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Press release from Marketwire

Northland Power Income Fund Announces Results for the First Quarter of 2010

Friday, May 14, 2010

Northland Power Income Fund Announces Results for the First Quarter of 201018:22 EDT Friday, May 14, 2010TORONTO, ONTARIO--(Marketwire - May 14, 2010) - NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OR ITS POSSESSIONS. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.Northland Power Income Fund ("Northland" or "the Fund") (TSX:NPI.UN)(TSX:NPI.DB)(TSX:NPI.DB.A) reported its financial results today for the quarter ended March 31, 2010.FINANCIAL AND OPERATING HIGHLIGHTS 3 Months Ended March 31 2010 2009 ------------------------------------------------------------------------ ------------------------------------------------------------------------ FINANCIAL (thousands, except per unit amounts) Sales $ 63,045 $ 52,877 Income from Operations $ 20,809 $ 21,557 Net income $ 9,550 $ 16,913 Standardized distributable cash ($5,171) $ 22,605 Distributable cash $ 18,416 $ 22,515 Distributions declared to Unitholders $ 19,272 $ 16,835 Per Unit - basic Standardized distributable cash ($0.0725) $ 0.3625 Distributable cash $ 0.2580 $ 0.3611 Distributions declared to Unitholders $ 0.2700 $ 0.2700 ------------------------------------------------------------------------ ------------------------------------------------------------------------ OPERATIONS Electricity sales volume (megawatthours) 497,229 371,628 Steam sales volume (thousands of pounds) 286,387 367,289 Fuel consumption (thousands of gigajoules) 3,314 2,926 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Consolidated sales for the first quarter of 2010 were $63 million, while net income was $9.6 million. Northland facilities operated well during the quarter, although lighter than expected winds and icing at both the Canadian and European wind farms affected output and revenues.Compared to the first quarter of 2009, revenues benefited from higher electricity sales at Northland's gas-fired co-generation facilities and from the start-up of the Jardin d'Eole wind farm.Net income was $7.4 million lower than in the same quarter last year, due largely to four factors: -- unusually light winds and unprecedented icing conditions at the wind farms and lower natural gas sales commensurate with weak prices for natural gas, -- higher costs and lower reported investment income as a result of the merger with Northland Power Inc. ("NPI") on July 16, 2009, including (i) higher management and administration and project development costs and (ii) the exclusion of interest and fees on the loans and loan commitments to Thorold CoGen L.P. ("Thorold LP") and Saint-Ulric Saint- Leandre Wind LP ("Jardin LP"), -- higher non-cash expenditures including foreign exchange losses and contract amortization partially offset by the recovery of future income taxes, and -- Interest on the convertible debentures issued in late 2009. DistributionsDeclared cash distributions to Unitholders for the quarter totalled $0.27 per trust unit ("Unit"), representing a payout ratio of 105% of distributable cash.Distributable cash was $18.4 million for the quarter, $4.1 million lower than the same period in 2009. The reduction was largely due to lower income from operations and increased interest costs associated with the new convertible subordinated debentures as well as interest and the first scheduled loan repayment on the Jardin d'Eole project debt.Northland's payout ratio of Unitholder distributions : distributable cash from inception to March 31, 2010 is 91%.DevelopmentNorthland continues to pursue a wide range of clean and renewable energy projects. These efforts produced a number of results, both during and subsequent to the quarter end:SaskPower PPA: In February, Northland entered into a 20-year power purchase agreement ("PPA") with the Saskatchewan Power Corporation to build and own a new natural-gas-fired combined-cycle power plant. The 261 megawatt ("MW") baseload facility will be built near North Battleford, Saskatchewan, about 150 km north-west of Saskatoon. All power produced will be sold to SaskPower under the PPA. The plant will use a General Electric gas turbine with associated heat recovery and a steam turbine. Construction is expected to begin in July 2010 with a scheduled commercial start in 2013. Project cost is budgeted at about $700 million.Loblaw Solar: In March, Loblaw Companies Limited ("Loblaw") announced that it will work with Northland to install photovoltaic solar panels on the roofs of four stores in Ajax, Orleans, Toronto and Whitby as part of a pilot project. The power will be sold to the Ontario Power Authority ("OPA") under PPAs issued under the Ontario government's Green Energy and Green Economy Act, 2009 Feed-in-Tariff ("FIT") program. Based on the success of the pilot project, Loblaw will evaluate the next phase of its planned roll-out of roof-top solar panels.Thorold Commercial Start: On April 1, Northland assumed operational control of its wholly- owned Thorold cogeneration facility from the engineering, procurement and construction contractor. This followed completion of all tests required to achieve commercial operations under its PPA with the OPA.FIT Awards: On April 8, Northland announced that it had been awarded contracts by the OPA to build 216 MW of renewable green energy projects in Ontario. The total investment by Northland on the FIT program projects is expected to reach almost $1 billion over the next four years.Spy Hill Financial Close: On April 29, Northland announced that it had completed the financing for its wholly-owned 86 MW Spy Hill gas-fired peaking facility in Saskatchewan. A consortium of the Canadian Imperial Bank of Commerce, the Bank of Montreal, and the Bank of Nova Scotia will provide construction and term financing of $111 million.Corporate ConversionNorthland's annual meeting will be held on June 21, 2010 at 11:00 a.m. At the meeting the Unitholders will be asked to approve the proposed conversion of the Fund from an income trust to a corporation to be called Northland Power Inc. pursuant to a plan