AltaGas to acquire three natural gas-fired power facilities in US for $642m

AltaGas and its indirect wholly-owned subsidiary AltaGas Power have signed an agreement to acquire GWF Energy holding a portfolio of three natural gas-fired electrical generation facilities in US from investment fund Highstar Capital for $642m.

The three plants including the 330MW Tracy facility, the 97MW Hanford facility and the 96MW Henrietta facility are located in northern California and are set to diversify AltaGas’ power position in California.

AltaGas chairman and CEO David Cornhill said: "Having a diversified energy infrastructure business across North America gives us more opportunities for growth and for creating shareholder value.

"The acquisition of these power facilities is an important addition to our business. Each asset has a power purchase agreement that will further enhance AltaGas’ stable earnings and cash flow."

According to AltaGas, the latest acquisition aligns with its diverse energy infrastructure and is consistent with the company’s strategy of increasing its clean energy portfolio.

The existing interconnection of Tracy facility with Pacific Gas & Electric Company (PG&E) for natural gas supply allows for avoidance of incremental transportation charges that would result in a cost advantage for the facility.

Located in resource constrained areas, the Hanford and Henrietta facilities are fully contracted under power purchase agreements through to the fourth quarter of 2022 with PG&E.

They are also connected to the Southern California Gas system for natural gas supply.

AltaGas hopes to fund the acquisition with a combination of equity and debt.

Set to add about $95m in incremental contracted EBITDA a year, the acquisition is expected to close late in the fourth quarter.

The transaction is subject to customary approvals, including regulatory approvals from the Federal Energy Regulatory Commission of the US Government.