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TransCanada Picks Up 5 Westcoast Cogeneration Plants

TransCanada Picks Up 5 Westcoast Cogeneration Plants

Calgary's TransCanada Power LP, a unit of TransCanada Pipelines Ltd., last week said it was buying Westcoast Energy Inc.'s interest in five Canadian cogeneration plants in a deal valued at C$512 million. Westcoast, based in Vancouver, is expected to net C$75 million after taxes, and turn its attention toward its new power generation projects.

The facilities to be sold include a 100% interest in the 250 MW Island cogeneration plant near Campbell River, BC, expected to begin operations later this year; a 100% interest in the 110 MW Fort Frances cogeneration plant in Fort Frances, ON; a 50% interest in the 100 MW Lake Superior cogeneration plant in Sault Ste. Marie, ONT; a 50% interest in the 117 MW McMahon cogeneration plant in Taylor, BC; and a 50% interest in the 50 MW Whitby cogeneration plant in Whitby, ON. Following regulatory approvals, the deal is expected close by the end of the year, according to officials.

With the sale, Westcoast CEO Michael Phelps said his company would use the profits as part of its capital reinvestment program. Currently, the company is nearing the final stages of its construction of the 285 MW Bayside power plant near Saint John, NB, in which it owns 75% interest.

Westcoast, which earned its reputation with its British Columbia gas pipeline system, also has begun preconstruction activities on a 350 MW Frederickson power plant to be located in the State of Washington. That facility, of which Westcoast will own 60%, is slated to begin operations in 2002. Westcoast also recently acquired power purchase agreements worth 296 MW in the Alberta Power Pool auction through Engage Energy.

"The development of natural gas fired power generation projects continues to be an integral part of our growth and value creation strategy," said Phelps. He said the company hopes to improve its "traditional value" by taking advantage of the merchant power opportunities found throughout North America.

TransCanada lately has been boosting its electric power investments and shedding its noncore properties. Already, TransCanada has either sold or has agreed to sell most of its natural gas liquids extraction and gas gathering and processing assets in western Canada, and it officially exited its U.S. midstream business after selling its properties to Coastal Corp. last year (see NGI, Nov. 29, 1999).

Carolyn Davis, Houston

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