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Winds of change blow in; Creststreet to sell stake in Pubnico power project

Atlantic Canada’s largest wind farm is up for sale.

Creststreet Power and Income Fund LP of Toronto, a significant owner of the $50-million wind farm in Pubnico Point, Yarmouth County, wants to sell its share of the development in response to the federal government’s decision to eliminate the tax benefits of trusts. “The change in the federal income trust rules doesn’t allow trusts to grow,” said Derren Newell, Creststreet’s CFO. An independent board of directors of Creststreet has set up a special committee to conduct a “strategic review” of the income fund’s two wind energy projects in Quebec and Nova Scotia, which have a total of 47 wind turbines and power generating capacity of 84.6 megawatts. Mr. Newell said the new tax rules come into effect in 2011, but the board is looking at selling the assets while renewable energy is a “hotly traded commodity” that will make sense for the unitholders of the income fund.

“The committee is looking at maximizing unitholder value,” he said.

To help in the review, the committee hired CIBC World Markets Inc. and Davies Ward Phillips Vineberg.

The Harper government passed legislation last year to start taxing income trusts at corporate rates.

The proposed rules will apply a new tax on the money distributed to shareholders by newly formed income trusts and tax some of the income at corporate rates. These new rates started for trusts trading after October 2007. But existing trusts such as Creststreet were given a four-year transition period, ending in 2011. PPWF Management Ltd., Creststreet’s partner in the Pubnico wind farm and its operator, is a local firm owned by four Nova Scotians and headed by lawyer Charles Demond.

Creststreet has been a “good partner” and expects any transaction to be completed by the end of this year, said Mr. Demond, president of Atlantic Wind Power Corp., a wind developing company.

The Pubnico wind farm has 17 turbines, has been generating electricity since 2005 and sells directly to Nova Scotia Power through a long-term-power purchase agreement.

Creststreet’s recent quarterly results show that for the first nine months of 2007, Pubnico Point’s production was eight per cent below the independent engineer’s projection, compared with seven per cent the previous year.

The lower production is being blamed on lower wind speeds, according to the Creststreet report.

By Judy Myrden
Business Reporter

The ChronicleHerald

7 February 2008