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Edmonton, Alberta, Canada, August 3, 2010 — Capital Power Corp. agreed to acquire the Island Generation Facility, a 275 MW, gas-fired combined cycle power plant at Campbell River, British Columbia.
The transaction is expected to close in the fourth quarter of 2010, subject to regulatory and other approvals.
The purchase and sale agreement for the transaction is between Capital Power LP, the legal entity that directly and indirectly holds Capital Power’s assets, and Kelson Canada Inc.
Subject to market conditions, Capital Power expects to permanently finance the purchase price of about $207 million, plus closing costs and normal working capital adjustments, with a combination of debt and equity.
“Since Capital Power’s launch in July 2009, approximately 700 MW of new capacity has been added or placed into development, including 247 MW in new wind power projects,” said Capital Power’s President and CEO, Brian Vaasjo. “The Island Generation facility will be the first addition to our fleet made via acquisition, and it demonstrates our commitment to significant growth under strategies encompassing both diversity of fuel types and conservative financial structure.”
Island Generation is fully-contracted from April 1, 2010 to April 2022 under a tolling arrangement with BC Hydro, a AAA-rated counterparty by Standard and Poors. BC Hydro is responsible for the fuel supply to the facility. Commissioned in 2002, the Island Generation facility is consistent with Capital Power’s fleet of young assets that deploy efficient technologies.
Island Generation is located on the eastern side of Vancouver Island in Campbell River, BC, about 200 km northwest of Vancouver. The facility operates an Alstom GT24B gas turbine and an Alstom steam turbine with total capacity of 275 MW. It commenced commercial operations in 2002 and has 21 operating staff.
Generation capacity on Vancouver Island is about 750 MW, with the Island Generation facility as the single largest plant.
BC Hydro’s demand forecast projects about 2,400 MW of peak demand for the Island. While the Vancouver Island transmission system is capable of providing the necessary energy imports from the mainland to meet Vancouver Island’s normal load, Island Generation is currently an important reliability resource at peak demand periods and during transmission outages. Load growth on Vancouver Island is expected to outpace new generation additions.
