Canadian-based independent producer AltaGas is selling three gas-fired power plants in California to a private equity firm for about $300 million (U.S.) to help fund its acquisition of an American power utility.
AltaGas has cut a deal with Middle River Power III to buy the Tracy, Hanford and Henrietta power plants. Those three plants total about 523 MW in generating capacity.
The three power plants are part of $560 million in asset sales that AltaGas announced this week to repay some funds related to the acquisition of WGL Holdings Inc. AltaGas bought the plants in 2015 for about $642 million.
Henrietta and Hanford are gas peaker plants. Tracy is a gas turbine combined-cycle generaton plant.
“We expect to have further announcements in the near future on our asset monetizations, which will continue to reshape AltaGas to focus on gas and U.S. utilities, while keeping a strong footing in the Power market with a focus on capital light, innovative solutions,” David Cornhill, Chairman and interim co-CEO of AltaGas, said in a statement. “We remain focused on reshaping AltaGas, directing our capital in high growth areas which will result in strong risk-adjusted returns.”
The sales include midstream gas assets. The sale of the power assets is subject to customary closing conditions, including Federal Energy Regulatory Commission approval. The transaction has an effective date of September 1 and is expected to be completed in the fourth quarter of 2018.
Middle River Power is a subsidiary of Avenue Capital. It also has made a move to buy the troubled, coal-fired Navajo Generating Station in Arizona.
Calgary-based AltaGas and WGL approved their execution agreement in May on the $4.5 billion merger. WGL owns and operates several gas utilities in the District of Columbia, Maryland and Virginia, serving more than one million customers.
(Rod Walton is content manager of Power Engineering the POWER-GEN International conference and exhibition scheculed December 4-6 in Orlando, Florida. He can be reached at [email protected]).