Dive Brief:
- A working group convened to consider whether the state of Vermont should purchase hydroelectric dams from TransCanada, and determined it is not a good dea due to the costliness of the transaction and the short time available to prepare a bid, the Associated Press reports.
- The Vermont HydroPower Acquisition Working Group issued a report last week, concluding the state should instead consider long-term power purchases or equity stakes in the clean generation.
- TransCanada announced it was selling generation assets earlier this year, worth more than $7 billion, to finance its takeover of Columbia Pipeline Group. The hydro dams are among those assets.
Dive Insight:
TransCanada is selling 13 dams that generate almost 600 MW, but while the deal is probably too expensive for Vermont to tackle on its own, the state does want to ensure it can benefit from the clean energy.
"Due to the short time-line for submitting a bid, the expected cost of the assets, and the significant costs associated with preparing a legitimate bid, it was not feasible for the State to pursue a bid on its own," the working group concluded.
The group said it considered entering into a partnership with potential bidders, but determined many of the bidders have sufficient assets and a partnership would not be necessary. In addition, the timing associated with legislative and regulatory approval created a disincentive for a bidder to work alongside Vermont.
Instead, the group's report advocates for the state or Vermont utilities to enter into a long-term contract for the output of the facilities, and possibly explore an equity stake or outright ownership of the facilities directly with the successful bidder.
The trend of late has been Canadian power players looking to snap up U.S. power assets, but TransCanada needs some cash to finance its $10.2 billion acquisition of Columbia Pipeline Group to extend its reach into the U.S. natural gas market.
