The Montour LLC unit of Talen Energy (NYSE: TLN) on May 11 notified the Federal Energy Regulatory Commission of a material change in facts related to its exempt wholesale generator (EWG) status due to new leasing and fuel procurement arrangements for its 1,515 MW (summer) Montour Generating Station in Pennsylvania.
The company has contracted with an unaffiliated refined coal producer, Montour Refined Coal LLC (MIRC), to supply a refined coal product to the power pplant for use as fuel. Montour granted MIRC a license to install, own and operate a refined coal production facility at the power plant, together with the right of ingress, egress and access through and over the private roads and driveways adjoining the facility.
The Refined Coal Facility will be sized to meet the needs of the Montour power plant only, with no additional capacity to process feedstock coal for third parties. In consideration for the rights to use the land and associated access rights, MIRC will pay to Montour an annual licensing fee in the amount of $100,000. In addition, pursuant to the Site License Agreement, Montour will provide services, including permitting and engineering services in connection with the Refined Coal Facility, for which MIRC will pay an additional fee to Montour on a time and materials and cost-reimbursable basis. If MIRC needs other utility services such as water, trash removal, cable, or phone, Montour will provide those services for a one-time connection fee in the amount of $10,000.
In conjunction with the Site License Agreement, affiliate Talen Generation LLC entered a contract through which Talen Generation will sell to MIRC sufficient feedstock coal for processing in the Refined Coal Facility. Except in limited circumstances, Talen Generation is expected to be the sole supplier of feedstock coal to MIRC. Additionally, except in limited circumstances such as force majeure or outage of the power plant, it is anticipated that MIRC will sell all of the refined coal produced to Talen Generation.
This refined coal arrangement was entered, in part, because the refined coal has characteristics that can help the power plant achieve required air emission reductions and will generate refined coal tax credits, the company said.
Notable is that Talen Energy said in its May 10 quarterly earnings report that a key strategic objective that continues on schedule is the natural gas co-firing project at the 1,500-MW Brunner Island coal plant in Pennsylvania. The company expects gas co-firing capability for the 750-MW Unit 3 to be completed in the third quarter of 2016. Co-firing of Units 1 and 2, which have a combined generating capacity of 750 MW, is on schedule for completion by the end of 2016. Brunner Island and Montour are similar plants that formerly belonged to PPL Corp. (NYSE: PPL).