Ontario Power Generation has agreed to acquire a clutch of operational and construction-stage gas-fired power plants in Ontario.
The company will pay TransCanada Energy approximately C$2.87 billion ($2.18 billion) for its stakes in the three-project portfolio.
The assets are the 683 MW Halton Hills facility, which came online in September 2010, the 900 MW Napanee generating station, which is nearing completion, and a 50% interest in the 550 MW Portlands Energy Centre, which came online in April 2009. OPG already owns the other 50% of Portlands Energy Centre.
RBC Capital Markets acted as financial adviser to OPG on the deal, which is expected to close in late 2019, subject to regulatory approvals and the commercial operations beginning at Napanee.
“The sale of these facilities is part of our ongoing efforts to maximize value for our shareholders and fund our industry-leading secured growth program in a disciplined manner,” said Russ Girling, TransCanada Energy president and CEO, in a statement. “In addition, we remain interested in new low-risk investment opportunities in the electricity sector within our core North American markets.”
The Halton Hills plant sells its electricity to the Ontario Independent Electricity System Operator (IESO), while Portlands Energy Centre sells its output to the Ontario Power Authority under the terms of a 20-year accelerated clean energy supply contract.
The Napanee Generating Station was designed as a flexible system resource which can be started and stopped daily and vary its output to meet the needs of the grid.
The deal is the latest of a series of acquistions announced by OPG of late. Last month, the company agreed to acquire the remaining 50% stake in the 560 MW combined-cycle Brighton Beach Generating Station, in which it already owns a 50% stake, from affiliates of Canadian Utilities, and in June, it agreed to acquire a 385 MW run-of-river and peaking hydro portfolio from I Squared Capital (PFR, 6/25).
For TransCanada, meanwhile, the sale will help bring the proceeds of its 2019 portfolio management activities to about C$6.3 billion ($4.79 billion). Other divestments this year include the sale of its 575 MW Coolidge simple-cycle gas-fired plant in Arizona to Southwest Generation (PFR, 12/17), the sale of an 85% stake in its Northern Courier pipeline to Alberta Investment Management Corp., and the monetizations of its U.S. midstream assets.
TransCanada intends to use the funds raised in the asset sales to help fund its C$30 billion ($22.8 billion) secured capital program.