Algonquin Power & Utilities Corp. commits to take Ascendant to new heights*
In August 2019, our shareholders provided overwhelming support to the acquisition of Ascendant Group Limited (“Ascendant”) by Algonquin Power & Utilities Corp. and its affiliates (“Algonquin”). This shareholder vote followed a robust selection process, which centred around the needs of our employees, our customers, and the broader Bermuda community.
*This process is subject to approval by the regulators and relevant Government departments.
Algonquin’s proven track record is the pathway to more affordable and cleaner energy for Bermuda.
Beyond the sale of Ascendant, which will inject $200 million into the Bermuda economy, Algonquin has committed to investing $300 million in renewables in Bermuda, which will accelerate the 85% renewable energy goal set by the IRP.
As an example of Algonquin’s investment in renewable energy, Algonquin is implementing a pilot program in New Hampshire. Tesla Powerwalls will be deployed to 500 homes, improving customer reliability.
Through efficiencies and economies of scale, Algonquin is committed to saving $5 million as a result of its amalgamating with Ascendant. This savings will produce lower rates for customers.
IN NORTH AMERICAN ASSETS
Algonquin is an established renewable energy and utility group, with North American assets in excess of $10 billion. It owns and operates 54 energy facilities, of which approximately 90% are renewable.
Algonquin has a utility division that operates clean-and-green energy assets, including hydroelectric, wind, thermal, and solar, and maintains both water, gas and electricity distribution systems. Its utility division operates 33 distribution utilities in 13 US states and 1 Canadian province. Algonquin has over 3,200 employees and approximately 800,000 customers.
Algonquin’s proven track record with renewables, in addition to its cost efficiencies, will allow Bermuda to move to more renewable energy sources while also enjoying lower energy prices.
Algonquin recognises the importance of all stakeholders and commits to the following:
- Invest $300 million in renewable energy in Bermuda
- Inject $200 million into the Bermuda economy
- Move one or more functional team(s) to be headquartered in Bermuda
- Hire local Bermudians to fill vacancies
- When relocated employees retire—hire Bermudians to fill their vacancies
- Collaborate with the Regulatory Authority to ensure fair-and-stable pricing
- Save $5 million in operational efficiencies, which will produce lower rates
- Minimise unplanned outages and improve reliability
- Ensure a seamless transition
- Provide the funding required to modernise the utility and integrate renewables
FOR MANAGEMENT / EMPLOYEES
- Maintain existing commitment to no company-initiated job cuts
- Keep Bermudian employee base, led by Ascendant’s existing Bermudian executive management team
- Continue employee development with advanced training opportunities, both locally and overseas
- Provide opportunities for employees to work in other utilities and renewables facilities to broaden and enhance skillsets
- Maintain or improve upon existing employee benefits
FOR OPERATIONS & GOVERNANCE
- Collaboration with key stakeholders to shape and implement the optimal IRP for Bermudians
- Share learned knowledge and best practices drawn from our 30+ utilities (e.g. storm support, energy storage, tech support, & cost savings on purchases)
- Follow business model of local, stand-alone operations, allowing local leaders to run the business
When can rate payers expect a rate cut?
This is happening already—the 2020 approved rate case will show savings to the customer. Algonquin has committed to work towards continuing to drive costs down by efficiently running the electricity system, exercising economies of scale in purchasing fuel, parts and services, as well as implementing renewable energy solutions.
How much will the rates be lowered?
Although there are a lot of variables, like fuel costs, taxes etc., the goal is that, by implementing large scale utility renewables, we can achieve a 10% reduction in customer bills through the life of the project by reducing fuel consumption and costs for existing generators by investing in renewables where the fuel is essentially free.
Will the sale result in a more robust distribution network?
BELCO is already investing over $100 million in system upgrades to strengthen reliability. Algonquin intends to continue this plan along with new technologies, like battery storage, distributed generation, etc. with the continued goal of enhancing system reliability.
Will restoration times increase?
Currently BELCO meets/exceeds North American reliability standards, even after major weather events. Algonquin is committed to continue this level of performance and we are assured even more assistance from Algonquin’s other utilities when needed. In fact, we received such support last year after Hurricane Humberto, when 10 Liberty lineman assisted us in getting service restored very quickly.
Will the $300M promised for renewables just be added to existing rates for customers?
All of BELCO’s capital costs and operating costs are scrutinised and approved by the Regulatory Authority—which ensures rates are fair and equitable for the consumer.
BELCO has deployed more than $120 million on the North Power Station (NPS) and battery storage and will deploy over $100 million on new grid infrastructure—and rates are going down. BELCO strives to implement capital upgrades that are more efficient than the current infrastructure, which in turn will lower costs. For example, with the NPS and battery storage, BELCO will spend $20 million LESS in fuel, which offsets the cost of these capital projects. The $300 million capital spending in renewables that Algonquin is promoting is expected to effectively do the same thing—fuel costs are expected to be reduced even further and that offsets the capital cost of building a renewable infrastructure. Although this is recovered in the rates, it is anticipated to be a lower rate than BELCO has currently.
How will the $300M investment in renewables be spent?
The majority of the $300 million will be for an offshore wind farm and battery storage. Naturally this would be subject to a competitive procurement process.
Will electric customers cover the cost of the sale?
No. The cost of the sale will not be covered by electric customers—there will be no increase in rates due to this sale. The cost will be borne by Algonquin and not the customer—this commitment was clearly made by Algonquin to both the Government and the Regulatory Authority.
Why do we need to sell?
In order to facilitate the Government’s renewable mandate, as well as to reduce electricity rates in the manner our customers are demanding, there is a need for greater technological ability, which Algonquin provides. Algonquin has:
- 1,421 MW of renewable generation that they have already built, and another 1,443 MW under construction
- Lower cost of capital ability: Algonquin has a $10 billion market cap with a lower cost of capital
- Greater purchasing power: Algonquin will strive to lower the cost of fuel, parts and services, as they purchase for their other utilities
- A vision of what a utility should look like now, and in 20-30 years, based on industry experience and a customer and sustainability mindset.
As a standalone utility BELCO does not have this but as part of the Algonquin family, we expect to benefit immensely.
About Ascendant Group Limited
Ascendant Group Limited is a Bermuda-based, publicly traded provider of energy and energy-related services. Ascendant Group Limited
is the parent company of Bermuda Electric Light Company Limited (BELCO) and AG Holdings Limited, which includes AIRCARE Limited, iFM Limited,
iEPC Limited, Ascendant Properties Limited.