Dive Brief:
- Provincial utility Ontario Power Generation (OPG) will spend almost $300 million to purchase Eagle Creek Renewable Energy LLC, which owns and operates more than five dozen small hydropower facilities in the United States.
- The deal is OPG's first foray outside of Ontario and is aimed at earning a return for the province and shareholders, officials say.
- Ontario has been seeking ways to lower energy prices and Premier Doug Ford promised a 12% reduction. Last month the high prices helped spur a series of energy storage contracts in the province, totaling 42 MWh.
Dive Insight:
No taxpayer dollars will be used to fund the acquisition, OPG explained in the announcement. The company's corporate public debt program or other available credit facilities will fund the $298 million purchase price. The utility's statement promised "no impact on electricity bills, greater financial return for Ontarians."
Though it must still pass regulatory approvals, OPG said it expects the deal to close later this year.
Eagle Creek owns 63 small hydropower facilities combining for 216 MW of capacity across the U.S. in 13 states. The dams are small compared with facilities OPG uses to supply its customers, the utility noted. The utility has 66 Ontario hydropower facilities with a capacity of 7,468 MW.
It is not clear if there is a relationship between the transaction and Ontario government's promise to bring down electricity rates. Industry consultant Tom Adams told the Globe and Mail the purchase could distract the utility from an ongoing nuclear project.
"Anything that distract[s] attention away — no matter how legitimate — is potentially very costly and I would think ill-advised," Adams told the paper.
Ontario passed the Green Energy Act in 2009, and at the same time set up the Global Adjustment Charge to make up the difference between wholesale power prices and various programs the provincial government instituted. That led to a steep rise in the province's energy costs.
A 2015 report said Ontario ratepayers paid $37 billion more than needed between 2006 and 2014 and will spend an additional $133 billion by 2032 as a result of the global adjustment charges.
