Buffett behind power deal

The outlook for natural gas-fired power plants got a lift in Canada with the announcement of a strategic partnership between Calgary-based utility TransAlta and Des Moines, Iowa-based MidAmerican Energy Holdings.

A strong vote of confidence for the arrangement comes from billionaire Warren Buffet, whose Berkshire Hathaway controls MidAmerican, which has cooperated with TransAlta through CE Generation on smaller-scale projects in the U.S. since 2001.

The new entity plans to tap into a power-generation market in Canada that TransAlta Chief Executive Officer Dawn Farrell predicted will require C$200 billion of investment over the next two decades.

Executives of the two companies say the demand for electricity from gas-fired plants will be especially strong in Alberta’s oil sands and for LNG export terminals.

Farrell said it is too early to outline in detail the size and scale of the strategic partnership’s planned investments, but she said the focus will be on Western Canada “so that we can aim at a few projects.”

However, Farrell said TransAlta and MidAmerican will be open-minded about other Canadian opportunities.

One example of cooperation will be TransAlta’s Sundance 7 gas-fired plant in Alberta, an 800-megawatt operation which is expected to cost about C$1.4 billion.

All development and construction or acquisition of approved projects will be funded on a 50-50 basis, with TransAlta responsible for construction management, operation and maintenance.

—Gary Park