Atlantic Power announces PPA extension for Ontario biomass plant

By Atlantic Power Corp. | December 09, 2020

Atlantic Power Corp. announced on Dec. 8 a one-year extension of its Calstock power purchase agreement (PPA) and a final settlement of the insurance claim for its Cadillac plant.

Calstock is an approximately 35 megawatt biomass plant located in Hearst, Ontario. The offtaker under the PPA is the Ontario Electricity Financial Corp. The PPA was originally scheduled to expire in June 2020 but prior to that date was extended to December 2020 on existing terms. The second extension, which is also on existing terms, runs to Dec. 16, 2021. The extension provides the provincial government additional time to consider future options for addressing mill waste in the province, including a potential new PPA for Calstock. The extension could be terminated early by mutual agreement if the company is successful in securing a new contract.  

"This extension was made possible by the Ontario government's commitment to support the forestry sector and the economy of Northern Ontario, and the strong support of all stakeholders involved in this process, including our Calstock team, the local communities and mills, unions and the Ontario Forest Industries Association," said Joe Cofelice, executive vice president—commercial development of Atlantic Power. "We look forward to further engagement with government and other stakeholders regarding a potential new contract for Calstock."   

The PPA extension, which is effective Dec. 17, 2020, does not result in a change to the company's 2020 project adjusted EBITDA guidance of $175 million to $190 million.

Separately, earlier this month, the company executed a final settlement of its insurance claim for the Cadillac plant, under which it will receive final payments from the insurers totaling approximately $10.1 million. The outcome was consistent with the company's expectation. The cash is expected to be received by year-end 2020, which would allow the company to record business interruption insurance recoveries to income in the fourth quarter of 2020.