Atlantic Power Corporation (NYSE: AT) (TSX: ATP) announced today that it has executed an agreement to sell its Manchief power plant to Public Service Co. of Colorado for $45.2 million, subject to working capital and other customary adjustments. PSCo, a subsidiary of Xcel Energy, Inc. (NASDAQ: XEL), is the current customer under the Manchief Power Purchase Agreement ("PPA"). Closing of the sale is expected to occur in May 2022, following the expiration of the PPA.
Manchief is an approximately 300 megawatt gas-fired peaking facility that entered commercial operation in July 2000. The plant is dispatchable by the customer under the terms of the PPA. In November 2017, the Company submitted several proposals in PSCo's 2017 All-Source Solicitation for its longer-term energy supply needs. In June 2018, the Company was notified by PSCo that PSCo had selected the proposal under which it would acquire Manchief from the Company at the end of the PPA term.
"We are pleased to announce this transaction, which is a positive financial outcome for Atlantic Power and also helps our customer to meet its power needs," said James J. Moore, Jr., President and CEO of Atlantic Power. "By retaining Manchief for the next three years, we will continue to realize the cash flows for the remaining PPA term. In addition, upon expiration of the PPA in 2022, the sale of the plant will provide us with a cash purchase price that eliminates uncertainty about post-PPA revenue and will support continued debt reduction."
The sale is subject to various closing conditions and approvals, including the receipt of regulatory approvals from the Colorado Public Utilities Commission and the Federal Energy Regulatory Commission, which are expected within approximately 11 months of filing. Proceeds of the sale are expected to be used to reduce the remaining principal amount of the Company's Senior Secured Term Loan.
About Atlantic Power
Atlantic Power is an independent power producer that owns power generation assets in nine states in the United Statesand two provinces in Canada. The generation projects sell electricity and steam to investment-grade utilities and other creditworthy large customers predominantly under long?term PPAs that have expiration dates ranging from 2019 to 2037. The Company seeks to minimize its exposure to commodity prices through provisions in the contracts, fuel supply agreements and hedging arrangements. The projects are diversified by geography, fuel type, technology, dispatch profile and offtaker (customer). The majority of the projects in operation are 100% owned and directly operated and maintained by the Company. The Company has expertise in operating most fuel types, including gas, hydro, and biomass, and it owns a 40% interest in one coal project.
