Competent Management Creating Shareholder Wealth At Atlantic Power Corp

| About: Atlantic Power (AT)

Fortis Inc (OTC: FRTSF.PK) lost its bid for Central Vermont Public Service Corp (NYSE: CV) to another Canadian company, which is set to combine it with another Vermont utility later this year. But that didn't stop management from trying to mine more electric gold in the US, launching a roughly USD1 billion bid for New York State-based electric and gas distribution utility CH Energy Group Inc (NYSE: CHG).

That offer still has a ways to go before consummation, needing approval from often-contentious Empire State regulators as well as the increasingly unpredictable Federal Energy Regulatory Commission. And it also faces potential opposition from some shareholders, who want Fortis to pay more.

The prospect of having to pay more--as well as conceding to regulatory demands--is a good reason for caution on Fortis stock, despite the company's fairly robust fourth-quarter earnings. Fortunately, it's far from the only Canadian company making a power move into the US.

Atlantic Power Corp's (NYSE: AT) merger with Capital Power LP, for example, more than doubled its market capitalization and generating capacity. That's dramatically diminished its former dependence on individual power sales contracts, such as two set to expire in Florida by 2014.

And it's left the company in prime shape to continue its robust expansion on both sides of the border.

In January, Atlantic bought a 51 percent interest in Canadian Hills Wind LLC, whose primary asset is a 300 megawatt wind power facility in Oklahoma. Construction is set to begin on the project by April at a total project cost of roughly CAD460 million. It will go into service in November, in plenty of time to earn wind power tax credits, which will expire for new projects at the end of 2012 if they're not extended.

That's a timely move to lock in long-term, stable cash flows--output is fully contracted for 20 years--that is only possible thanks to Atlantic's greater post-merger scale.

Ditto the company's investment in late 2011 for a 30 percent interest in an 80 megawatt wind facility in Idaho.

As was the case pre-merger, Atlantic's post-merger power mix is still heavily weighted toward natural gas.

This should prove to be a huge added advantage to the company going forward, as it's able to lock in much lower fuel prices for its facilities, undercutting wholesale power market rivals on price while preserving or even padding margins.

That's a smart strategy for a Canadian company doing a booming US business.

The addition of Canadian assets does provide a natural currency hedge to the US assets that contribute the bulk of Atlantic's cash flow. But management has consistently shown itself adept at limiting currency exposure in some very wild times, by virtue of knowing at all times where its cash is coming from.

Atlantic promised a 3 percent to 5 percent dividend increase when it completed the Capital merger. The company rewarded dividend investors, delivering 5 percent-plus. That's the kind of achievement I expect to see from this company for a long time to come, as it takes what the market gives it to boost shareholder value.

For more on investing in high-yield Canadian companies, check out my free Canadian REITS report.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.