EPCOR acquires TransCanada's interest in TransCanada Power, L.P.

EPCOR Utilities Inc. will host a live video webcast on Tuesday, May 17, 2005 at 9:00 a.m. (EDT). Immediately following, there will be an analyst conference call, followed by a news conference. To access the webcast, please visit www.epcor.ca. Please refer to the conference call information at the end of this news release.

EPCOR to assume role of manager and operator of the Partnership’s assets

EDMONTON and CALGARY – May 17, 2005 – EPCOR Utilities Inc. (EPCOR) and TransCanada Corporation (TSX, NYSE: TRP) (TransCanada) have entered into an agreement whereby EPCOR will acquire TransCanada’s interest in TransCanada Power, L.P. (TSX: TPL.UN) for $529 million.

TransCanada Power, L.P. (the Partnership) is a limited partnership that owns a portfolio of 11 power generation assets in Canada and the United States, with a total generating capacity of 744 megawatts. The generation plants include natural gas, small-scale hydro and bio-mass facilities.

EPCOR’s acquisition includes:

  • Approximately 14.5 million units of the Partnership, representing approximately 30.6 per cent of the outstanding units;
  • 100 per cent ownership of the General Partner of the Partnership; and
  • Management and operations agreements governing the ongoing operation of the Partnership’s power generation assets.  

The transaction has been approved by the Boards of each of TransCanada, EPCOR and the Partnership, and is expected to close in the third quarter of 2005, subject to regulatory approvals. When the transaction closes, TransCanada expects to realize an after tax gain of approximately $200 million. TransCanada will continue to operate and maintain the Partnership’s power plants until closing. TransCanada has agreed to provide operations and support services to EPCOR and the Partnership during a transition period following closing to facilitate an orderly transfer of management functions for the Partnership. EPCOR will change the Partnership’s name and ticker symbol, to take effect at the close of the transaction

“EPCOR is pleased to announce the acquisition of a significant ownership interest in one of Canada’s premier power partnerships,” said EPCOR President and CEO Don Lowry, who EPCOR will nominate to become Chairman of the Partnership. “Our investment in the Partnership represents the cornerstone of EPCOR’s long-term power growth strategy, and this commitment will be demonstrated over time through project development, acquisitions and the transfer of quality power assets to the Partnership on a basis that will be accretive to unitholder value. We look forward to assuming sponsorship of the Partnership. We have committed to maintain our investment in the Partnership as a long-term core asset for EPCOR.”

“EPCOR brings to the Partnership over 100 years of experience operating power assets,” Lowry continued. “We currently operate over 2,400 megawatts of generation capacity in Alberta, British Columbia, Washington State and Ontario. EPCOR has consistently had Canadian generating assets ranked among the top ten nationally in the Canadian Electricity Association’s annual rankings of operating reliability and availability. Our extensive expertise in the power sector across a broad range of fuel sources will serve the Partnership well in efficiently operating the Partnership’s existing assets and in identifying, evaluating and successfully pursuing future opportunities for growth.”

“The Partnership’s assets operate under long-term contracts, and have a proven record of strong, stable operating performance,” said EPCOR Executive Vice President Brian Vaasjo, who EPCOR will nominate to become President of the Partnership. “As the manager and operator, our goal will be to maintain this performance at the existing plants, and to develop or acquire additional high quality assets for the Partnership on an accretive basis.”

Vaasjo continued: “The change in sponsorship should have no impact on the high reliability of the assets and no material impact on the costs of the Partnership. In our new role as sponsor to the Partnership, we are confident that we will be able to maintain the stability that unitholders have become accustomed to. EPCOR and the Partnership will enjoy excellent alignment, partly as a result of the Partnership having a ‘right of first look’ on potential power generation acquisitions available to EPCOR. Furthermore, EPCOR currently owns an inventory of power generation assets that possess characteristics that would make them attractive acquisitions for the Partnership.”

“TransCanada Power, L.P. has performed exceptionally well for both TransCanada and the Partnership’s public unitholders,” said Hal Kvisle, TransCanada's President and CEO. “Under our sponsorship, TransCanada Power, L.P. has grown significantly while generating strong returns for Partnership unitholders, including TransCanada. However, the completion of this transaction will enable TransCanada to focus on our much larger, directly-owned power businesses in Canada and the United States. We are pleased to have reached agreement to divest our interests in TransCanada Power, L.P. to EPCOR, a strong and capable sponsor with a proven record in the power business.”

RBC Capital Markets and BMO Nesbitt Burns acted as exclusive financial advisors to EPCOR and TransCanada, respectively, in association with the transaction.

