Capital Power targets Shepard plant first fire in August

Shepard Energy Centre is expected to begin first fire in early August and the facility is on track to begin commercial operations in early 2015, Capital Power Corp. (TSX:CPX) said July 25, in reporting its financial results for the second quarter.

Capital Power also updated the status of various facilities and projects.

“Second quarter financial performance was impacted by seasonally low Alberta power prices, lower generation from the acquired Sundance PPA, and lower generation at Genesee 3 caused by transmission constraints,” said Brian Vaasjo, President and CEO of Capital Power. “Alberta power prices have averaged [C]$51 per megawatt hour in the first six months of 2014 compared to our original full year forecast of [C]$57 per megawatt hour. With the expected output from our commercial plants fully hedged for the remainder of the year, we expect funds from operations in 2014, including the [C]$20 million received for the amendment of the Genesee Coal Mine Agreements, to be in the middle of our annual financial target range of [C]$360 to [C]$400 million.”

He added: “While we are disappointed with this quarter’s financial performance, the fundamentals of our business and the additions to our solid asset base continue to strengthen the outlook for the Company. Capital Power’s contracted cash flow base has grown significantly since 2012 with the addition of three contracted wind facilities to our fleet. In addition, the Shepard Energy Centre is expected to begin first fire in early August and the facility is on track to begin commercial operations in early 2015. Seventy-five per cent of our generation from the Shepard facility is contracted for the first 3 years and 50% is contracted from 2018 to 2034. Combined with the expected completion of the K2 Wind project in Ontario later next year, we are forecasting a substantial expansion in our contracted operating margin.”

The Shepard Energy Centre is a natural gas-fired facility with a capacity of up to 875 MW located in Calgary, Alberta, that has been under construction since 2011.

Various developments include:

  • Genesee coal mine – Capital Power is a party to various agreements with Prairie Mines & Minerals Royalty Ltd. (PMRL) in relation to the operations of the Genesee coal mine (Genesee Coal Mine Agreements). Under the Genesee Coal Mine Agreements, PMRL operates the Genesee mine. In connection with the acquisition by U.S.-based Westmoreland Coal of PMRL and the acquisition by Altius Minerals Corp. of the royalty assets of PMRL, the Genesee Coal Mine Agreements and certain related agreements have, amongst other things, been amended to: confirm the acquisitions by Westmoreland and Altius; provide for certain amendments to the Genesee Coal Mine Agreements; and provide for a payment to Capital Power.
  • Genesee 4 and 5 – On April 24, Capital Power and ENMAX Corp. executed a purchase and sale agreement in support of a joint arrangement agreement to jointly develop, construct, and operate the Genesee 4 and 5 power project. The joint arrangement agreement will provide provisions for, among other things, an agreement for ENMAX to purchase approximately 225 MW from Capital Power for eight years. The joint arrangement agreement closing occurred in July. Genesee Units 4 and 5 would be located on a brownfield site adjacent to the existing, coal-fired Genesee station located about 30 kilometers southwest of Stony Plain, Alberta.
  • Construction of K2 Wind Power Project – On March 24, construction of the K2 Wind Power Project commenced following the successful completion of financing in the form of a construction loan that will convert to long-term project debt once K2 Wind starts commercial operations. K2 Wind is a 270-MW project located in Goderich, Ontario, that is under joint development by Samsung Renewable Energy, Pattern Energy Group LP and Capital Power with operations expected to commence in the second half of 2015.

Capital Power is a growth-oriented North American power producer headquartered in Edmonton, Alberta, Canada. The company develops, acquires, operates and optimizes power generation from a variety of energy sources. Capital Power owns more than 2,600 MW of power generation capacity at 14 facilities across North America and owns 371 MW of capacity through its interest in the acquired Sundance power purchase arrangement (acquired Sundance PPA). An additional 490 MW of owned generation capacity is under construction in Alberta and Ontario.

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.