HALIFAX, Nova Scotia – A Rhode Island electricity generation operation in Tiverton is one of the three combined-cycle gas-fired facilities in New England to be purchased by Emera Inc., an energy company based in Halifax.
Emera Inc. agreed to purchase the facilities, which include Bridgeport Energy in Connecticut, Tiverton Power in Rhode Island and Rumford Power in Maine, from Edmonton, Alberta-based power producer Capital Power Corp.
The sale is in line with Capital Power’s efforts to refocus its merchant power business in Alberta. Capital Power purchased the Tiverton facility in 2011 with the expectation that earnings would increase with the recovery of the U.S’s economy. According to fourth quarter earnings reports released by the company in 2012, the U.S. plants incurred a net pre-tax loss of $10 million.
“These are quality assets, in a region Emera knows very well, having operated in the New England gas and electricity markets for more than a decade,” said Chris Huskilson, president and CEO of Emera. “Adding gas generation to our existing generation portfolio of wind and hydro assets in the Northeast has been a strategic objective for Emera. We are pleased to have acquired these particular assets, which are highly efficient, well situated and low emitting, and which we believe can deliver value to our business.”
The transaction will add 1,050 megawatts to Emera’s generation capacity in the Northeast – 520 megawatts from Bridgeport and 265 megawatts each from Rumford and Tiverton – and represents a total investment of $541 million. Emera, which holds $8 billion in assets, reported $2.1 billion in 2012 revenue.
Emera plans to finance the purchase with cash and short-term credit resources on closing, and ultimately expects to finance the acquisition with a combination of debt and equity consistent with maintaining its financial position and existing credit ratings. The transaction is subject to certain regulatory approvals and is expected to close by the end of 2013.
“Emera is making this investment for the long term,” said Huskilson. “The earnings profile is modest in the early years, but we have acquired these facilities at a fair price and we expect their value will increase over time, as we optimize within our portfolio, as older, less efficient assets in the region are retired, and more intermittent renewable generation is added to the system.”
Capital Power had acquired the Tiverton and Rumford power plants in 2011 from Brick Power Holdings LLC for $315 million before adjustments.