New Special Purpose Entity to Extend Life of CalEnergy Geothermal Facilities: MidAmerican and TransAlta U.S. Announce CalEnergy, LLC
DES MOINES, Iowa (May 17, 2013) – MidAmerican Energy Holdings Company and TransAlta Corporation (TSX: TA; NYSE: TAC) announced today the formation of CalEnergy, LLC, a new special purpose entity that will allow CalEnergy to market reliable green power in a new way. The 340-megawatt contract capacity available for this remarketing initiative is one of the largest single geothermal remarketing exercises to be pursued in North America, which will extend the operating life of all 10 facilities in the Imperial Valley region of California for another 25 years.
“CalEnergy has developed an exciting strategy for marketing the output of these facilities,” said Bill Fehrman, president of MidAmerican Renewables, whose parent company is MidAmerican Energy Holdings Company. “The formation of CalEnergy, LLC ensures our existing facilities in the Salton Sea field remain in our renewable energy portfolio for years to come.”
MidAmerican Renewables oversees MidAmerican Geothermal, which is based in Imperial Valley, Calif., and owns and operates 10 geothermal facilities with TransAlta. Over the next three to seven years, eight of 10 geothermal generating facilities operated by CalEnergy Operating Corporation in the Known Salton Sea Geothermal Resource Area field will reach their original design life of 30 years. The owners, 50-50 partners that are indirect subsidiaries of MidAmerican Energy Holdings Company and TransAlta Corporation, have developed CalEnergy, LLC, which is in discussions with a number of California and Arizona-based utilities interested in contracting for the energy output of the facilities. The majority of the geothermal facilities have been in operation for more than 20 years and have been under long-term power purchase agreements since their initial construction.
New capital improvement plans will sustain the facilities for more than 25 years. A new contract structure has been adopted that will market the existing plants as a portfolio, or fleet of plants, rather than as individual plants. The recontracting effort and infusion of capital will help maintain operations that currently employ a staff of more than 200 and continue to provide the largest source of tax revenues for Imperial County, Calif.
“TransAlta’s continued investment in the Imperial Valley geothermal resource and plants reaffirms our commitment to a strategy based on a diversified fuel mix that also includes gas, wind, hydro and coal across three key markets,” said Paul Taylor, president of TransAlta USA. “The decision to extend the life of these facilities and the innovative remarketing effort is an important step in meeting the ongoing renewable energy needs of California and neighboring states.”
Geothermal energy is a reliable renewable resource, and the new contract approach provides a number of benefits for both customers and CalEnergy. For customers, the ability to secure power purchase contracts for a share of the energy generated by the fleet of generating facilities provides a more diversified supply risk and the utmost flexibility for volume and timing requirements to meet their renewable energy supply needs. Customers also will have the ability to secure contracts in increments as low as 5 megawatts. CalEnergy will benefit from the operating and contracting flexibility achieved under the new portfolio management structure.
“This is a very significant first step in securing our future,” said Steve Larsen, president of MidAmerican Geothermal. “Market response received to date has been very positive, and we look forward to securing multiple long-term power purchase agreements that will allow us to invest new capital that will extend the life of these facilities to 2040. In addition, the capital improvements associated with this portfolio remarketing will create approximately 150 additional temporary construction jobs annually and will continue to provide much needed economic benefits to the Imperial Valley economy.”
Announcements regarding specific power purchase agreements are expected in the coming months.
TransAlta is a power generation and wholesale marketing company focused on creating long-term shareholder value. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta’s focus is to efficiently operate geothermal, wind, hydro, natural gas and coal facilities in order to provide customers with a reliable, low-cost source of power. For over 100 years, TransAlta has been a responsible operator and a proud contributor to the communities in which it works and lives. TransAlta has been selected by Jantzi-Sustainalytics as one of Canada’s Top 50 Socially Responsible Companies since 2009 and is recognized globally for its leadership on sustainability and corporate responsibility standards by FTSE4Good. TransAlta is Canada’s largest investor-owned renewable energy provider. Information about TransAlta is available at www.transalta.com.
MidAmerican Energy Holdings Company
MidAmerican Energy Holdings Company, based in Des Moines, Iowa, is a global provider of energy services. Through its energy-related businesses, MidAmerican provides electric and natural gas service to more than 7 million customers worldwide. These businesses are Pacific Power, Rocky Mountain Power and PacifiCorp Energy, comprising PacifiCorp; MidAmerican Energy Company; Northern Powergrid Holdings Company; Northern Natural Gas Company; Kern River Gas Transmission Company; MidAmerican Renewables; and CalEnergy Philippines. Information about MidAmerican is available at www.midamerican.com.
MidAmerican Renewables owns and operates wind, geothermal, solar and hydro projects in the unregulated renewables market. MidAmerican Geothermal, a subsidiary of MidAmerican Renewables, is a Calipatria, Calif.-based geothermal power producer. The company oversees 10 geothermal facilities in California’s Imperial Valley. Information about MidAmerican Renewables and MidAmerican Geothermal is available on the company’s website and its Twitter, Facebook and YouTube pages, which can be accessed via www.midamericanrenewablesllc.com.
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