Talen Energy, led by PPL veterans, launched through IPO

Talen Energy (NYSE: TLN), one of the largest independent power producers in the United States, was officially launched on June 1 in a long-expected IPO.

Talen Energy was formed when the competitive power generation business of PPL Corp. (NYSE: PPL) was spun off and immediately combined with the competitive generation business owned by private equity firm Riverstone Holdings LLC. Upon completion of these transactions, PPL shareholders owned 65% of Talen Energy’s common stock; affiliates of Riverstone owned 35%.

Notable is that the power plants, mostly coal-fired, of PPL’s regulated Louisville Gas and Electric and Kentucky Utilities subsidiaries in Kentucky were not part of the spin-off and were retained by PPL.

Paul A. Farr, President and Chief Executive Officer, leads an experienced Talen Energy management team that has decades of experience in power generation, commercial operations and corporate strategy. Upper management of the company is mostly from the PPL side of this deal.

“The combination with Riverstone was the first step in Talen Energy’s growth plans,” Farr said. “Talen Energy, a pure-play competitive energy company, will focus on extracting value from our existing portfolio of generating assets, and identifying quality assets in attractive markets that are accretive to cash flow. Our balance sheet and expected asset sale proceeds will enable meaningful execution of our growth plans. We have a strong team with the knowledge and experience to generate power safely and reliably, and to create a legacy under the Talen Energy name that benefits our shareholders, employees, and customers.”

At closing, Talen Energy owns about 15,000 MW of generating capacity, primarily located in two of the largest, most transparent and most liquid competitive power markets in the United States: PJM Interconnection (Mid-Atlantic) and Electric Reliability Council of Texas (ERCOT). Talen Energy has agreed to divest approximately 1,300 MW of generating assets in a specific sub-region of PJM under a Federal Energy Regulatory Commission order. FERC approved a certain set of power plants that can be sold to meet its requirements, with Talen allowed some discretion on which ones will be sold.

With carbon-free nuclear power, clean and flexibly dispatched natural gas generation, and efficient coal-fired generation, Talen Energy said it already has the scale and asset diversity to be one of the leading companies in the competitive energy and power generation sector. The generation mix is about 43% natural gas or oil, 40% coal, 15% nuclear and 2% hydro.

Members of the leadership team average nearly 30 years of experience in energy and power generation.

  • Farr previously served as President of PPL Energy Supply, Executive Vice President and Chief Financial Officer of PPL Corp., Senior Vice President-Financial and Controller of PPL Corp., and Chief Operating Officer of PPL Global.
  • Jeremy R. McGuire, Senior Vice President and Chief Financial Officer, has 20 years of financing and strategic advisory experience. He led the Strategic Planning function at PPL Corp. for the past seven years. Before joining PPL in 2008, he was an investment banker at Lehman Brothers, where he worked with regulated utilities, independent power producers and private equity clients.
  • Clarence J. Hopf Jr., Senior Vice President and Chief Commercial Officer, has more than 30 years of experience in power generation and energy marketing.
  • Timothy S. Rausch, Senior Vice President and Chief Nuclear Officer, has 25 years of experience in virtually all disciplines of the nuclear power industry.

Talen Energy’s generating plants will continue to be operated and maintained by the experienced professionals who operated and maintained them safely and efficiently under PPL and Riverstone.

Talen Energy also will continue the wholesale and retail energy sales businesses of PPL EnergyPlus LLC. Current customers of PPL EnergyPlus will see no changes in service, prices or contracts. PPL EnergyPlus will be called Talen Energy Marketing as of June 2 and will operate under the Talen Energy brand.

Talen Energy will begin regular-way trading June 2 on the New York Stock Exchange. Farr and other members of Talen Energy leadership will ring the Exchange’s opening bell at 9:30 a.m.

Talen works on clean-air issues at three Maryland coal plants

In a June 1 investor presentation, Talen said about clean-air compliance at coal units in Maryland that came from Riverstone: “Wagner Unit 3 will install a new DSI system, Wagner Unit 2 will burn a low chlorine coal (Adaro from Indonesia or Colorado) and they will average emissions with Brandon Shores for MATS compliance. Crane burns low-sulfur PRB (sub-bituminous) coal and DSI systems will also be installed at Crane for MATS compliance. Crane and Wagner could also use ultra-low sulfur Adaro coal to comply with MATS, or if needed, to meet future ambient SO2 standards.”

P.T. Adaro is an Indonesian coal producer that supplies a very-low-sulfur coal that has been used by several U.S. power plants under emissions constraints where the installation of new air emissions controls was not considered economic. MATS is the federal Mercury and Air Toxics Standards, which took effect on April 16 of this year. DSI is dry sorbent injection. PRB means Powder River Basin. Brandon Shores is a 1,273-MW coal plant, Crane is a 399-MW coal plant and Wagner is a 976-MW plant fired by coal, oil and natural gas.

The Talen presentation also said about these plants and clean-air needs: “Crane is a cyclone boiler and is equipped with over-fired air with SNCR for NOx control. MDE is developing new NOx requirements for [Maryland] coal plants which could require additional controls or operational changes in 2020. Wagner Unit 2, which has low NOx burners with SNCR for NOx control, could also be required to install additional controls or make operational changes in 2020 as a result of MDE’s pending rule.”

SNCR is selective non-catalytic reduction, and MDE stands for Maryland Department of the Environment.

Incidentally, Talen under that FERC order will divest the power plants in one of these two overlapping groups:

Group 1

  • Bayonne, 174 MW, gas/oil, New Jersey;
  • Camden, 151 MW, gas/oil. New Jersey;
  • Elmwood Park, 73 MW, gas/oil, New Jersey;
  • Newark Bay, 129 MW, gas/oil, New Jersey;
  • Pedricktown, 132 MW, gas/oil, New Jersey;
  • York, 52 MW, gas, Pennsylvania; and
  • Ironwood, 660 MW, gas, Pennsylvania.
  • Total 1,371

Group 2

  • Bayonne, 174 MW,
  • Camden, 151 MW;
  • Elmwood Park, 73 MW;
  • Newark Bay, 129 MW;
  • Pedricktown, 132 MW;
  • York, 52 MW;
  • C.P. Crane, 399 MW, coal, Maryland;
  • Holtwood, 249 MW, hydro, Pennsylvania; and
  • Wallenpaupack, 44 MW, hydro, Pennsylvania.
  • Total 1,403
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.