimmie Creek Hydro project, Alterra has executed all major contracts for this 62 MW run-of-river project in coastal British Columbia. Full construction is underway, with nearly 100 workers currently active at the site. Road and bridge construction is now complete and work is well underway at the intake and powerhouse locations. Clearing for penstock excavation is nearly complete and subsurface conditions are in line with expectation.

Through June 30, Alterra has invested C$21.2m (plus accrued legal expenses) in the Jimmie Creek project in 2014, which will constitute the majority of its equity investment in the project. Alterra is currently documenting a credit agreement with a group of four long-term fixed-rate lenders, and expects to close construction financing in the third quarter. Alterra will ultimately hold a 51% ownership stake in the project under a partnership agreement with a fund managed by Fiera Axium Infrastructure Inc.

The Jimmie Creek project is expected to achieve commercial operations in August 2016 and will sell 100% of its power to BC Hydro under a 40-year contract.

For the Shannon Wind project, Alterra is in the final documentation stage for all major project contracts for this 204-MW project located in Clay County, Texas. Initial phase construction activities were completed by an affiliate of M.A. Mortenson Co. in December 2013, with further design, geotechnical investigation and other work taking place subsequently in 2014.

Alterra has invested US$13.1m (plus accrued legal expenses) in Shannon Wind during 2014, mostly comprised of reimbursable security deposits for the design and construction of the project’s interconnection to the electric transmission grid. Alterra expects to close construction financing for the project later this year with two lenders. Alterra will ultimately own up to 50% of the project under a partnership agreement currently being negotiated with a large energy infrastructure fund under the terms of a previously executed letter of intent.

The Shannon Wind project is expected to achieve commercial operations in the summer of 2015 and will sell the majority of its renewable power under a long-term hedging agreement with a financial institution.

Alterra noted that it is documenting a credit agreement with a lender for a holding company loan of up to C$110m to support its equity investments into the Jimmie Creek and Shannon projects, and to potentially provide capital for other projects or general corporate needs. The loan would be supported by the equity cash flows from the Toba Montrose, Dokie 1, Jimmie Creek and Shannon projects. Alterra expects to close this loan in the third quarter of 2014.

In the interim period until closing of this financing, Alterra has agreed with its Executive Chairman, Ross Beaty, to enter into a second tranche of its revolving credit facility. The second tranche (C$23.4m) will be extended under the same terms as the first tranche (C$26.6m), except that the annual interest rate will be 12% and the maturity will be the earlier of Sept. 30, 2014 and three business days following the closing of the holding company financing. The current amount outstanding under both tranches is C$34.6m. The closing and funding of the new revolver tranche occurred prior to such filing to keep the Jimmie Creek construction activities on schedule.

John Carson, Alterra’s Chief Executive Officer, stated: “Our teams are in execution mode on these important transactions, putting us on track to make 2014 a significant growth year for the company.”

Alterra Power operates six power plants totaling 568 MW of generation capacity, including British Columbia’s largest run-of-river hydro facility and largest wind farm, two geothermal facilities in Iceland, and a geothermal plant in Nevada. Alterra owns a 262 MW share of this capacity. Alterra also has an extensive portfolio of exploration and development projects. The company trades on the Toronto Stock Exchange under the symbol AXY and OTC in the U.S. as MGMXF.

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.