Nova Scotia Power’s parent company is teaming up with an Ontario income fund to form a new renewable energy utility in California.
Emera Inc. of Halifax will spend $27.6 million buying a 9.9 per cent stake in the Algonquin Power Income Fund of Oakville, Ont., the companies announced Thursday.
As a first step in their new 50-50 partnership, Emera and Algonquin will buy the California electricity distribution and related generation assets of the Sierra Pacific Power Co. from NV Energy of Nevada for about US$116 million, subject to certain working capital and other closing adjustments.
Sierra Pacific provides electricity to about 47,000 customers in the Lake Tahoe region of Nevada. Emera and Algonquin will jointly own and operate Sierra Pacific through a newly formed entity, California Pacific Electric Co. (Calpeco).
Emera’s 50 per cent equity investment in Calpeco is US$27 million. The transaction is subject to approval, expected next year, from the California Public Utilities Commission.
"This partnership positions Emera to increase our holdings of renewable energy in North America and introduces us to a new market," Emera president Chris Huskilson said in a news release Thursday.
"It also allows us to increase value to jointly owned energy infrastructure assets with Algonquin Power. We look forward to working with Algonquin to build on our portfolio in the utilities and renewable energy sectors."
Emera will buy its 9.9 per cent stake in Algonquin when the Calpeco transaction closes next year. The Nova Scotia energy giant also has rights to acquire up to five per cent more of Algonquin over the next two years.
For Algonquin, "the acquisition of the California utility assets represents an important element in the strategic expansion of Algonquin Power’s low-risk utility infrastructure portfolio, and the highly predictable, long-term regulated returns from these assets will contribute to the stability of our earnings for years to come," Ian Robertson, executive director of the Algonquin Power Income Fund, said in a release.
Nova Scotia Liberal Leader Stephen McNeil criticized Emera, which owns Nova Scotia Power and Bangor Hydro in Maine, for investing outside the province and the Maritimes.
"Earlier this year, Nova Scotia Power admitted it needs to invest $100 million over the next five years in order to improve reliability to its customers here," Mr. McNeil said. "Nova Scotians are being asked to wait while Emera invests all over North America and the Caribbean."
Last year, Nova Scotia Power contributed $105.6 million to Emera’s bottom line.
"Obviously, Nova Scotia Power customers are not getting a fair shake," Mr. McNeil said. "Let’s see some investment here in our province."
Emera’s stock traded up 30 cents a share on the Toronto Stock Exchange on Thursday, closing at $20.11.
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