EDMONTON, Alberta, Jan. 04, 2022 (GLOBE NEWSWIRE) -- Capital Power Corporation (TSX: CPX) (“Capital Power” or “the Company”) announced today the execution of a 6-year tolling agreement extension through October 2031 for its Arlington Valley (Arlington) facility with the current counterparty. Arlington is a 600-megawatt natural gas-fired combined cycle facility located west of Phoenix, Arizona that began commercial operations in 2002 and was acquired by Capital Power in late 2018.
“Consistent with our natural gas strategy of acquiring mid-life contracted natural gas assets that are strategically located in markets with strong fundamentals and have a high probability for recontracting, Arlington Valley is our second natural gas facility at which we have executed a long-term extension after the facility was acquired,” said Brian Vaasjo, President and CEO of Capital Power. “Arlington operates in the attractive Desert Southwest (DSW) power market where there is a significant need for reliable, dispatchable gas-fired generation to address reductions in baseload coal capacity, meet growing demand, and help with the integration of renewables.”
Arlington currently sells capacity and electricity to an investment grade load serving utility (credit ratings of A3/BBB+ from Moody's and S&P, respectively) under a tolling agreement during the summer months through 2025. For the non-summer months through 2025, Arlington produces power to support a Heat Rate Call Option (HRCO) with another investment grade counterparty when called upon. When not called to support the HRCO, Arlington may sell energy into the DSW or the California Independent System Operator (CAISO) wholesale markets. Under the extension, the tolling agreement will cover six months of the year starting in 2026 compared to the four summer months currently.
When Capital Power announced the acquisition of Arlington in 2018, the Company provided a forecasted average adjusted EBITDA of US$35 million per year (ranging from US$32 million to US$38 million) and US$16 million of adjusted funds from operations (AFFO) during the 6-year period from 2020 to 2025. Under the terms of the tolling agreement extension, adjusted EBITDA will move towards the low end of the original guidance range for 2024 and 2025 before increasing to an average of US$47 million (ranging from US$42 million to US$49 million) per year and US$34 million of AFFO per year for the 6-year period from 2026 to 2031.
About Capital Power
Capital Power is a growth-oriented North American wholesale power producer with a strategic focus on sustainable energy headquartered in Edmonton, Alberta. We build, own and operate high-quality, utility-scale generation facilities that include renewables and thermal. We have also made significant investments in carbon capture and utilization to reduce carbon impacts and are committed to be off coal in 2023. Capital Power owns approximately 6,600 MW of power generation capacity at 26 facilities across North America. Projects in advanced development include approximately 425 MW of owned renewable generation capacity in North Carolina and Alberta and 560 MW of incremental natural gas combined cycle capacity, from the repowering of Genesee 1 and 2 in Alberta.
https://www.globenewswire.com/news-release/2022/01/04/2360730/0/en/Capital-Power-announces-a-6-year-tolling-agreement-extension-for-Arlington-Valley.html