Atlantic Power Corp. has signed over its 300 MW simple-cycle gas-fired Manchief peaker in Morgan County, Colo., to the plant's offtaker.
Xcel Energy's utility subsidiary Public Service Co. of Colorado (PSCo) is paying $45.2 million for the plant, subject to working capital and other adjustments.
Atlantic Power says it will use the sale proceeds to repay a portion of its senior secured term loan B. There was $435 million outstanding under the loan as of March 31 and it matures in 2023.
The sale of Manchief is expected to close in May 2022, a month after PSCo’s power purchase agreement expires. The transaction is subject to regulatory approvals from the Colorado Public Utilities Commission and the U.S. Federal Energy Regulatory Commission.
The transaction is the culmination of PSCo's 2017 "All-Source" request for proposals for its long-term energy supply needs. Last June, the utility notified Atlantic Power that it had approved of one of its submitted proposals, whereby PSCo would acquire Manchief at the end of its PPA term.
"By retaining Manchief for the next three years, we will continue to realize the cash flows for the remaining PPA term,” said James J. Moore, Jr., president and ceo of Atlantic Power, in a statement. “In addition, upon expiration of the PPA in 2022, the sale of the plant will provide us with a cash purchase price that eliminates uncertainty about post-PPA revenue and will support continued debt reduction."
Manchief is fitted with a pair of Siemens-Westinghouse V84.3A1 turbines and has been online since in July 2000.
Atlantic Power acquired the facility in November 2011 when it bought Capital Power Income in a $506.5 million transaction, simultaneously adding 1.3 GW of biomass, hydro and gas-fired generation to its fleet (PFR, 6/21/11). Capital Power, the independent power producer affiliate of the income fund, received $320.3 million for its 29% share in the fund.
Capital Power Income had bought Manchief from El Paso Electric in 2002, for $127 million (PFR, 9/23/02).
Spokespeople for Atlantic Power and Xcel Energy did not immediately respond to inquiries regarding the use of financial advisers.