Capital Power Corporation (TSX: CPX) (“Capital Power”) successfully completed the acquisition of a 50.15% interest in the Frederickson 1 Generating Station (“Frederickson 1” or the “Facility”), a 265-megawatt (MW) natural gas-fired combined-cycle generation facility in Pierce County, Washington. The acquisition was previously announced on October 10, 2023.
The facility was acquired from Atlantic Power & Utilities for US$97.5 million, subject to working capital adjustments. Capital Power financed the transaction using cash on hand and its credit facilities. The other 49.85% interest in the Facility is owned by Puget Sound Energy (“PSE”). As part of the ownership agreement with PSE, Capital Power will operate and maintain the facility and will receive an annual management fee under the operating arrangement with PSE.
Located southeast of Tacoma in the Puget Sound Region load centre, Frederickson 1 is a flexible generation asset that is well-positioned to support long-term energy security and reliability for the Pacific Northwest. The Facility is supported by long-term contracts out to October 2030 with credit-worthy counterparties and is well-positioned for re-contracting as a key dispatchable, baseload asset in the region. Additionally, the Frederickson 1 site and adjacent lands provide ample room and infrastructure for future non-emitting, flexible generation developments.
The acquisition is immediately accretive to near-term cash flows and, for Capital Power’s portion of the Facility, provides an expected average contracted adjusted EBITDA of US$15 million per year during the 5-year period of 2024-2029.
