Papermaker to sell five hydro projects in Wisconsin

March 12, 2010

Wisconsin municipal power company Great Lakes Utilities has signed a letter of intent to buy five hydroelectric projects located along a 33-mile stretch of the Wisconsin River.

It is offering $70.4 million for the projects to Consolidated Water Power Company (CWPCo), a subsidiary of Ohio-based paper manufacturer NewPage Corporation.

The hydropower stations in DuBay, Stevens Point, Whiting, Biron and Wisconsin Rapids, all in Wisconsin, have a total of 39 hydrogenerators, adding up to 35.2 megawatts of generating capacity.

The projects generate the equivalent power to the needs of about 75,000 households.

“Low cost”

Manitowoc-based GLU said the deal, equivalent to $2,000 per kilowatt of installed capacity, should provide it with “low cost, reliable power” as well as helping to meet its requirements under Wisconsin’s Renewable Portfolio Standard.

The company, which is owned by member communities Clintonville, Kiel, Manitowoc, Marshfield, Medford, Rice Lake , Shawano and Wisconsin Rapids, said it had assessed options including wind and biomass projects before opting for the hydropower deal.

The hydropower projects currently provide power to four of NewPage Corp’s paper mills in central Wisconsin, but their output represents just 10% of the paper mills’ power needs.

When the deal is concluded, subject to regulatory approvals, the companies said the sale would “have little impact” on the paper mill operations.

Last month, CWPCo filed an application to Wisconsin’s Public Service Commission seeking the approval to sell its transmission and distribution assets to the Wisconsin Rapids Water Works and Lighting Commission.

Sanabe & Associates, LLC acted as exclusive financial advisor to NewPage and CWPCo for the proposed transactions.