NRG Energy (NYSE: NRG) has agreed to sell two of its generating stations: the 525 MW, coal-fired Seward power plant in New Florence, Pennsylvania; and the 352-MW, gas-fired Shelby County power plant in Neoga, Illinois.
“NRG is focused on maintaining a robust presence and balance through conventional generation assets that complement each other in respect to geography, technology and smart fuel diversity,” said David Crane, the CEO of NRG, in a Dec. 1 statement. “By streamlining our fleet, we can create additional value for our shareholders and meet the needs of our customers with reliable, efficient and economic power. This is part of our ongoing and deliberate strategy of portfolio optimization.”
The Seward facility, which is located in the PJM Interconnection, is being acquired by Seward Generation LLC, a Robindale Energy Services company. As part of the sale agreement, NRG Energy Services will provide operations and maintenance services to the Seward plant on behalf of Robindale Energy using the current NRG workforce. Robindale has been the longtime supplier of waste coal to the Seward plant, which was repowered with fluidized-bed combustion technology, which can readily burn low-quality waste coal. The repowered version of the plant, which involved replacement of old coal-fired capacity at the site, went into operation in 2004.
Said the Robindale website: “Robindale Energy & Associated Companies is a major Pennsylvania-based employer, providing good-paying jobs for more than 500 employees and contractors. The company annually contributes in excess of $100 million in economic impact to the state’s economy. Its work in restoring abandoned waste coal sites and cleaning up waterways is priceless to the environment and has saved taxpayers millions of dollars in clean up efforts that would have otherwise had to be paid for with tax dollars. Waste coal reclaimed by Robindale Energy & Associated Companies helps fuel three Pennsylvania-based generating plants, with hundreds more employees working at those plants.”
The Robindale website doesn’t show who owns the company. The U.S. Office of Surface Mining’s ownership and control database, which covers companies with coal mining permits, shows Robindale as 100% owned by its CEO, D. Scott Kroh. Kroh is a longtime veteran of the Pennsylvania coal business and once worked briefly as a top executive for Alpha Natural Resources.
The Shelby County facility, which is located in the Midcontinent ISO region, is being acquired by an affiliate of Rockland Capital LLC. The station is a 352 MW natural gas-fueled, simple-cycle combustion turbine peaking plant with eight General Electric LM6000 aero-derivative combustion units.
“Operating a diverse generation fleet is a key component of NRG’s continued success in every region in which we operate,” said Mauricio Gutierrez, COO of NRG. “As part of our asset optimization initiative, we’ve identified a few specific facilities that would be better suited in other hands in markets where we can transact at good value while avoiding future capital expenditures.”
The aggregate purchase price for the two generation facilities, both of which are owned by GenOn Energy Inc., an excluded project subsidiary of NRG, is approximately $138 million, comprised of cash and other consideration. Together, these assets were projected to average $10.5 million of Adjusted EBITDA annually over the next three years and require approximately $17 million in maintenance capital expenditures over the same period.
These plant sale transactions are expected to close in the first quarter of 2016, subject to regulatory approvals, including the Federal Energy Regulatory Commission.
NRG is leading a customer-driven change in the U.S. energy industry by delivering cleaner and smarter energy choices, while building on the strength of the nation’s largest and most diverse competitive power portfolio.