Atlantic Power secures 10-year contract for biomass plant

By Atlantic Power Corp. | October 02, 2019

Atlantic Power Corp. announced Oct. 1 that it has executed a new 10-year energy purchase agreement (EPA) with BC Hydro for the Williams Lake biomass plant in British Columbia, Canada. The new EPA is effective Oct. 1, 2019. The plant had been operating under a short-term EPA since April 2, 2018, which expired on Sept. 30, 2019.

Under the new EPA, Williams Lake will receive a fixed price per megawatt-hour for energy produced. This price escalates annually with the British Columbia CPI. The EPA does not provide for a capacity payment and the energy payment structure does not include a fuel cost passthrough.

Conditions in the British Columbia timber market for the past couple of years have adversely affected both the availability and cost of fuel, which as previously noted by the company represents the most significant operational and financial risk for Williams Lake. During the period that the plant has been operating under the short-term contract, the company has been procuring fuel only on a short-term basis. With a long-term EPA now in place, the company is evaluating fuel supply options and plans to provide EBITDA guidance for Williams Lake under the new EPA at a later date. Considering market conditions and the absence of a fuel cost passthrough, the company expects there to be greater variability to EBITDA and cash flow from this plant as compared to its other contracted biomass plants.

The company plans to undertake several major maintenance projects at Williams Lake that will result in a higher level of maintenance expense for the plant in 2020. These projects may be commenced as early as the fourth quarter of 2019 and are expected to be completed in 2020.      

"As we have highlighted previously, biomass plants provide benefits beyond the generation of electricity, including support for the local economy and timber industry, and environmental benefits, including forest management," said Joe Cofelice, executive vice president, commercial development. "We are very pleased to be extending our longstanding relationship with our customer BC Hydro at Williams Lake in order to serve the interests of consumers, the environment and the local community. We thank all those in the local community who supported our efforts to obtain a new long-term contract for this plant."