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7 April 2006 -- EPCOR Power L.P. announced that it is acquiring from EPCOR Utilities Inc. and its wholly owned subsidiaries a 100% interest in Frederickson Power L.P. for an aggregate purchase price of $118 million. FPLP owns a 50.15% interest in the Frederickson power facility, a 249 MW single unit, natural gas-fired combined cycle generating facility, with an additional duct firing capability of 20 MW, located in Pierce County, Washington. The acquisition is expected to close in the summer of 2006, subject to regulatory approvals.
The expected benefits of the acquisition include modest accretion to funds generated from operations on a per unit basis, further geographic diversification of assets, the addition of new investment grade counterparties, and extending the weighted average life of the Partnership's power purchase agreements.
FPLP's portion (50.15%, or approximately 125 MW) of the Frederickson power facility's base 249 MW generating capacity has been sold under tolling arrangements in the form of power purchase agreements expiring in 2022 to three Washington State public utility districts.
In addition, at the closing of the acquisition, EPCOR will grant to the Partnership an option to acquire a 49% interest in the development rights for a second generating unit adjacent to the Frederickson facility site, exercisable for six months after the closing of the acquisition at an exercise price of U.S. $4.0 million.
There will be no change to the remaining interest in the Frederickson power facility, which is held by Puget Sound Energy. PSE holds its share of the facility's capacity (49.85%, or approximately 124 MW) through its ownership of a 49.85% undivided interest in the Frederickson power facility. PSE uses its share of such capacity to serve its retail customers. Plant dispatch is coordinated with FPLP and PSE through a dispatch amendment agreement to the Power Purchase Agreements.
EPCOR will continue to operate the Frederickson power facility.
"This acquisition emerges from an earlier commitment to seek growth opportunities which are consistent with the Partnership's strategic focus," said Brian Vaasjo, President of the general partner of EPCOR Power L.P. "With long term power purchase agreements with investment grade counterparties in place and the continuation of EPCOR as the operator, this acquisition will contribute positively to the Partnership's per unit funds generated from operations and to cash available for distributions on a sustainable basis. EPCOR remains committed to maintaining its current level of interest in the Partnership."
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