Alberta 500kV power transmission line project reaches financial close

Alberta PowerLine is a partnership between Canadian Utilities (an ATCO company) and Quanta Services. Alberta PowerLine was selected by the Alberta Electric System Operator (the AESO) in December 2014 to design, build, own, operate and finance the Fort McMurray West 500 kV Transmission Project.

Valued at $1.43 billion, the project consists of approximately 500 kms of 500 kV transmission line and associated facilities running from Wabamun (west of Edmonton) to Fort McMurray.

Under the partnership, Valard Construction, a Canadian subsidiary of Quanta, will provide turnkey EPC services for the project while ATCO Electric, an ATCO company, will be responsible for route planning and operations and maintenance of the transmission facilities for 35 years.

The proposed route, substations and design of the transmission line were subject to approval by the Alberta Utilities Commission, and approval was received in February of 2017.

In early October 2017, Alberta PowerLine completed a $1.38-billion four-tranche bond deal to finance the Project.

The Project is unique in many respects, featuring a two-stage process with the successful proponent undertaking the land acquisition and approvals process during a development period prior to execution of the Project Agreement and a debt funding competition.

Once the Project is in service, Alberta PowerLine will receive availability payments from the AESO that will cover operating, maintenance and rehabilitation costs, debt service and equity returns, with payments only subject to deductions for unavailability or non-performance.

The Project construction period commenced in the summer of 2017 and is expected to continue for approximately 21 months.

The Project will predominantly cross Crown land, with approximately 30 per cent of the lands being privately owned.

Availability payments will be paid on a monthly basis from the AESO, and will be made up of non-indexed capital payments, O&M Payments that cover indexed life-cycle costs and insurance payments.

The deal represented the largest P3 bond transaction in Canadian history.

Bennett Jones LLP acted for Alberta PowerLine, the project entity, as well as for Canadian Utilities Limited as equity investor, and ATCO Electric Ltd., the operating and maintenance contractor and construction contractor co-venturer.

The Bennett Jones team included John Craig, Mark Kortbeek, Paul Blundy, Loyola Keough, Shawn Munro, Deirdre Sheehan, William Osler, Peter Westcott, Paul Barbeau, Denise Bright, Thomas McInerney, Brian Reid, Artem Barsukov, Michael DeFaria, Patrick Daley, Elyse van Spronsen and Kate Devlin.

Norton Rose Fulbright Canada LLP represented the AESO with a team. The NRF team included David Eeles, and Richard Borden, Jennifer Kennedy, Lincoln Mitchell and Iwan Davies.

Fasken Martineau DuMoulin LLP (Vancouver) was counsel to Quanta Services and Valard Construction. The Fasken team included David Little and Marcus Turner.

Torys LLP represented the underwriters, CIBC and RBC. The Torys team included Dan Ford, Milosz Zemanek, Andrew Beck, David Mattingly and Dan Doubilet.