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March 8, 2016

TransCanada to end power purchase arrangements in Alberta

TransCanada has announced plans to terminate power purchase arrangements (PPAs) with the Canadian province of Alberta, in a move that will affect Sheerness, Sundance A and B PPAs.

TransCanada has announced plans to terminate power purchase arrangements (PPAs) with the Canadian province of Alberta, in a move that will affect Sheerness, Sundance A and B PPAs.

Due to a rise in costs relating to carbon emissions and less lucrative market conditions, prices are expected to increase on the remaining term of PPAs.

TransCanada executive vice-president and president for energy Bill Taylor said: "The agreements contain a provision that permits the PPA buyers to terminate the PPAs if there is a change in the law that makes the agreements unprofitable.

"The company does not view this action on the PPAs as a full retreat from the Alberta power market."

"We have made the decision to exercise this right."

TransCanada expects this decision to enhance its cash-flow, as well as comparable earnings in the near future.

The firm expects to save non-cash charge of approximately $235m pre-tax, which is expected to shrink to $175m after-tax.

Taylor added: "The company does not view this action on the PPAs as a full retreat from the Alberta power market.

"TransCanada has a robust gas-fired cogeneration business totaling 438 megawatts at four sites. These low cost and low CO2 emitting gas units are expected to perform well even in today’s market environment."

Last month, TransCanada expanded its 60-year presence in Québec with a larger corporate provincial office in Montréal.

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