CAPITAL POWER PARTNERS WITH ENMAX FOR SHEPARD PLANT
Shepard project worth $1.4B
Edmonton-based Capital Power has signed on as a 50 per cent partner in Enmax’s $1.4 billion natural gas-fired power plant under construction in southeast Calgary.
The company will jointly build, own, and operate the 800 MW Shepard Energy Cen- tre along with City of Calgary-owned Enmax.
Capital Power — an independent power generation company formerly part of Edmonton’s Epcor — will invest $860 million in the Shepard project, the largest natural gas-fuelled facility in Western Canada.
“We’re a significant power generator in Alberta, and that asset is an excellent asset,” said Capital Power president and CEO Brian Vaasjo. “Looking at the market in the future, with the retirement of coal plants and growth in the province, it has a very significant value.”
Enmax announced in 2008 its plans to build the facility in the Shepard Industrial Park, the utility’s first major foray into electrical generation. The project drew criticism from some, including then alderman Ric McIver, who argued it was a high-risk venture that shouldn’t be taken on by a publicly owned utility.
Enmax president and CEO Gianna Manes said Thursday that the utility had been open to a possible partnership from the beginning.
“It made sense for us all along, if it was the right opportunity, to sell a portion of the plant — to share in the cost of construction and ongoing operations,” she said.
Manes said the deal with Capital Power is a good one because it allows Enmax to share the risk associated with the project while still allowing the utility to increase its presence as a power generator. In addition, a 20-year “tolling agreement” will see Enmax pay Capital Power a fixed capacity charge for a portion of that company’s share of the output from the Shepard facility — giving Enmax an additional secure supply of electricity to help meet future demands.
In 2009, Capital Power was one of four independent Alberta electricity companies that filed a court action in an effort to stop a governmentappointed assessor from giving a favourable report on the proposed Shepard Energy Centre. The companies argued the Shepard proposal failed to ensure a “level playing field” between independent power producers and government-owned utilities.
That action was not successful, and though Vaasjo acknowledged Capital Power was “the most vocal” producer involved in that argument, he said it has no bearing on today.
“That’s very much water under the bridge,” he said. “Enmax was found to be playing on a level playing field.”
Construction on the Shepard Energy Centre began in July 2011 and the project is on track to begin operations in early 2015. Both Vaasjo and Mares said its generating capacity is sorely needed, in part to meet the demands of Alberta’s growing population, but also because new federal greenhouse gas regulations will require some of the province’s aging coal-fired plants to be decommissioned by the end of the decade and in the years following.
Vaasjo said by increasing the province’s power supply, the Shepard Energy Centre should mean good news for electricity customers when it comes online.
“It will have the impact of lowering power prices in the province, until demand surpasses the addition of that capacity,” he said.
Capital Power is also planning to develop another natural gas-fired facility, expected to be similar in size to the Shepard project, in the Edmonton area. That facility, the Capital Power Energy Centre, is expected to be completed between 2017 and 2019.