BC Hydro has agreed to take over the Waneta Dam and Generating Station in Canada by acquiring the remainder two-third ownership stake from Teck Resources for $1.2bn in an all-cash deal.
Located close to the Canada-US border and Trail in British Columbia, the Waneta Dam was built in 1954. The power plant associated with it comprises four units that put together have a capacity of 480MW to produce nearly 2,680GWh of energy per year.
BC Hydro had bought a one-third ownership stake in the Waneta Dam for $825m in 2010. The latest transaction, which has BC Hydro exercising its right of first offer to purchase two-thirds stake from Teck, is anticipated to be closed after the first quarter of 2018.
In May, Teck had agreed to sell its stake in the Waneta Dam and Generating Station to Fortis but the deal could not move forward owing to BC Hydro’s right of first offer. As a result, Teck is likely to pay Fortis a break fee of nearly $28m.
The transaction between Teck and BC Hydro also features a lease agreement for 20 years under which the electricity produced from the two-thirds share will continue to deliver power to Teck’s smelter in Trail at set prices.
BC Hydro executive chair Ken Peterson said: “BC Hydro was presented with a unique opportunity to purchase the remaining two-thirds interest in the Waneta Dam and our analysis shows that this purchase is in the best interest of our customers.
“Our number one priority is to keep rates low, and this purchase will help make rates more affordable.”
As per the terms, Teck also has an option to stretch the lease by 10 more years. Owing to this, the decision has no affect on energy supply and demand balance of BC Hydro.
The transaction is subject to meeting of customary conditions like regulatory approvals and certain consents.
Image: The Waneta hydro project in British Columbia, Canada. Photo: courtesy of BC Hydro.