AltaGas Announces Expansion of US Power Business With US$515 Million
Acquisition of Natural Gas Fired Plant
CALGARY, ALBERTA -- (Marketwire) -- 03/25/13 -- AltaGas Ltd.
("AltaGas") (TSX:ALA)(TSX:ALA.PR.A)(TSX:ALA.PR.U) announced today
that its indirect wholly owned subsidiary AltaGas Power Holdings
(U.S.) Inc. has entered into a purchase and sale agreement with
affiliates of LS Power Equity Advisors, LLC to acquire Blythe Energy,
LLC ("Blythe"), which owns a 507 MW natural gas-fired combined cycle
plant (the "Blythe Energy Center"), associated major spare parts, and
a related 230 kV 67-mile electric transmission line in Southern
California, for US$515 million (the "Acquisition").
"The Acquisition of Blythe is an important addition to our power
business. The power purchase agreement provides stable earnings and
cash flow and with the infrastructure in place today, the facility is
well positioned to access two premium power markets in California and
Arizona in the future," said David Cornhill, Chairman and CEO of
AltaGas. "The addition of natural gas-fired power generation to our
energy infrastructure portfolio in the US provides another platform
for growth to meet the increasing demand for clean sources of
The Acquisition is expected to be accretive to earnings and cash flow
per share in 2014, the first full year of ownership, and is expected
to add approximately $50 million in incremental contracted EBITDA per
The Blythe Energy Center is contracted under a Power Purchase
Agreement ("PPA") through to July 2020 with Southern California
Edison ("SCE"). Contract provisions match PPA revenues to all major
The Blythe Energy Center is well positioned upon expiry of the PPA in
2020 to contract with other market participants due to its location
and ability to serve both the California Independent System Operator
("CAISO") and Desert Southwest markets. The demand for cleaner energy
sources, including natural gas, continues to be strong across North
America and is a key driver for potential future growth of the Blythe
Energy Center. Blythe is located on an owned 76-acre site which
provides a significant geographic footprint for potential future
-- The Acquisition fits with AltaGas' vision of being one of North
America's leading energy infrastructure companies and aligns with
AltaGas' strategy of adding stable, long life assets;
-- The Acquisition is consistent with AltaGas' strategy of increasing its
clean energy portfolio by adding gas-fired generation and enhancing
power market and counterparty diversity; and
-- It is expected that the Blythe Energy Center will provide a significant
US geographic footprint for AltaGas' power business, with opportunities
for future growth.
Stable Cash Flows
-- It is expected that the Acquisition will provide stable cash flows to
further support both AltaGas' dividend and capital growth projects; and
-- Cash flows are underpinned by the PPA with SCE.
Description of the Asset
The Blythe Energy Center is a natural gas-fired combined cycle power
plant located in Blythe, California. The facility employs proven
Siemens technology and has a low base load heat rate in the range of
7,000 to 7,500 Btu/kWh, low emissions, responsive start times and
flexible ramp rates. The facility is one of the most economic natural
gas generating facilities on the CAISO dispatch curve.
The facility is directly connected to Southern California Gas and
interconnects with SCE and the CAISO via a 67-mile transmission line.
The transmission line is capable of transmitting 1,100 MW and has
excess capacity to meet future load growth.
The facility is also interconnected with the El Paso Natural Gas
system and is situated to re-connect to the Western Area Power
Administration ("WAPA"), providing market access optionality upon
expiry of the PPA in 2020.
The Blythe Energy Center is operated pursuant to an Operating and
Maintenance agreement with NextEra Energy Operating Services Inc.
("NextEra"). The initial term of this agreement expires in November
2016. NextEra Energy Resources developed, constructed and placed into
service the Blythe Energy Center in 2003.
The Acquisition will be financed consistent with AltaGas' current
capital structure. AltaGas will continue to maintain its strong
balance sheet and financial discipline and is committed to
maintaining its investment grade credit rating.
The transaction is subject to customary approvals including
regulatory approvals from the Federal Energy Regulatory Commission of
the United States government, and filings and approvals including the
expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The acquisition
is expected to close in the second quarter of 2013.
About AltaGas Ltd.
AltaGas is an energy infrastructure business with a focus on natural
gas, power and regulated utilities. AltaGas creates value by
acquiring, growing and optimizing its energy infrastructure,
including a focus on renewable energy sources. For more information
This news release contains forward-looking statements. When used in
this news release, the words "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "seek", "propose",
"estimate", "expect", and similar expressions, as they relate to
AltaGas or an affiliate of AltaGas, are intended to identify
forward-looking statements. In particular, this news release contains
forward-looking statements with respect to, among other things, the
anticipated benefits of the Acquisition, the closing of the
Acquisition, the maintenance of its investment grade rating, business
objectives, expected growth, results of operations, business projects
and opportunities and financial results. These statements involve
known and unknown risks, uncertainties and other factors that may
cause actual results or events to differ materially from those
anticipated in such forward-looking statements. Such statements
reflect AltaGas' current views with respect to future events based on
certain material factors and assumptions and are subject to certain
risks and uncertainties, including without limitation, changes in
market, competition, governmental or regulatory developments, general
economic conditions and other factors set out in AltaGas' public
disclosure documents. Many factors could cause AltaGas' actual
results, performance or achievements to vary from those described in
this news release, including without limitation those listed above.
These factors should not be construed as exhaustive. Should one or
more of these risks or uncertainties materialize, or should
assumptions underlying forward-looking statements prove incorrect,
actual results may vary materially from those described in this news
release as intended, planned, anticipated, believed, sought,
proposed, estimated or expected, and such forward-looking statements
included in, or incorporated by reference in this news release,
should not be unduly relied upon. Financial outlook information
contained in this press release about prospective cash flows and
EBITDA is based on assumptions about future events, including
economic conditions and proposed courses of action, based on
management's assessment of the relevant information currently
available. Readers are cautioned that any such financial outlook
information contained herein should not be used for purposes other
than for which it is disclosed herein. Such statements speak only as
of the date of this news release. AltaGas does not intend, and does
not assume any obligation, to update these forward-looking
statements. The forward-looking statements contained in this news
release are expressly qualified by this cautionary statement.
Press spacebar to pause and continue. Press esc to stop.