BRIEF Author:Robert Walton@TeamWetDog Published April 2, 2018

Dive Brief:

NextEra Energy Partners has reached a deal to sell its Canadian portfolio of renewable generation, as the company seeks to move the capital back into the United States to take advantage of the lower corporate tax rate. Canada Pension Plan Investment Board will pay $582 million and assume $689 million in debt, for approximately 400 MW of wind and solar generating facilities located in Ontario.
President Trump’s push to lower the corporate tax rate has led several energy companies to make adjustments, including utilities lowering rates. Beginning this year, the corporate rate dropped from 35% to 21%.

NextEra floated the idea of selling its Canadian assets during its January earnings call and has since moved quickly. The company says it expects the sale to close during the second quarter of this year. With the funds returned to the United States, the lower corporate tax rate will boost the funds available for distribution.

NextEra CEO Jim Robo said the assets were sold at a 10-year average cash available for distribution (CAFD) yield of 6.6%. Included in the sale are six fully-contracted wind and solar assets, with an average contract life of approximately 16 years and 10-year average CAFD of $38.4 million.The sale includes four wind generating facilities totaling more than 350 MW and a pair of 20 MW solar generating facilities.

The corporate tax cut will be a double-edged sword for utilities, reducing their tax burden as well as their revenue. But for customers, the benefits are more clear, evidenced by a trend of states pushing utilities to return savings to customers. Earlier this year, Florida Power & Light announced it would use federal tax savings to repair $1.3 billion in damage caused by Hurricane Irma last year and to avoid a rate increase. Regulators in Kentucky cited the lower rate in approving a smaller-than-requested rate increase for Kentucky Power Co. Virginia lawmakers rolled back a Dominion Energy rate freeze to return some funds to customers.