EDMONTON, Alberta - March 11, 2010 - BC Hydro announced today that Capital Power Corporation's ("Capital Power," or "the Company") (TSX: CPX) Quality Wind Project ("Quality Wind," or "the project") has been selected for the award of an Energy Purchase Agreement ("EPA").
The 142-megawatt (MW) wind power project would be located in northeastern British Columbia, and developed by an indirect wholly-owned subsidiary of Capital Power. The project has an expected cost of $455 million.
Clean, renewable energy generated by Quality Wind would be sold under a 25-year EPA with BC Hydro. Commercial operation is expected to commence no later than the spring of 2013.
"Quality Wind is an excellent fit with Capital Power's strategy," said Capital Power President and CEO, Brian Vaasjo. "Once constructed, we expect the project to be immediately accretive to earnings, and the long-term contract supports our strategy to maintain a balance between contracted and merchant generation."
Management expects that Quality Wind would be funded in conjunction with the Company's overall financing plan, and be consistent with its commitment to maintaining its investment-grade credit ratings. Capital Power currently has about $1.2 billion in credit facilities available.
The Quality Wind project design currently calls for 79 turbines on a site about 10 kilometres northeast of Tumbler Ridge, British Columbia, a community of 2,500. The proposed site is near Highway 52, which provides relatively good access for construction. The area has seen other development, including oil/gas activity and forestry operations. Public consultation for the project began in 2007.
"Based on the input we've received from local stakeholders, and from the field studies we've conducted, the project site appears to be well suited for development," said Keith Boutcher, a Director of Business Development with Capital Power. "Subject to the completion of the review process, we believe that the physical characteristics of the area would allow us to build and operate the project with a minimum of environmental and stakeholder impacts."
Construction of the Quality Wind project will be subject to regulatory approvals, including completion of the provincial environmental assessment (EA) process and approval of the EPA by the B.C. Utilities Commission.
The project is currently being reviewed under British Columbia's Environmental Assessment Act. An Application for an Environmental Assessment Certificate has been filed with the B.C. Environmental Assessment Office (EAO), and a formal 180-day review process, including Open Houses, is near completion. The EA Application examines the project's potential impacts, including biophysical, social, economic, heritage and health components. Information on the project, including the EA Application, can be viewed on the EAO website at: http://www.eao.gov.bc.ca/.
Certain information in this news release is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, and expect or similar words suggest future outcomes.
Forward-looking information in this news release includes, among other things, information relating to Quality Wind's: (i) expected capital cost; (ii) expected timing for completion of environmental permitting and timing of commercial operation; (iii) expected impact to Capital Power's earnings; and (iv) expectations regarding Capital Power's strategy, including expectations that the long-term contract supports Capital Power's commitment to maintain an investment-grade credit rating, and a balance between contracted and merchant generation; (v) expectations regarding funding of Quality Wind and possible sources of funding; and (vi) expectations regarding the term of the EPA with BC Hydro. These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements include, but are not limited to: (i) the location of the project and the site on which it will be developed; (ii) costs of construction and development; (iii) the Company's financial position, credit facilities and sources of funding; (iv) the Company's assessment of commodity and power markets; (v) the Company's assessment of the markets and regulatory environments in which it operates; (vi) the Company's assessment of economic conditions; (vii) weather; (viii) availability and cost of labour and management resources; (ix) performance of contractors and suppliers; (x) availability and cost of financing; (xi) foreign exchange rates; (xii) management's analysis of applicable tax legislation; (xiii) the currently applicable and proposed tax laws will not change and will be implemented; (xiv) currently applicable and proposed environmental regulations will be implemented; (xv) counterparties will perform their obligations; (xvi) ability to successfully integrate and realize benefits of its acquisitions; (xvii) ability to implement strategic initiatives which will yield the expected benefits and results; and (xviii) the Company's assessment of capital markets and ability to complete future share offerings.
Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company's expectations. Such risks and uncertainties include, but are not limited to risks relating to: (i) operation of the Company's facilities; (ii) power plant availability and performance; (iii) unanticipated maintenance and other expenditures; (iv) availability and price of energy commodities; (v) electricity load settlement; (vi) regulatory and government decisions including changes to environmental, financial reporting and tax legislation; (vii) weather and economic conditions; (viii) competitive pressures; (ix) construction; (x) availability and cost of financing; (xi) foreign exchange; (xii) availability and cost of labour, equipment and management resources; (xiii) performance of counterparties, partners, contractors and suppliers in fulfilling their obligations to the Company; (xiv) developments in the North American capital markets; (xv) compliance with financial covenants; (xvi) ability to successfully realize the benefits of acquisitions and investments; and (xvii) the tax attributes of and implications of any acquisitions. If any such risks actually occur, they could materially adversely affect the Company's business, financial condition or results of operations. In that case the trading price of the Company's common shares could decline, perhaps materially.
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are provided for the purpose of providing information about management's current expectations, and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Capital Power is a growth-oriented North American independent power producer, building on more than a century of innovation and reliable performance. The Company's vision is to be recognized as one of North America's most respected, reliable and competitive power generators. Headquartered in Edmonton, Alberta, Capital Power has interests in 31 facilities in Canada and the U.S. totaling approximately 3,500 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources.