Northland Power Income Fund
TSX : NPI.UN
TSX : NPI.DB

Northland Power Income Fund

May 11, 2006 17:50 ET

Northland Power Income Fund Reports First Quarter 2006 Results

TORONTO, ONTARIO--(CCNMatthews - May 11, 2006) - Northland Power Income Fund (the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) today reported financial results for the three months ended March 31, 2006.



FINANCIAL AND OPERATING HIGHLIGHTS

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3 Months Ended Mar. 31
2006 2005
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FINANCIAL (thousands, except per
unit amounts)
Sales $35,792 $31,875
Net income $15,939 $16,574

Funds from operations before changes
in working capital(1) $16,307 $20,899
Distributable cash(1) $17,322 $21,408
Distributions declared to Unitholders $14,105 $12,107

Units Outstanding at Quarter End 61,522 47,958
Average Number of Units Outstanding
- basic 50,750 47,936

Average Number of Units Outstanding
- diluted 54,143 53,116

Per Unit
Funds from Operations before Changes
in Working Capital(1) $0.3213 $0.4360
Distributable Cash(1) $0.3413 $0.4466
Distributions Declared to Unitholders $0.2625 $0.2525
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OPERATIONS
Electricity Sales Volume (megawatthours) 271,946 272,504
Steam Sales Volume (thousands of pounds) 402,258 373,806
Fuel Consumption (thousands of gigajoules) 2,369 2,554
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(1) These are non-GAAP financial measures. Please refer to schedule of Distributable Cash and Distributions to Unitholders in the Fund's first quarter MD&A for the calculations of funds from operations before changes in working capital and distributable cash.

In the first quarter of 2006, the Fund purchased the 50% interest in the Kingston facility that it did not already own for $128.4 million, including transaction costs, and repaid the $33.5 million balance of the levelization account loan to Ontario Electricity Financial Corporation under the Kingston facility's power purchase agreement. The Fund issued 11,560,000 trust units on March 23rd pursuant to a subscription receipts offering to fund the acquisition and loan repayment. The first three months of 2006 included a 50% share of the Kingston facility's financial and operating results up to March 22nd and 100% for the remainder of the quarter. The financial results for last year included the one-time impact of the sale of the Panda-Rosemary facility on income earned on the Panda Energy Corporation ("PEC") investment and senior loan.

The Fund generated distributable cash of $17.3 million during the quarter; $4.1 million lower than the prior year (which included $5.3 million from the Panda-Rosemary sale), or $1.2 million higher than last year excluding the one-time impact of the Panda- Rosemary sale. Distributable cash exceeded distributions declared to Unitholders by $3.2 million. Distributions to Unitholders declared for the quarter totaled $0.2625 per unit, 4% higher than 2005, with an expected total of $1.05 to be distributed for the full year.

Strong financial results at Kingston during the quarter helped offset weakness at Iroquois Falls and Mont Miller. Sales at the Kingston facility were up from the same quarter last year due to higher prices received for electricity and natural gas. Production and sales of electricity at Iroquois Falls were reduced from last year during lower-priced off-peak periods by a shortfall in contracted natural gas deliveries due to the bankruptcy of Calpine Canada Natural Gas Partnership. The Fund's financial results for the first quarter of 2006 included a full quarter of operations from the Mont Miller facility compared to none in the same period of 2005; in the future, Mont Miller is expected to contribute, on average, 8% of the Fund's distributable cash. During the first quarter, Mont Miller's production fell short of expectations due primarily to unusually low local wind speeds compared to prior years.

The Fund's consolidated sales were up 12% from the same period last year while net income was down largely due to lower investment income earned from PEC.

On March 8, 2006 Standard and Poor's confirmed the Fund's Stability Rating at SR-2 and upgraded the outlook to stable while raising the Fund's distribution profile assessment to moderately conservative.

On April 25, 2006, the Fund completed the acquisition of two operating wind farms in Germany with a total capacity of 21.5 megawatts ("MW"). The price is approximately Euro 16 million (CAD $23 million) including the retirement of all project debt. The acquisition is being financed with cash on hand and $5 million drawn under the Fund's acquisition line of credit.

A copy of the Fund's first quarter report and MD&A can be found at www.sedar.com and the Fund's web site at www.NPIFund.com.

ABOUT THE FUND Northland Power Income Fund indirectly owns interests in six power generating facilities: three natural gas-fired combined-cycle cogeneration power plants that efficiently and cleanly produce electricity and steam for sale, and three wind farms. Two cogeneration plants are located in Ontario: the 120 megawatt ("MW") Iroquois Falls facility that has been wholly-owned by the Fund since its inception in 1997, and the 110 MW Kingston facility which has been wholly- owned by the Fund since it acquired an additional 50% interest on March 23, 2006. Through its 19% equity interest in PEC and loan to a PEC subsidiary, the Fund has an interest in the 230 MW Panda-Brandywine cogeneration power plant located just outside Washington, D.C. Electricity produced from the cogeneration plants is sold under long-term power purchase agreements (PPAs) with creditworthy entities to ensure revenue stability, and long-term contracts assure the supply and price of natural gas, which is the Fund's largest cost. The 54 MW Mont Miller wind farm in the Gaspesie region of Quebec supplies electricity to Hydro-Quebec under the terms of a 21-year PPA. On April 25, 2006 the Fund acquired two operating wind farms in Germany with a total capacity of 21.5 MW that sell electricity to regional power utilities under German renewable energy legislation that assures price certainty for the life of the wind farms.

The Fund's trust units and convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN and NPI.DB respectively, are qualified investments for RRSPs and DPSPs under the Canadian Income Tax Act. The Fund has in place a distribution re-investment plan that allows unitholders who are residents of Canada to automatically have their monthly cash distributions reinvested in additional units. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.

FORWARD LOOKING STATEMENTS

The disclosure above contains certain forward-looking statements. Although these forward-looking statements are based upon current expectations and assumptions, they are subject to numerous risks and uncertainties, certain of which are beyond the Fund's control. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of distributions, the Fund and unitholders will derive there from.

Contact Information

  • Northland Power Income Fund Management Inc.
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x156
    or
    Northland Power Income Fund Management Inc.
    Tony Anderson
    Chief Financial Officer
    (416) 962-6262 x120
    (416) 962-6266 (FAX)
    info@NPIFund.com
    www.NPIFund.com