Atlantic Power Corporation Announces New Ten-Year Energy Purchase Agreement for Williams Lake Plant
Dedham, Mass -- Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ('Atlantic Power' or the 'Company') announced today that it has executed a new ten-year Energy Purchase Agreement (EPA) with BC Hydro for the Williams Lake biomass plant in British Columbia, Canada. The new EPA is effective October 1, 2019. The plant had been operating under a short-term EPA since April 2, 2018, which expired on September 30, 2019.
Under the new EPA, Williams Lake will receive a fixed price per megawatt-hour for energy produced. This price escalates annually with the British Columbia CPI. The EPA does not provide for a capacity payment and the energy payment structure does not include a fuel cost passthrough.
Conditions in the British Columbia timber market for the past couple of years have adversely affected both the availability and cost of fuel, which as previously noted by the Company represents the most significant operational and financial risk for Williams Lake. During the period that the plant has been operating under the short-term contract, the Company has been procuring fuel only on a short-term basis. With a long-term EPA now in place, the Company is evaluating fuel supply options and plans to provide EBITDA guidance for Williams Lake under the new EPA at a later date. Considering market conditions and the absence of a fuel cost passthrough, the Company expects there to be greater variability to EBITDA and cash flow from this plant as compared to its other contracted biomass plants.
The Company plans to undertake several major maintenance projects at Williams Lake that will result in a higher level of maintenance expense for the plant in 2020. These projects may be commenced as early as the fourth quarter of 2019 and are expected to be completed in 2020.
"As we have highlighted previously, biomass plants provide benefits beyond the generation of electricity, including support for the local economy and timber industry, and environmental benefits, including forest management," said Joe Cofelice, Executive Vice President, Commercial Development. "We are very pleased to be extending our longstanding relationship with our customer BC Hydro at Williams Lake in order to serve the interests of consumers, the environment and the local community. We thank all those in the local community who supported our efforts to obtain a new long-term contract for this plant."
About Atlantic Power
Atlantic Power is an independent power producer that owns power generation assets in eleven states in the United States and two provinces in Canada. The generation projects sell electricity and steam to investment-grade utilities and other creditworthy large customers predominantly under long‑term Power Purchase Agreements that have expiration dates ranging from 2019 to 2043. The Company seeks to minimize its exposure to commodity prices through provisions in the contracts, fuel supply agreements and hedging arrangements. The projects are diversified by geography, fuel type, technology, dispatch profile and offtaker (customer). The majority of the projects in operation are 100% owned and directly operated and maintained by the Company. The Company has expertise in operating most fuel types, including gas, hydro, and biomass, and it owns a 40% interest in one coal project.
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