EDMONTON, Alberta, Dec. 28, 2023 (GLOBE NEWSWIRE) — Capital Power Corporation (TSX: CPX) (“Capital Power”) successfully completed the acquisition of a 50.15% interest in the Frederickson 1 Generating Station (“Frederickson 1” or the “Facility”), a 265-megawatt (MW) natural gas-fired combined-cycle generation facility in Pierce County, Washington. The acquisition was previously announced on October 10, 2023.
The facility was acquired from Atlantic Power & Utilities for US$97.5 million, subject to working capital adjustments. Capital Power financed the transaction using cash on hand and its credit facilities. The other 49.85% interest in the Facility is owned by Puget Sound Energy (“PSE”). As part of the ownership agreement with PSE, Capital Power will operate and maintain the facility and will receive an annual management fee under the operating arrangement with PSE.
Located southeast of Tacoma in the Puget Sound Region load centre, Frederickson 1 is a flexible generation asset that is well-positioned to support long-term energy security and reliability for the Pacific Northwest. The Facility is supported by long-term contracts out to October 2030 with credit-worthy counterparties and is well-positioned for re-contracting as a key dispatchable, baseload asset in the region. Additionally, the Frederickson 1 site and adjacent lands provide ample room and infrastructure for future non-emitting, flexible generation developments.
The acquisition is immediately accretive to near-term cash flows and, for Capital Power’s portion of the Facility, provides an expected average contracted adjusted EBITDA of US$15 million per year during the 5-year period of 2024-2029.
Non-GAAP Financial Measures and Ratios
The Company uses earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from its joint venture interests, gains or losses on disposals and unrealized changes in fair value of commodity derivatives and emission credits (adjusted EBITDA) as a financial performance measure.
This term is not a defined financial measure according to GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, it is unlikely to be comparable to similar measures used by other enterprises. This measure should not be considered an alternative to net income or to other measures of financial performance calculated in accordance with GAAP. Rather, this measure is provided to complement GAAP measures in the analysis of the Company’s results of operations from management’s perspective.
See Non-GAAP measures and ratios in the Company’s third quarter management’s discussion and analysis for the three and nine months ended September 30, 2023, and the Company’s 2022 Integrated Annual Report, which are available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on the Company’s website at www.capitalpower.com, for further discussion of these metrics and a reconciliation of Adjusted EBITDA to net income.
Forward-looking Information
Certain information in this news release is forward-looking within the meaning of Canadian securities law as it relates to anticipated financial and operating performance, events or strategies. The forward-looking information or statements are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.
Material forward-looking information in this press release relating to the acquisition of Frederickson 1 includes expectations regarding: (i) operating arrangements for the Facility; (ii) financial impacts of the acquisition, including expected annual adjusted EBITDA contribution of the Facility for the five year period from 2024 to 2029, (iii) positioning for potential re-contracting of the Facility; and (iv) future development opportunities for the site and adjacent lands.
These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate, including its review of Frederickson 1 and re-contracting opportunities. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity and other energy prices, (ii) anticipated performance of Frederickson 1, (iii) re-contracting and wholesale market opportunities, (iv) status of and impact of policy, legislation and regulations, and (v) effective tax rates.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity prices, (ii) changes in energy commodity market prices and use of derivatives, (iii) regulatory and political environments including changes to environmental, financial reporting, market structure and tax legislation as well as the receipt and timing thereof of required regulatory approvals, (iv) generation facility availability and performance including maintenance of equipment, (v) ability to fund current and future capital and working capital needs, (vi) changes in market prices and availability of fuel, (vii) ability to realize the anticipated benefits of Frederickson 1, (viii) limitations inherent in the Company’s review of Frederickson 1, and (ix) changes in general economic and competitive conditions. See Risks and Risk Management in the Company’s 2022 Integrated Annual Report for further discussion of these and other risks.
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the specified approval date. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Territorial Acknowledgement
In the spirit of reconciliation, Capital Power respectfully acknowledges that we operate within the ancestral homelands, traditional and treaty territories of the Indigenous Peoples of Turtle Island, or North America. Capital Power’s head office is located within the traditional and contemporary home of many Indigenous Peoples of the Treaty 6 region and Métis Nation of Alberta Region 4. We acknowledge the diverse Indigenous communities that are located in these areas and whose presence continues to enrich the community.
About Capital Power
Capital Power is a growth-oriented power producer committed to net zero by 2045. Our balanced approach to the energy transition prioritizes reliable, affordable and decarbonized power that communities across North America can depend on.
Capital Power owns approximately 7,600 MW of power generation capacity at 30 facilities across North America. Projects under construction include approximately 140 MW of renewable generation capacity and 512 MW of incremental natural gas combined cycle capacity from the repowering of Genesee 1 and 2 in Alberta, as well as approximately 350 MW of natural gas and battery energy storage systems in Ontario and approximately 70 MW of solar capacity in North Carolina in advanced development.
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