Dividend Ramp Up In Canadian Utilities
As IÂ’ve pointed out on numerous occasions, oil sands development is at its core not a drilling operation but a mining and chemical refining process. That requires an enormous amount of electricity to carry through.
On the other hand, the Canadian government has also been very aggressive setting targets for use of renewable energy and reducing carbon dioxide emissions from power generation.
A year ago the country set tough new standards for fostering biofuels development. That matches renewable energy standards set in nine Canadian provinces that require power companies to generate a set percentage of their electricity from wind, solar and hydro.
As the major utilities are primarily provincial power authorities, that amounts to guaranteed contracts for renewable energy developers and generators. And not only are contracts backed by the full support of taxpayers, but they typically guarantee premium rates and recovery of any change in costs. Some - particularly in solar and wind - actually guarantee payment even if conditions inhibit a full generation.
After it completes its acquisition of Capital Power LP, Atlantic Power Corp. AT will hold several valuable projects. Management plans to follow up with more, particularly in hydro-rich British Columbia.
Meanwhile, Innergex Renewable Energy INGXF.PK, which I first profiled in this February 2010 InvestingDaily.com article, already has substantial holdings, and is in the process of building more capacity. Innergex has aggressive plans with new wind and water projects in development that will nearly double current capacity in the next few years. And it has prospective projects that would potentially add another 2,800 megawatts, or nearly seven times current output of 401 megawatts.
Getting all that up and running is just a matter of executing, and Innergex has been very effective getting such deals done in the past. Even a partial success will result in a big ramping up of dividends in coming years, even as the current payout remains secure despite what happens in the economy.
Related News
Ontario will not renew electricity deal with Quebec
TORONTO - The Ontario government does not plan to renew the Ontario-Quebec Electricity Trade Agreement, Radio-Canada is reporting.
The seven-year contract, which expires next year, aims to reduce Ontario's greenhouse gas (GHG) emissions by buying 2.3 Terawatt-hours of electricity from Quebec annually — that corresponds to about seven per cent of Hydro-Quebec's average annual exports.
The announcement comes as the provincially owned Quebec utility continues its legal battle over a plan to export power to Massachusetts.
The Ontario agreement has guaranteed a seasonal exchange of energy, since Quebec has a power surplus in summer, and the province's electricity needs increase in the winter.…
