With the gas-fired Sundance 7 project in Alberta on hold for the time being, TransAlta Corp. (TSX: TA) (NYSE: TAC) in a Feb. 18 financial report indicated that it has bought out, at least for now, MidAmerican Energy Holdings as a partner in the project.
Said the TransAlta report: “During 2015, we received approval from the [Alberta Utilities Commission] to construct and operate an 856 MW combined-cycle natural gas-fired power plant in Alberta. The Sundance 7 project has received all regulatory approvals after receiving the Environmental Protection and Enhancement Act approval from Alberta Environment and Parks on Oct. 1, 2015.”
The financial report added: “Construction of Sundance 7 will not commence until we have contracted a significant portion of the plant capacity. Following changes to market conditions in Alberta during the past year, we do not anticipate that this condition will be met before the next decade. In December 2015, we repurchased our partner’s 50 per cent share in TAMA Power, the jointly controlled entity developing this project, for consideration of [C]$10 million payable in five years, along with an option to buy back into this project or into other projects of TAMA Power during this period.”
The Alberta Utilities Commission on Feb. 4 granted a request from the TransAlta MidAmerican Partnership (TAMA Power) to delay the commission-imposed deadline by four years, until the end of 2022, to complete construction of Sundance Unit 7. This project would be located at the existing Sundance coal-fired power plant in the Lake Wabamun area. TAMA Power in November 2015 asked for the delay. The commission issued its approval to construct Sundance 7 in June 2015, with a construction completion date of Dec. 31, 2018. In this application, TAMA Power requested an extension to Dec. 31, 2022, stating that such time extension is required because of the current regulatory uncertainty and economic volatility in Alberta. That volatility is in large part due to a world decline in oil prices, which impact Alberta’s oil sands industry, a mainstay of its economy.
Said the Feb. 4 commission order: “Given the considerations discussed above, the Commission finds the application to be in the public interest pursuant to Section 17 of the Alberta Utilities Commission Act and approves a time extension to December 31, 2022, for the completion of Sundance 7.”
Said the project website: “TransAlta Corporation and MidAmerican Energy Holdings Company joined forces to create TransAlta MidAmerican Partnership (‘TAMA Power’) in October 2012. TAMA Power is committed to building reliable, economical and environmentally responsible natural gas fuelled power generation facilities for Albertans.”
MidAmerican Energy Holdings, which is part of Berkshire Hathaway, also controls U.S. electric utilities like MidAmerican Energy and PacifiCorp.
The Unit 7 project will consist of two natural gas-fired combustion turbine generators, each rated at 345 megavolt-amperes (MVA), one steam turbine generator rated at 400 MVA and a standby diesel generator. This new facility is planned to have a gross nominal generation capability of 856 MW.