Atlantic Power (NYSE: AT) (TSX: ATP) announced Jan. 20 that Atlantic Power Limited Partnership, a wholly-owned indirect subsidiary, entered into an agreement with the Ontario Power Authority and its successor, the Independent Electricity System Operator (IESO), for the future operations of the Tunis facility.
“This agreement represents the culmination of many months of discussions with the IESO to obtain an arrangement that is beneficial for both the ratepayers of Ontario and the Company,” said Ken Hartwick, Interim President and CEO. “Atlantic Power’s focused approach of working with the IESO to arrive at a mutually-beneficial outcome is demonstrable of both our capabilities and our resolve in developing opportunities to extend the commercial viability of our existing fleet. The agreement with the IESO provides for a strong baseline cashflow profile for Tunis which will form part of the facility’s total return profile extending out to at least 2032.”
Subject to meeting certain technical modifications to the plant, gas delivery and other requirements, Tunis will operate under a 15-year agreement with the IESO commencing between November 2017 and June 2019.
The new contract will require the plant to become fully dispatchable as opposed to its current baseload configuration. Tunis will only provide electricity to the Ontario grid when required thereby assisting to reduce the incidents of surplus baseload generation in the market. The new agreement provides APLP with a fixed monthly payment which escalates annually according to a pre-defined formula while allowing Tunis to earn additional energy revenues for those periods during which it is called upon to operate.
Tunis is a 43-MW, gas-fired combined-cycle facility located in Iroquois Falls, Ontario, adjacent to the TransCanada Mainline. It commenced commercial operation in 1995. The Atlantic Power website said energy generated at Tunis was sold to the Ontario Electricity Financial Corp. under a long-term power purchase agreement expiring in 2014. Natural gas is provided to the project under short-term purchases in the spot market. Tunis joined Atlantic Power as a result of its acquisition of Capital Power Income LP in November 2011.
Atlantic Power owns and operates a diverse fleet of power generation assets in the United States and Canada. Its power generation projects in operation have an aggregate gross electric generation capacity of approximately 2,945 MW in which its aggregate ownership interest is approximately 2,024 MW. Its current portfolio consists of interests in twenty-eight operational power generation projects across eleven states in the United States and two provinces in Canada.