Capital Power to buy US gas power plants for $1.1bn

Capital Power, a Canada-based independent power producer, has reached deals with CSG Investments to acquire two natural gas-fired power plants in the US for a total of $1.1bn (C$1.51bn).

The company will purchase CXA La Paloma, a company that owns the 1.06GW La Paloma natural gas-fired generation facility in Kern County, California, and the 1.09GW Harquahala natural gas-fired generation facility in Maricopa County, Arizona, owned by New Harquahala Generation Company.

Capital Power is carrying out the acquisition under a 50-50 partnership with Capital Power Investments and an affiliate of a fund managed by BlackRock’s Diversified Infrastructure business.

Capital Power and BlackRock will each provide 50% of the funding.

Capital Power will then own almost 1.6GW of capacity.

The company will also handle operations and maintenance, along with asset management, and receive an annual management fee.

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Capital Power president and CEO Avik Dey stated: “Capital Power’s acquisition of La Paloma and the partnership in Harquahala’s gas generation assets marks a significant milestone in our strategic growth. These plants are well-positioned to bolster our current portfolio and align with our commitment to providing reliable, affordable power solutions that support a balanced approach to the energy transition.

“This acquisition further unlocks an interesting market opportunity in WECC [the Western Electricity Co-ordinating Council], where we can play a leading role in supporting the shift to low-carbon energy solutions through offering reliable generation while we grow our own renewables fleet. Lastly, this transaction underscores our dedication to delivering long-term value to our shareholders and advancing our position as a leader in the power generation sector.”

Scheduled for completion in the first quarter of 2024, the transactions await regulatory clearances.

The company stated that the deals align with its plan to own contracted gas-fired power plants that are strategically placed within their markets and can bring additional growth to the company.

On completion, Capital Power will operate the fifth-largest fleet of non-regulated gas-fired power plants in North America with a footprint across the US and Canada.

Capital Power plans to raise a total of $400m in subscription offerings to fund the acquisitions, of which $300m will be a publicly purchased offering and the remaining $100m will be a private placement to AIMCo.

In October 2023, the company acquired a 50.15% stake in the 265MW Frederickson 1 generating station from Atlantic Power & Utilities for $100m.

The gas-fired combined-cycle power plant is located in Pierce County, Washington, and has been operating since 2002.

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