This is another of those press releases that I have mentioned in Workathon before(in this case an Alberta utility) .The details are a bit sketchy but it does show that Capital Power has begun commercial operation of a wind project called K2 in southwestern Ontario.Capital tells us that it was under construction for 18 months.The power generated will be 270MW which makes it one of the largest in Canada.Capital owns it in combination with Samsung Energy and Pattern Enegy.Capital Power and Samsung sold 33% to Pattern and now all are equal partners in the K2 wind project.So in effect,Capital owns 90MW of new power generation in K2.
Capital has most of it's facilities in Alberta which has had low power prices for the last year and a half. K2 will fetch higher power prices in Ontario and help Capital diversify further.Capital Power(CPX) gets energy from a variety of energy sources.CPX owns more than 3200 MW of power generation from 17 facilities and another 371 from a power purchase agreement.Also an additional 545MW of owned generation capacity is now under construction in Alberta and North Carolina.
Summary
This sounds like a good deal for Capital Power.It will bring on more revenues and hence increase adjusted EBITDA,But selling about 17% to Pattern Energy when it was completed should have been at a good price.There are no details to calculate whether the profit on the sale almost paid for their share of the project costs but it should be easier to carry after the sale to Pattern Energy.Also Ontario power prices should bring a bigger margin than Alberta prices.Capital did not offer guidance on whether this changes their forecast for adjusted EBITDA for 2015 or not.But this may help to bring them in at the top end of guidance.
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