About TransCanada Power, L.P.
Established by TransCanada in 1997, TransCanada Power, L.P. (TSX: TPL.UN) is a limited partnership organized under the laws of the Province of Ontario which owns and operates a portfolio of power generation assets in Canada and the United States. The Partnership has the highest stability ratings of any power income fund, rated STA-1 (low) by Dominion Bond Ratings Service and SR-1 by Standard & Poor’s.

Outstanding units can only be held by residents of Canada and are considered foreign property for purposes of inclusion in registered retirement savings plans, registered retirement income funds or deferred profit sharing plans.

About EPCOR Utilities Inc.
EPCOR Utilities Inc. is one of Canada's top providers of energy and energy-related services and products, providing power and water solutions to customers in Alberta, Ontario, British Columbia and the U.S. Pacific Northwest. Drawing on over 100 years of experience, EPCOR builds, owns and operates power plants, electrical transmission and distribution networks, water and wastewater treatment facilities, and infrastructure.

EPCOR has been named one of Canada’s Top 100 employers for five consecutive years, and was the 2004 Overall Winner of the Conference Board of Canada/Spencer Stuart National Award in Governance. With over $4 billion in assets, EPCOR is headquartered in Edmonton, Alberta. EPCOR’s web-site is http://www.epcor.ca/.

About TransCanada Corporation
TransCanada is a leading North American energy company. TransCanada is focused on natural gas transmission and power services with employees who are expert in these businesses. TransCanada’s network of approximately 41,000 kilometres (25,600 miles) of pipeline transports the majority of Western Canada’s natural gas production to the fastest growing markets in Canada and the United States. Excluding its interests in TransCanada Power, L.P.’s 744 megawatt portfolio, TransCanada owns, controls or is constructing approximately 5000 megawatts of power generation – an amount of power that can meet the needs of about 5 million average households. TransCanada’s common shares trade under the symbol TRP on the Toronto and New York stock exchanges.

FORWARD-LOOKING INFORMATION

Certain information in this news release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of each of TransCanada and EPCOR to successfully implement their respective strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, competitive factors in the pipeline and power industry sectors, and the current economic conditions in North America. For additional information on these and other factors, see the reports filed by TransCanada and EPCOR with Canadian securities regulators and with the United States Securities and Exchange Commission. TransCanada and EPCOR disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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EPCOR Utilities Inc. will host a live video webcast at 9:00 a.m. (EDT) and two separate conference calls on Tuesday, May 17, 2005. To access the webcast, please visit www.epcor.ca.
The webcast will also be available in audio only by conference call. Dial 416-405-8532 or 1-877-295-2825 at 9:00 a.m. EDT.

9:20AM Analyst Call

 

10:30AM Media Conference

Local: 416-405-8532
North American Toll Free: 1-877-295-2825

Instant Replay (end date Tuesday May 24, 2005):
Local: 416-695-5800
North American Toll Free: 1-800-408-3053
Passcode: 3152986#

 

 

Place: Metro Toronto Convention Centre, Room 201B/D, 255 Front Street West, Toronto.

Call Nos:
Local: 416-470-1030
North American Toll Free: 1-877-767-7642

Instant Replay (end date Tuesday May 24, 2005):
Local: 416-695-5800
North American Toll Free: 1-800-408-3053
Passcode: 3152990#

 

Backgrounder: Generating assets owned by TransCanada Power, L.P.

Unit

Capacity (MW)

Location

Commissioning Date

Power Purchase
Contract
Expiry

Calstock

35

Ontario

October 2000

2020

Castleton

64

New York

March 1992

2008

Curtis Palmer

60

New York

January 1985

2027

Kapuskasing

40

Ontario

March 1997

2017

Mamquam

50

British Columbia

November 1996

2027

ManChief

300

Colorado

July 2000

2012

Nipigon

40

Ontario

May 1992

2012

North Bay

40

Ontario

March 1997

2017

Queen Charlotte

6

British Columbia

September 1990

2022

Tunis

43

Ontario

January 1995

2015

Williams Lake

66

British Columbia

April 1993

2018

For further information, please contact:

TransCanada Media Inquiries:
Kurt Kadatz / Hejdi Feick
(403) 920-7859 or Toll Free (800) 608-7859

TransCanada Investor & Analyst Inquiries:
David Moneta
(403) 920-7911

EPCOR Media Inquiries:
Jay Shukin
(780) 412-8877

EPCOR Investor Information:
Randy Geislinger/John Patterson
(866) 896-4636