of arrangement. The independent Trustees of the Fund have approved the terms of the proposed corporate conversion. The corporate conversion is subject to Unitholder approval, the approval of the Ontario Superior Court of Justice and other third party and regulatory approvals. If all necessary approvals are obtained, the corporate conversion is intended to take effect on January 1, 2011.Details of the proposed conversion will be set out in the management information circular for the Fund's annual meeting which is expected to be mailed in the last week of May.TrusteesUnitholders will be asked at the annual meeting to elect the following incumbent Trustees:James C. Temerty;The Right Honourable John N. Turner;Dr. Marie Bountrogianni; andPierre R. Gloutney,as well as the following individuals to serve as Trustees:Linda L. Bertoldi, partner of Borden Ladner Gervais LLPGordon F. Cheesbrough, managing partner of Blair Franklin Capital Partners Inc.V. Peter Harder, Senior Policy Adviser to Fraser Milner Casgain LLP"On behalf of all Unitholders, I would like to thank David Rounthwaite and Warren Moysey for their dedicated services to Northland since its creation 13 years ago", said James C. Temerty, Chair of the Fund. "I am also gratified that we have been able to attract such high-quality individuals to serve as trustees as the Fund enters this exciting new phase in its development."Overview and OutlookNorthland management views first quarter operating results in the light of decisions made to secure the company's future and pursue its strategic goals. The acquisition of NPI in 2009 had an immediate impact on costs while providing revenues over time. The Jardin d'Eole wind farm contributed to first quarter sales, and the Thorold facility began commercial operations immediately after quarter end and will start contributing to financial results in the second quarter.The project pipeline acquired with NPI is proving its value; for example, the Saskatchewan Spy Hill and North Battleford thermal projects and the 216 MW in FIT projects awarded were all in NPI's project pipeline.Northland continues to pursue a disciplined approach to managing both operations and risk. The 265 MW Thorold cogeneration facility began commercial operations below budget and slightly ahead of schedule. Financing for the Spy Hill project was obtained with attractive terms on a non-recourse basis.Management expects that the corporation resulting from the conversion will be able to maintain the current rate of distributions by paying a dividend of $1.08 per annum, payable monthly, due to the increased cash flow and tax deferral from the additions of Thorold and Jardin d'Eole to the Fund, and the expected input of the two new Saskatchewan plants coming on stream. Collectively all four projects are expected to provide $1.5 billion in capital cost allowance pools.Management remains committed to a payout ratio below 100%. Because the Fund commits debt and equity funding for new projects before the start of construction, our payout ratio worsens during construction when interest is paid and distributions are made on funds that are not generating revenues. Northland is careful in calculating its project profitability threshold to recognize the impact of new construction on our payout ratio and to ensure that the Fund's distributable cash over time will exceed its distributions.ABOUT THE FUNDNorthland is a Canadian income trust that has ownership or economic interests in 10 power projects totaling over 1,100 megawatts ("MW") (net 872 MW). Northland's assets comprise natural-gas-fired plants which efficiently and cleanly produce electricity and steam as well as facilities generating renewable energy from wind and biomass. Sales are made almost entirely under long-term contracts with a current average duration of 13 years. Northland's plants are located in Canada, the United States and Germany. In addition, Northland has the 86 MW Spy Hill project, 261 MW North Battleford project and 216 MW of wind, solar and run-of-river hydro projects awarded under the Ontario Power Authority's Feed-in-Tariff program in advanced stages of development. Northland also has a diverse development portfolio of high-quality 'Clean and Green' energy projects, including wind, solar, natural gas, and hydro assets that supports its strategy of sustainable growth primarily through internally developed opportunities.The Fund's trust units and convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN, NPI.DB and NPI.DB.A respectively, are qualified investments for RRSPs and DPSPs under the Canadian Income Tax Act. The Fund has in place a distribution re- investment plan that allows Unitholders who are residents of Canada to automatically have their monthly cash distributions reinvested in additional units. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.FORWARD-LOOKING STATEMENTSCertain statements in this news release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect Northland's and its subsidiaries' current expectations. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of Northland's and its subsidiaries' for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties, including those set out in the management's discussion and analysis section of Northland's 2009 annual report and Northland's Annual Information Form dated March 31, 2010 certain of which are beyond management's control. Northland's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or what benefits, including the amount of distributions, Northland and Unitholders will derive therefrom.The forward-looking statements contained in this quarterly report are made as of the date hereof for the purpose of providing readers with Northland's expectations for the coming year. The forward-looking statements may not be appropriate for other purposes. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.FOR FURTHER INFORMATION PLEASE CONTACT: Northland Power Income Fund Barb Bokla Manager, Investor Relations (416) 962-6262 x156 or Northland Power Income Fund Boris Balan Director of Communications (416) 962-6262 x116 (416) 962-6266 (FAX) info@NPIFund.com www.NPIFund.com