Northland Power Income Fund

Northland Power Income Fund

December 20, 2007 12:39 ET

Northland Power Income Fund to Receive $21.5 Million in Settlement of Calpine Claim

TORONTO, ONTARIO--(Marketwire - Dec. 20, 2007) - Northland Power Income Fund ("Northland Power" or the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) announced today that its subsidiary, Iroquois Falls Power Corp. ("IFPC") has reached agreement with Calpine Canada Natural Gas Partnership ("Calpine"), an affiliate of Calpine Corp, in connection with a claim brought by IFPC as a result of Calpine's default on January 1, 2006 in delivering natural gas under a long-term supply contract with IFPC. Calpine has agreed to pay IFPC $32 million to settle IFPC's claim, and IFPC has agreed to pay $10.5 million to one of its other long-term gas suppliers to settle IFPC's mitigation obligation under the "backstop" provisions of that supplier's contract. Payment is expected to be received prior to December 31, 2007.

Settlement of the claim with Calpine and the mitigation payment do not affect IFPC's gas supply arrangements. The Iroquois Falls facility continues to have long-term contracts for natural gas supply with EnCana Corporation and Shell Canada Limited which are adequate to meet the plant's needs.

The $21.5 million settlement ($32 million from Calpine less the $10.5 mitigation payment) will be taxable at IFPC and will not result in any change to the taxability of distributions to unitholders. The Fund expects to have net proceeds from the claim of approximately $12.8 million after taxes payable by IFPC and a payment in respect of the Fund's manager's gas management incentive fee under the terms of the IFPC management agreement. The Fund intends to retain these proceeds for future investment.

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. Through its 19% equity interest in Panda Energy Corp (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 a long-term PPA while the Fund's two wind farms in Germany, with a combined capacity of 21.5 MW, sell electricity to regional power utilities under the provisions of German renewable energy legislation. The Fund has committed to provide $30 million as subordinated debt to Northland Power Inc.'s 265 MW Thorold Cogeneration Project that is under construction near the Town of Thorold, Ontario.

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 Northland Power Income Fund's Manager's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties including those set out in the management's discussion and analysis section of the Fund's 2006 annual report and in the Fund's Annual Information Form dated March 30, 2007, certain of which are beyond the Manager's control. For this purpose, any statements that are contained herein that are not statements of historical fact may be forward-looking statements. The Fund's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or what benefits, including the amount of distributions, the Fund and Unitholders will derive therefrom.

Contact Information

  • Northland Power Income Fund Management Inc.
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x156
    Northland Power Income Fund Management Inc.
    Boris Balan
    Director of Communications
    (416) 962-6262 x116
    (416) 962-6266 (FAX)