Atlantic Power Media Update
DEDHAM, Mass., Jan. 9, 2017 /PRNewswire/ -- Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ("Atlantic Power" or the "Company") announced today revised contractual arrangements for, and operational status of, its Kapuskasing, North Bay and Nipigon facilities in Ontario, each having a capacity of 40 megawatts.
Effective for 2017, Atlantic Power Limited Partnership (APLP, a subsidiary of the Company) has signed Non-Utility Generator (NUG) Enhanced Dispatch Contracts with the Ontario Independent Electricity System Operator for the three facilities. In conjunction with the execution of the new contracts, APLP has agreed to terminate the Power Purchase Agreements (PPAs) with the Ontario Electricity Financial Corporation (OEFC) for the Kapuskasing and North Bay plants, which were scheduled to expire in December 2017, and to suspend for a period (as described below) 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 December 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, the Company has begun the process of mothballing both plants.
The Enhanced Dispatch Contract for Nipigon provides fixed monthly payments to that plant through October 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. The Company also has begun the process of mothballing Nipigon.
The Company is committed to working with those employees affected by the decision to mothball the three facilities.
Atlantic Power 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.
The Company does not expect the revised contractual arrangements for these three facilities to have a cash impact on its 2016 financial results.
However, because the PPAs at the Kapuskasing and North Bay plants have been terminated one year earlier than the original expiration date, the amortization of the intangible assets related to those PPAs must be accelerated, resulting in a non-cash amortization expense, subject to audit adjustments, of approximately $13 million, which will be included in 2016 net income rather than being expensed over the course of 2017.
The impact on 2017 financial results is expected to be positive as compared to the corresponding results under the previous arrangements for the three plants. Further detail will be provided in the Company's 2016 year-end earnings release and annual report on Form 10-K.
