Atlantic Power Corp. (NYSE: AT) (TSX: ATP) announced Jan. 9 some revised contractual arrangements for, and operational status of, its Kapuskasing, North Bay and Nipigon gas-fired combined-cycle facilities in Ontario, each with a capacity of 40 MW.
Effective for 2017, subsidiary Atlantic Power LP (APLP) has signed Non-Utility Generator (NUG) Enhanced Dispatch Contracts with the Ontario Independent Electricity System Operator for the three facilities. In conjunction with the new contracts, APLP has agreed to terminate Power Purchase Agreements (PPAs) with the Ontario Electricity Financial Corp. (OEFC) for the Kapuskasing and North Bay plants, which were scheduled to expire in December 2017, and to suspend for a period the Nipigon PPA, which is scheduled to expire in December 2022.
The Enhanced Dispatch Contracts for Kapuskasing and North Bay provide a fixed monthly payment to the plants until Dec. 31, 2017. The contracts have no delivery obligations and allow APLP to retain operating flexibility. Based on its assessment of the Ontario power market, including the estimated impact on plant economics, Atlantic Power has begun the process of mothballing both plants.
The Enhanced Dispatch Contract for Nipigon provides fixed monthly payments to that plant through Oct. 31, 2018. During that period, the plant’s PPA with the OEFC will be suspended. At the conclusion of that period, or after that date should that subsequently be agreed to, the arrangement will revert to the existing terms of the PPA. Atlantic Power also has begun the process of mothballing Nipigon.
Atlantic Power said it believes this outcome provides benefits for ratepayers and contributes to the province’s goal of reducing greenhouse gas emissions. The company is continuing to work collaboratively with the relevant parties on potential other initiatives that could result in additional benefits to ratepayers.
Atlantic Power owns and operates a diverse fleet of 23 power generation assets across nine states in the U.S. and two provinces in Canada. The company’s power generation projects sell electricity to utilities and other large commercial customers largely under long-term power purchase agreements, which seek to minimize exposure to changes in commodity prices. The aggregate gross electric generation capacity of this portfolio is approximately 2,138 MW, and the company’s aggregate net ownership interest is approximately 1,500 MW. Nineteen of the projects are currently operational, totaling 1,975 MW on a gross capacity basis and 1,337 MW on a net ownership basis; the other four, all in Ontario, are presently mothballed.