LONGUEUIL, QC, May 22, 2020 /CNW Telbec/ - Innergex Renewable
Energy Inc. (TSX: INE) ("Innergex" or the "Corporation") announced
today that it has received notices from BC Hydro in relation to six
of the Corporation's hydroelectric facilities in British Columbia stating that BC Hydro will
not accept and purchase energy under the applicable electricity
purchase agreements ("EPAs") above a specified curtailment level
for the period starting on May 22,
2020 and ending on July 20,
2020, which period may be further extended by BC Hydro. The
specified curtailment levels are 0.0 MW/h for the Jimmie Creek,
Upper Lillooet River, Northwest Stave River, and Boulder Creek
facilities, 2.0 MW/h for the Tretheway Creek facility and
4.0 MW/h for the Big Silver Creek facility. Maintaining these
curtailment levels for the period specified would translate in a
loss in revenues of less than $20
million for Innergex, based on past production levels.
BC Hydro cites the current COVID-19 pandemic and related
governmental measures taken in response to it as constituting a
"force majeure" event under the EPAs, and resulting in a situation
in which BC Hydro is unable to accept or purchase energy under the
EPAs. The notices to Innergex follow public statements by BC Hydro
regarding measures it is taking to address the reduced electricity
demand during the COVID-19 pandemic and related challenges to the
safe operation of its hydroelectric system.
Innergex disputes that the current pandemic and related
governmental measures in any way prevent BC Hydro from
fulfilling it obligations to accept and purchase energy under the
EPAs or enable it to invoke "force majeure" provisions under the
EPAs to suspend these obligations. Innergex acknowledges that
BC Hydro retains "turn-down" rights under the EPAs, which
enable it to require Innergex to turn down or shut off its
facilities in certain circumstances, including in order to avoid a
safety or stability risk. Where BC Hydro exercises this right, it
is required under the EPAs to compensate Innergex for energy that
would have been produced at the facilities in the absence of the
curtailment.
Innergex intends to comply with BC Hydro's curtailment request,
but will do so under protest and will seek to enforce its rights
under the EPAs on the basis described above.
About Innergex Renewable Energy Inc.
For 30 years,
Innergex has believed in a world where abundant renewable energy
promotes healthier communities and creates shared prosperity. As an
independent renewable power producer which develops, acquires, owns
and operates hydroelectric facilities, wind farms and solar farms,
Innergex is convinced that generating power from renewable sources
will lead the way to a better world. Innergex conducts operations
in Canada, the United States, France and Chile and manages a large portfolio of
high-quality assets currently consisting of interests in 69
operating facilities with an aggregate net installed capacity of
2,656 MW (gross 3,556 MW), including 37 hydroelectric facilities,
26 wind farms and six solar farms. Innergex also holds interests in
six projects under development, two of which are under
construction, with a net installed capacity of 295 MW (gross 369
MW), and prospective projects at different stages of development
with an aggregate gross capacity totaling 7,131 MW. Its approach to
building shareholder value is to generate sustainable cash flows,
provide an attractive risk-adjusted return on invested capital and
to distribute a stable dividend.
Forward-Looking Information Disclaimer
To
inform readers of the Corporation's future prospects, this press
release contains forward-looking information within the meaning of
applicable securities laws ("Forward-Looking Information"),
including the Corporation's power production, prospective projects,
successful development, construction and financing (including tax
equity funding) of the projects under construction and the
advanced-stage prospective projects, sources and impact of funding,
project acquisitions, execution of non-recourse project-level
financing (including the timing and amount thereof), and strategic,
operational and financial benefits and accretion expected to result
from such acquisitions, business strategy, future development and
growth prospects (including expected growth opportunities under the
Strategic Alliance), business integration, governance, business
outlook, objectives, plans and strategic priorities, and other
statements that are not historical facts. Forward-Looking
Information can generally be identified by the use of words such as
"approximately", "may", "will", "could", "believes", "expects",
"intends", "should", "would", "plans", "potential", "project",
"anticipates", "estimates", "scheduled" or "forecasts", or other
comparable terms that state that certain events will or will not
occur. It represents the projections and expectations of the
Corporation relating to future events or results as of the date of
this press release.
Forward-Looking Information includes future-oriented financial
information or financial outlook within the meaning of securities
laws, including information regarding the Corporation's expected
production, the estimated project costs, projected revenues,
projected Adjusted EBITDA and projected Adjusted EBITDA
Proportionate, Projected Free Cash Flow and intention to pay
dividend quarterly, the estimated project size, costs and schedule,
including obtainment of permits, start of construction, work
conducted and start of commercial operation for Development
Projects and Prospective Projects, The Corporation's intent to
submit projects under Requests for Proposals, the qualification of
U.S. projects for PTCs and ITCs and other statements that are not
historical facts. Such information is intended to inform readers of
the potential financial impact of expected results, of the expected
commissioning of Development Projects, of the potential financial
impact of completed and future acquisitions and of the
Corporation's ability to sustain current dividends and to fund its
growth. Such information may not be appropriate for other
purposes.
Forward-looking Information is based on certain key assumptions
made by Innergex, including, without restrictions, assumptions
concerning project performance, economic, financial and financial
market conditions, expectations and assumptions concerning
availability of capital resources and timely performance by
third-parties of contractual obligations, receipt of regulatory
approvals and the divestiture of select assets. Although Innergex
believes that the expectations and assumptions on which such
forward-looking information is based are reasonable, under the
current circumstances, readers are cautioned not to rely unduly on
this forward-looking information as no assurance can be given that
they will prove to be correct. The forward-looking information
contained in this press release is made as of the date hereof and
Innergex does not undertake any obligation to update or revise any
forward-looking information, whether as a result of events or
circumstances occurring after the date hereof, unless so required
by law.
