Spurred by nuclear project writedown, Talen takes loss for Q2 2016

Talen Energy (NYSE: TLN) on Aug. 4 reported a net loss of $3 million for the second quarter of 2016, compared with net income of $26 million for the year-ago quarter, and Adjusted EBITDA of $132 million, compared with $171 million for the three months ended June 30, 2015.

The net loss in the second quarter includes an after-tax, non-cash asset impairment charge of $122 million related to the proposed Bell Bend nuclear power plant project. Although the project’s Combined Operating License Application remains on file at the Nuclear Regulatory Commission, licensing and permitting activities are suspended, and Talen Energy said it has no plans to resume them.

For the six months ended June 30, 2016, Talen Energy reported net Income of $148 million, compared with $122 million for the six months ended June 30, 2015, and Adjusted EBITDA of $367 million, compared with $408 million for the six months ended June 30, 2015.

“Our second quarter financial results reflect the unrelenting focus of Talen Energy employees on executing major projects designed to improve our resilience to low commodity prices, enhance the safe and reliable operation of our plants, and reduce corporate support costs even further,” said Paul Farr, Talen Energy President and Chief Executive Officer.

The company is adding natural gas co-firing capability to about 3,000 MW of coal-fired generation in Pennsylvania that will enhance its operating flexibility by enabling those plants to use low-cost gas from the nearby Marcellus shale producing region. Co-firing at the Brunner Island plant (1,428 MW) is on schedule to be completed and in commercial operation by the end of 2016. In June, Talen Energy announced that it will proceed with natural gas co-firing capability at the Montour plant (1,528 MW). Assuming timely receipt of necessary permits and regulatory approvals, completion is expected in the second quarter of 2018.

Affiliate Talen Montana is party to a recent settlement agreement in a lawsuit involving the Colstrip plant. The agreement, which was filed in July and is pending approval by a federal court, includes a commitment to retire the coal-fired Colstrip Units 1 and 2 no later than July 2022. Talen Montana owns 50% (307 MW) of those units.

On June 3, Talen Energy announced entry into a definitive merger agreement, executed on June 2, with affiliates of Riverstone Holdings LLC, a private investment firm. Filings have been made with the Nuclear Regulatory Commission, Federal Energy Regulatory Commission and other regulatory agencies. The parties have been granted early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close by the end of 2016, subject to receipt of stockholder and regulatory approvals and satisfaction of other customary closing conditions.

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.