CALGARY, ALBERTA -- (Marketwire) -- 03/25/13 -- AltaGas Ltd. ("AltaGas") (TSX: ALA)(TSX: ALA.PR.A)(TSX: ALA.PR.U) announced today that its indirect wholly owned subsidiary AltaGas Power Holdings (U.S.) Inc. has entered into a purchase and sale agreement with affiliates of LS Power Equity Advisors, LLC to acquire Blythe Energy, LLC ("Blythe"), which owns a 507 MW natural gas-fired combined cycle plant (the "Blythe Energy Center"), associated major spare parts, and a related 230 kV 67-mile electric transmission line in Southern California, for US$515 million (the "Acquisition").
"The Acquisition of Blythe is an important addition to our power business. The power purchase agreement provides stable earnings and cash flow and with the infrastructure in place today, the facility is well positioned to access two premium power markets in California and Arizona in the future," said David Cornhill, Chairman and CEO of AltaGas. "The addition of natural gas-fired power generation to our energy infrastructure portfolio in the US provides another platform for growth to meet the increasing demand for clean sources of energy."
The Acquisition is expected to be accretive to earnings and cash flow per share in 2014, the first full year of ownership, and is expected to add approximately $50 million in incremental contracted EBITDA per year.
The Blythe Energy Center is contracted under a Power Purchase Agreement ("PPA") through to July 2020 with Southern California Edison ("SCE"). Contract provisions match PPA revenues to all major plant costs.
The Blythe Energy Center is well positioned upon expiry of the PPA in 2020 to contract with other market participants due to its location and ability to serve both the California Independent System Operator ("CAISO") and Desert Southwest markets. The demand for cleaner energy sources, including natural gas, continues to be strong across North America and is a key driver for potential future growth of the Blythe Energy Center. Blythe is located on an owned 76-acre site which provides a significant geographic footprint for potential future expansion.
-- The Acquisition fits with AltaGas' vision of being one of North America's leading energy infrastructure companies and aligns with AltaGas' strategy of adding stable, long life assets;-- The Acquisition is consistent with AltaGas' strategy of increasing its clean energy portfolio by adding gas-fired generation and enhancing power market and counterparty diversity; and-- It is expected that the Blythe Energy Center will provide a significant US geographic footprint for AltaGas' power business, with opportunities for future growth.
Stable Cash Flows
-- It is expected that the Acquisition will provide stable cash flows to further support both AltaGas' dividend and capital growth projects; and-- Cash flows are underpinned by the PPA with SCE.
Description of the Asset
The Blythe Energy Center is a natural gas-fired combined cycle power plant located in Blythe, California. The facility employs proven Siemens technology and has a low base load heat rate in the range of 7,000 to 7,500 Btu/kWh, low emissions, responsive start times and flexible ramp rates. The facility is one of the most economic natural gas generating facilities on the CAISO dispatch curve.