Power Holdings, LLC has agreed to indirectly acquire 100% of Trans-Elect NTD Path 15, LLC, which owns approximately 72% of the transmission system rights in the Path 15 transmission project located in California.

The project is an 84-mile, 500-kV transmission line built along an existing transmission corridor in California to help alleviate what had been a chronic transmission congestion point. The project went into service in December 2004 and increased transmission capacity from Southern to Northern California by approximately 1500 MW to 5400 MW, and southward transmission capacity by approximately 1100 MW. This transmission line facilitates the movement of power from the Pacific Northwest to Southern California in the summer and from generators in Southern California to Northern California in the winter.

The equity purchase price for the project will be approximately $85.5 million and will be financed with an acquisition credit facility provided by BMO Capital Markets. Existing debt at the project's operating and holding companies will be assumed in the transaction but will be non-recourse to Atlantic Power and Holdings.

The sellers include affiliates of Trans-Elect, Inc., which is a GFI Energy Ventures, LLC portfolio company, United States Power Fund, LP managed by Energy Investors Funds Group, ArcLight Energy Partners Fund I, L.P. which is an affiliate of Atlantic Power's sponsor, and other private investors. The sellers were advised by Morgan Stanley as exclusive financial advisor and Dickstein Shapiro Morin & Oshinsky LLP as legal counsel. Atlantic was represented by Leonard, Street and Deinard Professional Association as legal counsel.

The project's revenue stream is regulated by the Federal Energy Regulatory Commission on a cost-of-service ratebase methodology, which insulates cash flows from any impacts of actual line usage. All prudently incurred operating, maintenance and capex costs are reflected in rates charged. California's Independent System Operator collects Transmission Access Charges being paid predominantly by the state's investor-owned utilities and passes them to transmission owners, such as Path 15.

The acquisition is subject to approval by the FERC. It is anticipated that an application for approval will be filed in the next two weeks, with a FERC ruling expected in the third quarter of 2006.