EDMONTON, Jan. 28 /CNW/ - EPCOR Power L.P. (TSX: EP.UN) (the
Partnership), today announced that it has reached a settlement with NAL
Resources Ltd. (NAL), a subsidiary of Manulife Financial Corporation, in
respect of NAL's claim of frustration of the contract pursuant to which NAL
supplies natural gas to the Partnership's Tunis power plant located in
Ontario. Settlement of the NAL claim concludes all outstanding litigation
which commenced in 2003 with respect to Tunis natural gas supply contracts.
As a result of the settlement with NAL, the Partnership has made a
one-time payment to NAL of approximately $4.2 million for periods up to
December 31, 2007. Amounts owing up to September 30, 2007 were previously
estimated and accrued by the Partnership in its third quarter interim
The settlement with NAL follows settlement of a similar but separate
claim by Devon Canada Corporation (Devon) that was resolved in July of 2007
regarding its Tunis gas supply agreement. All retroactive amounts owing under
the Devon settlement were previously paid in 2007.
Based on the settlements reached with NAL and Devon, the Partnership
expects that its cost for natural gas for the Tunis facility will increase by
approximately $6 million in each of 2008 and 2009 and by $3 million in 2010
from what they would otherwise have been under the previous contract terms.
Amounts recorded up to September 30, 2007 for natural gas costs at the Tunis
facility have been recorded and accrued based on the terms of the amended
contracts. Under the amended terms of the natural gas supply contracts for the
Tunis facility, the natural gas prices are at fixed rates that escalate 4 per
cent per annum.
Had the claims by NAL and Devon been successful, the natural gas
supplying the Partnership's Tunis plant would have been purchased at
prevailing market prices for the period 2003 to 2010 and the Partnership
estimated that the total resulting incremental cost would have been in excess
of $100 million.
"We are pleased to have the long standing Tunis natural gas supply
litigation behind us and it represents another step in securing the long-term
stability of our cash flows," said Brian Vaasjo, President, EPCOR Power
Services Limited, the general partner for EPCOR Power L.P. "It removes what
was a large financial exposure and will allow us to continue to focus on
ongoing operational, commercial and growth opportunities."
About EPCOR Power L.P.
Established in 1997, EPCOR Power L.P. is a limited partnership organized
under the laws of the Province of Ontario. The Partnership's portfolio
consists of 19 wholly-owned power generation assets located in Canada and the
United States, a 50 per cent interest in a power generation asset in
Washington State, and a 15.4 per cent interest in Primary Energy Recycling
Holdings LLC ("PERH"). The Partnership's assets have a total net generating
capacity of 1,287 megawatts and more than three million pounds per hour of
thermal energy. PERH wholly owns four recycled energy assets in the United
States with an aggregate generation capacity of 284 megawatts and nearly two
million pounds per hour of thermal energy, and has a 50 per cent interest in a
pulverized coal facility. Primary Energy Ventures LLC, a subsidiary of the
Partnership, manages and operates these facilities for PERH. For more
information on the Partnership, please visit: www.epcorpowerlp.ca.
Certain information in this news release is forward-looking and related
to anticipated financial performance, events and strategies. When used in this
context, words such as "will", "anticipate", "believe", "plan", "intend",
"target", and "expect" or similar words suggest future outcomes. By their
nature, such statements are subject to significant risks, assumptions and
uncertainties, which could cause the Partnership's actual results and
experience to be materially different than the anticipated results. Such
risks, assumptions and uncertainties include, but are not limited to, the
ability of the Partnership to successfully integrate and realize the financial
benefits of acquisitions, the ability of the Partnership to implement its
strategic initiatives and whether such strategic initiatives will yield the
expected benefits, the availability and price of energy commodities, plant
availability, waste heat availability and water flows, regulatory and
government decisions, the renewal and terms of power purchase contracts,
competitive factors in the power industry, the current and future economic
conditions in North America and the performance of contractors and suppliers.
Readers are cautioned not to place undue reliance on forward-looking
statements as actual results could differ materially from the plans,
expectations, estimates or intentions expressed in the forward-looking
statements. Except as required by law, the Partnership disclaims any intention
and assumes no obligation to update any forward-looking statement even if new
information becomes available, as a result of future events or for any other
For further information:
For further information: Media inquiries: Tim le Riche, (780) 969-8238;
Unitholder and analyst inquiries: Randy Mah, (780) 412-4297, (866) 896-4636