Since forward-looking information addresses future events and
conditions, it is by its very nature subject to inherent risks and
uncertainties. Forward-looking information involves risks and
uncertainties that may cause actual results or performance to be
materially different from those expressed, implied or presented by
the forward-looking information. These include, but are not limited
to, the risks associated with the ability of Innergex to execute
its strategy for building shareholder value, its ability to raise
additional capital and the state of the capital markets, liquidity
risks related to derivative financial instruments, variability in
hydrology, wind regimes and solar irradiation, uncertainties
surrounding the development of new facilities, interest rate
fluctuations and refinancing risks, financial leverage and
restrictive covenants governing current and future indebtedness,
failure to realize the anticipated benefits of such acquisitions,
variability of installations performance and related penalties,
foreign exchange fluctuations and the fact that revenues from
certain facilities will vary based on the market (or spot) price of
electricity.
To combat the spread of the COVID-19, authorities in all regions
where we operate have put in place restrictive measures for
businesses. However, these measures have not impacted the
Corporation in a material way to date as electricity production has
been deemed essential service in every region where we operate. Our
renewable power production is sold mainly through PPAs to solid
counterparts. It is not excluded that current or future restrictive
measures might have an adverse effect on the financial stability of
the Corporation's suppliers and other partners, or on the
Corporation's operating results and financial position. The
issuance of permits and authorizations, negotiations and
finalizations of agreements with regards to development and
acquisition projects, construction activities and procurement of
equipment could be adversely impacted by the COVID-19 restrictive
measures.
The following table outlines Forward-looking information
contained in this press release, the principal assumptions used to
derive this information and the principal risks and uncertainties
that could cause actual results to differ materially from this
information.
Principal
Assumptions
|
Principal Risk and
Uncertainties
|
Expected
production For each
facility, the Corporation determines a long-term average annual
level of electricity production ("LTA") over the expected life of
the facility, based on engineers' studies that take into
consideration a number of important factors: for hydroelectricity,
the historically observed flows of the river, the operating head,
the technology employed and the reserved aesthetic and ecological
flows; for wind energy, the historical wind and meteorological
conditions and turbine technology; and for solar energy, the
historical solar irradiation conditions, panel technology and
expected solar panel degradation. Other factors considered include,
without limitation, site topography, installed capacity, energy
losses, operational features and maintenance. Although production
will fluctuate from year to year, over an extended period it should
approach the estimated LTA.
On a consolidated
basis, the Corporation estimates its LTA by adding together the
expected LTAs of all the Operating Facilities that it consolidates.
This consolidation excludes however the facilities which are
accounted for using the equity method.
|
Improper
assessment of water, wind and solar resources and associated
electricity production Variability in hydrology, wind regimes and solar
irradiation resources Equipment
supply risk, including failure or unexpected operations and
maintenance activity Natural
disasters and force majeure Regulatory and political risks affecting
production Health, safety and
environmental risks affecting production Variability of installation performance and related
penalties Availability and
reliability of transmission systems Litigation
|
Projected
revenues For each facility,
expected annual revenues are estimated by multiplying the LTA by a
price for electricity stipulated in the PPA secured with a public
utility or other creditworthy counterparty. In most cases, these
PPAs stipulate a base price for electricity produced and, in some
cases, a price adjustment depending on the month, day and hour of
its delivery. This excludes facilities that receive revenues based
on the market (or spot) price for electricity, including the Foard
City, Shannon and Flat Top wind farms, the Phoebe solar farm and
the Miller Creek hydroelectric facility, which receives a price
based on a formula using the Platts Mid-C pricing indices; and the
Horseshoe Bend hydroelectric facility, for which 85% of the price
is fixed and 15% is adjusted annually as determined by the Idaho
Public Utility Commission. In most cases, PPAs also contain an
annual inflation adjustment based on a portion of the Consumer
Price Index.
On a consolidated
basis, the Corporation estimates annual revenues by adding together
the projected revenues of the Operating Facilities that it
consolidates. The consolidation excludes however the facilities
which are accounted for using the equity method.
|
See
principal assumptions, risks and uncertainties identified
under "Expected Production Reliance on PPAs Revenues from certain facilities will vary based on
the market (or spot) price of electricity Fluctuations affecting prospective power prices
Changes in general economic conditions Ability to secure new PPAs
or renew any PPA
|
Projected Adjusted
EBITDA
For each facility, the
Corporation estimates annual operating earnings by adding
(deducting) to net earnings (loss) provision (recovery) for income
tax expenses, finance cost, depreciation and amortization, other
net expenses, share of (earnings) loss of joint ventures and
associates and change in fair value of financial
instruments.
|
See principal
assumptions, risks and Uncertainties identified under "Expected Production"
and "Projected Revenues" Unexpected maintenance expenditures
|
Projected Adjusted
EBITDA Proportionate
On a consolidated
basis, the Corporation estimates annual Adjusted EBITDA
Proportionate by adding to the projected Adjusted EBITDA Innergex's
share of Adjusted EBITDA of the operating joint ventures and
associates, other revenues related to PTCs, and Innergex's share of
the other net revenues of the operating joint ventures and
associates' related to PTCs.
|
See principal
assumptions, risks and uncertainties identified under "Expected
Production", "Projected Revenues" and "Projected Adjusted
EBITDA"
|
Although the Corporation believes that the expectations and
assumptions on which Forward-Looking Information is based are
reasonable, readers of this press release are cautioned not to rely
unduly on this Forward-Looking Information since no assurance can
be given that they will prove to be correct. The forward-looking
statements contained in this press release are made as of the date
hereof and Innergex undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, unless so required by
applicable securities laws.
SOURCE Innergex Renewable Energy Inc.