9 February 2010 - Northland Power Income Fund said that a wholly-owned subsidiary has entered into a 20-year Power Purchase Agreement (PPA) with the Saskatchewan Power Corporation to build and own a new natural-gas-fired power plant to provide baseload power to the Saskatchewan energy system.
The 261 MW natural-gas-fired combined cycle plant will be built near North Battleford, Saskatchewan, about 150 km north-west of Saskatoon. All power produced by the plant will be sold under the PPA to SaskPower. The plant will use a General Electric gas turbine with associated heat recovery and a steam turbine to produce the electricity. Construction is expected to begin in July 2010, and the plant is scheduled to begin commercial operations in 2013. The total cost of the project is budgeted at approximately $700 million.
Under the PPA, the project will receive monthly payments that are designed to cover all fixed costs and investment returns. The PPA also provides protection against changes in the market price of natural gas, as fuel costs are passed through to SaskPower. Northland Power will be responsible for operating the plant to achieve specified efficiency and reliability levels. The contractual structure of the project is designed to ensure predictable, stable and sustainable cash flows over the entire 20-year term of the PPA. The Fund intends to finance the project largely using non-recourse project debt, its line of credit and cash on hand.