Emera Inc., the parent company of Nova Scotia Power, is getting into the wind energy business in the northeastern United States.
Emera announced on the weekend it has formed a joint venture with First Wind Holdings LLC of Boston, Mass., and Algonquin Power & Utilities Corp. of Oakville, Ont., to jointly construct, own and operate wind energy projects in the northeastern U.S.
"First Wind is the premiere wind developer in the northeast and it meets our strategy to invest in renewables and to do so in a low-risk, value-added way," Chris Huskilson, Emera’s president and chief executive officer, told analysts during a conference call Monday.
The new operating company, which has yet to be named, will own seven wind projects producing a total of 370 megawatts. Five of the projects are already operational, including three in Maine and two in New York state. The other two projects, including one in Vermont and another in Maine, are slated to be in service later this year.
Huskilson said he expects the partners will develop more wind projects in the future.
"We’re quite excited about this leading to more, both in the existing pipeline (of projects) that comes with this work, as well as leading to a need for more transmission," he told analysts.
Emera already owns two Maine power companies, Bangor Hydro Electric Co. and Maine & Maritimes Corp.
First Wind will own 51 per cent of the new operating company and continue to operate the wind projects. Emera and Algonquin will own the remaining 49 per cent through a separate joint venture called Northeast Wind.
Emera will initially own 75 per cent of Northeast and Algonquin, 25 per cent.
Northeast will pay $333 million for its stake in the new operating company, with the investment including a $150-million loan to the new venture. The loan will be repaid within five years or converted to equity in future projects, a joint news release said.
Emera said it plans to finance the transaction through existing credit facilities.
Algonquin’s financing plans include a deal with Emera for the Nova Scotia-based company to invest $37 million in the Ontario firm.
Emera will pay $5.37 per share through subscription receipts that will convert to shares once the deal is closed.
The agreement will increase Emera’s stake in Algonquin from 15 to 25 per cent, subject to Algonquin shareholder approval.
The agreement on the three-way joint venture, which does require certain state and U.S. federal regulatory approvals, is expected to close by the end of the year.
On Friday, Emera and Algonquin announced that they have entered into a strategic investment agreement to partner on further energy projects.
"With the support and the co-operation of Emera, we anticipate being able to identify additional attractive independent power and utility investment opportunities," Algonquin CEO Ian Robertson told analysts.
The companies are still free to pursue projects, either on their own or with another partner, that don’t fall within the agreement, he said.
As part of Friday’s deal, Emera will sell its 49.999 per cent stake in California Pacific Electric Co. to Algonquin, subject to state regulatory approval. In return, Emera will receive 8.211 million Algonquin shares in two tranches.
The Ontario company’s shareholders must still approve the deal at a special meeting in June.
Emera first teamed up with Algonquin in April 2009 to operate the California utility.
Algonquin owns and operates about $1 billion worth of clean, renewable power generation and sustainable utility distribution businesses in North America.
On Monday afternoon, Emera’s stock traded down 13 cents a share at $31.37 on the Toronto Stock Exchange.
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