TransCanada closes $1B sale of hydro assets

Dive Brief:

  • TransCanada yesterday announced it completed the sale of 13 hydroelectric facilities to Great River Hydro, an affiliate of ArcLight Capital Partners, for US $1.065 billion.
  • The facilities include stations and associated dams and reservoirs on the Connecticut and Deerfield Rivers. The assets are located in New Hampshire, Vermont and Massachusetts, and have total generating capacity of 584 MW.
  • The deal, announced last year, was a part of a broader plan for TransCanada to divest its Northeast power business to private equity interests for a total of $3.7 billion.

Dive Insight:

TransCanada's announcement means the company is successfully following through on a strategic review of its business, which called for divesting generation in order to fund its $13 billion acquisition of the Columbia Pipeline Group.

A larger $2.2 billion deal, where TransCanada will sell its Ravenswood, Ironwood, Ocean State Power gas plants and the Kibby Wind facility, to Helix Generation LLC, has yet to finalize. Those plants have a combined capacity of 3,950 MW.

When the deals were announced last year, TransCanada CEO Russ Girling said in a statement that the transition from generation to fuel "will further enhance the stability and predictability of our earnings and cash flow streams and support a strong and growing dividend." 

The sale to Helix Generation, which is an affiliate of LS Power Equity Advisors, is expected to close later this year. 

Volatility in the nation's wholesale markets has driven a number of utilities to move out of the merchant generation business, and to look to gas projects for stability. 

AmerenDuke and PPL have all sold merchant plants to independent power producers in recent years. AEP sold four plants to a private equity group last year after a Ohio plant subsidy proposal was blocked by federal regulators.

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