Atlantic Power Corp. on June 29 entered into an agreement to acquire Covanta Holding Corp.'s 50% stake in the 13-MW Koma Kulshan hydro project in Whatcom, Wash., for $11.8 million.

The deal is expected to be completed in the third quarter, upon which Atlantic Power will own the entire project and become its operator. The company intends to fund the acquisition through unrestricted cash, according to a July 3 news release.

The Dedham, Mass.-headquartered power producer will also purchase the project's operation and maintenance contract from Covanta for $300,000.

The facility, which began operating in 1990, has two hydro licenses from the Federal Energy Regulatory Commission and sells its output to western Washington utility Puget Sound Energy Inc. under a power purchase agreement which will expire in March 2037.

Atlantic Power currently owns a 49.75% interest in Koma Kulshan through a partnership and recently acquired the remaining 0.25% interest from the managing general partner for $1.1 million, eliminating a management fee payment to the general partner.

"This is an important milestone for Atlantic Power as it marks the first external growth investment after a three-year business restructuring process," Atlantic Power President and CEO James Moore said.