PPL shuts Montana coal plant; Talen Energy IPO planning moves along

Operations were suspended and the 148-MW Corette plant in Montana was retired in March of this year, said Talen Energy in a third amendment to its IPO prospectus filed on April 16 at the SEC.

April 16, coincidentally, is the same day that the federal Mercury and Air Toxics Standards (MATS), which forced the shutdown of the coal-fired Corette plant, took initial effect. Talen, to be made up of power plants now owned by PPL Corp. (NYSE: PPL) and privately-held RJS Power, is aiming for an IPO in the next few weeks. The April 16 prospectus update still lacks the planned share offering price and how many shares in the company will be offered. Talen Energy has applied to list its common stock on the New York Stock Exchange under the symbol “TLN.”

Corette, incidentally, is a plant currently controlled by PPL.

Said the updated prospectus on MATS compliance in general: “[PPL] Energy Supply and RJS Power are generally well-positioned to comply with MATS, primarily due to recent investments in environmental controls. Energy Supply is evaluating chemical additive systems for mercury control at Brunner Island, and modifications to existing controls at Colstrip for improved emission reductions. In September 2012, Energy Supply announced its intention to place its Corette plant in long-term reserve status beginning in April 2015 due to expected market conditions and costs to comply with MATS. Operations were suspended and the Corette plant was retired in March 2015. The Corette plant asset group was determined to be impaired in December 2013. Given the air emission controls already employed, RJS Power expects that each of RJS Power’s facilities will be in compliance with the MATS rule emission limits without the need for significant additional investment. Energy Supply has received approval for one-year compliance extensions for certain plants in Pennsylvania, and a one-year extension request has been submitted for Colstrip. Other Energy Supply extension requests are under regulatory consideration.”

Upon completion of certain transactions, Talen Energy will be one of the largest competitive energy and power generation companies in North America. Its primary business will be the production and sale of electricity, capacity and related products from a fleet of power plants totaling approximately 14,000 MW of generating capacity. It will own and operate a portfolio of generation assets principally located in the PJM Interconnection and Electric Reliability Council of Texas (ERCOT) regions.

PPL Energy Supply is primarily engaged in the competitive power generation and marketing of electricity, generating capacity, ancillary services and related commodities primarily on a wholesale basis from its fleet of power plants located in Pennsylvania and Montana, totaling approximately 9,896 MW of electricity generation capacity as of Dec. 31, 2014. These include the big Brunner Island and Montour coal plants in Pennsylvania and part of the big Colstrip coal plant in Montana.

RJS Power is engaged in the competitive power generation and marketing of electricity, generating capacity and ancillary services on a wholesale basis from its fleet of power generating facilities located in five states totaling approximately 5,331 MW of electricity generation capacity as of Dec. 31, 2014. RJS Power owns and operates a diverse portfolio of power generating facilities of various technology types and operating characteristics fueled by coal, natural gas and oil. Approximately 63% and 35% of the net generating capacity of RJS Power’s facilities is located in PJM and ERCOT, respectively.

Prior to the transactions, Talen’s principal executive offices are located at Two North Ninth Street, Allentown, Pennsylvania. Following the transactions, its principal executive offices will be located in 835 W. Hamilton Street, Allentown, Pennsylvania. Its website will be www.talenenergy.com.

The filing noted that PPL Energy Supply is presently considering divesting its renewables plants, which collectively represent approximately 25 MW of generating capacity (summer rating) and are located in various states in the eastern United States. The renewables plants represented an average of less than 2% of each of PPL Energy Supply’s income from continuing operations and total assets over the five-year period ended Dec. 31, 2014.

As for expansion plans once Talen Energy is up and running: “We believe that there will continue to be significant acquisition opportunities for competitive power generation assets in the United States, enabling us to grow our fleet and enhance shareholder value,” said the filing. “Approximately 81 GW of operating capacity are owned by companies that operate both regulated utilities and competitive power generation assets, while approximately 40 GW are owned by private equity funds. Given the trend of separating competitive power generation assets from regulated utility assets, and the typically defined target holding period of private equity funds, we expected that a significant number of assets will come to market over the next several years.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.