Atlantic Power Holdings, LLC had indirectly acquired 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 company paid US$85.5 million in cash for the project, which has approximately $145 million in non-recourse project-level debt.
The project is an 84-mile, 500-kV transmission line built along an existing transmission corridor in California to help alleviate what had been a chronic transmission congestion point in the state's north-south capacity. The project went into service in December 2004.
The project's revenue stream is regulated by the Federal Energy Regulatory Commission on a cost-of-service rate base methodology, which insulates cash flows from any impacts of power prices or actual line usage. The approved rate base includes all costs of the project and earns an allowed rate of return that is reviewed by the FERC every three years, and the rate base is depreciated over 30 years. All prudently incurred operating and maintenance costs and capital expenditures may be collected in rates charged. California's Independent System Operator collects transmission access charges being paid predominantly by the state's investor-owned utilities and passes them to transmission owners, such as Path 15.
"We are very pleased to be completing the Path 15 acquisition, further strengthening our ability to generate stable, sustainable and predictable cash flows while enhancing the diversity of our project portfolio," commented Barry Welch, president and CEO.
The company also announced that it will increase its cash distribution to shareholders by an annual rate of Cdn$ 0.03 per Income Participating Security commencing with the September distribution. Since its Initial Public Offering in November 2004 the company has increased annualized cash distributions per IPS by 6%.
"This increase in cash distributions, the second since our IPO, is another significant milestone and the direct result of our successful strategies to support and grow distributable cash over the long term," commented Barry Welch.
Atlantic Power Corporation owns interests in a diversified portfolio of 15 power generation projects and one transmission line located primarily in major markets in the United States. The company's objectives are to sustain and grow its cash distributions over the long term by enhancing the performance of its existing assets and by making accretive acquisitions.