Cannon Power Group Closes $547 Million Power Sales Transaction With Southern California Public Power Authority
Del Mar – based Cannon Power Group announced today the closing of the sale of a 20-year block of renewable power to Southern California Public Power Authority (SCPPA) for $547 million. This is believed to be the largest transaction of its kind in the power industry.
The power will be provided from Cannon Power Group’s 262-megawatt (MW) Windy Flats wind project in Goldendale, Washington under a long-term power purchase agreement entered into last year by the parties.
The transaction involves SCPPA “pre-paying” for a 20-year block of power representing over 70 percent of the project’s expected annual production. In return for such “pre-payment,” SCPPA obtained a discounted power price. The balance of the power from the project also will be sold by Cannon Power Group to SCPPA at a formula-based price. As part of the transaction, SCPPA also received an option to purchase the project after five years.
“This uniquely structured transaction is a true win-win for both parties,” said Gary Hardke, president of Cannon Power Group. “It combined SCPPA’s low-cost, tax exempt bond financing with the federal stimulus grant program to produce a very attractive long-term cost of renewable power.”
SCPPA reportedly closed its 20-year bond financing at the end of August at pricing of less than four percent, according to Bloomberg News. Cannon Power Group received total federal stimulus grants of $220 million in connection with the project.
“This was really a remarkable and innovative transaction,” said attorney Tom Trimble, partner and co-head of the Renewable Energy Practice at Washington D.C.-based Hunton & Williams, who represented Cannon Power Group in the transaction. “It allowed the parties to navigate the credit crisis and take advantage of the low interest rate environment.”
Cannon Power Group’s Windy Flats project went on line earlier in 2010. It is part of the company’s 500 MW Windy Point/Windy Flats project. The project, one of the largest wind projects in the United States, and representing an investment of over $1.2 billion, spans over 26 miles along the Columbia River. It is expected to be completed in 2011 and has provided over 350 new jobs to the local area. Cannon Power developed and constructed the project.