Algonquin Power (OTCPKAQUNF) n
Algonquin Power is Offering a Value For Investors
Algonquin Power (OTCPK:AQUNF) operates through two main subsidiaries, Algonquin Power (responsible for their power generation), and Liberty Utilities (responsible for their utilities). Algonquin’s operations can be broken down into three main areas: generation, distribution, and transmission (Algonquin Power & Utilities).
The generation side of their business is made up of non-regulated renewable generation facilities across North America. They own hydroelectric, wind, solar, and geothermal facilities with respective capacities of: 120MW, 650MW, 10MW, and 335MW. Management has a development plan that will increase their generation portfolio capacity by 529MW by 2018 (Capital IQ).
Another very attractive feature of their power generation business from a value investing point of view is their power purchase agreements (PPA). These PPA’s currently average a length of 16 years (Capital IQ) and are a way for the company to guarantee revenue, and ensures stability on this side of their business. 85% of Algonquin’s power generation is under a PPA.
Algonquin’s distribution subsidiaries operate across electric, water, and natural gas markets, as well as waster water collection. This asset portfolio generates stable cash flows to the company through its more than 560,000 customers. Their distribution assets are entirely US, and generate a regulated rate-base of $1.3 billion per year.
On the transmission front, Algonquin is a relatively new player, creating its transmission group in 2014. They are currently looking for opportunities to invest in, and develop natural gas and electricity transmission projects. For instance, they are currently involved in a project with Kinder Morgan building the North East Supply pipeline, with an initial 4% interest that has the option to grow to 10%. This project is estimated to cost Algonquin up to $207 million, and will be scalable to 1.2 Bcf per day.