TransCanada Corporation has announced that it has reached an agreement to acquire the Ironwood natural gas fired, combined cycle power plant in Lebanon, Pennsylvania, with a nameplate capacity of 778 megawatts (MW), from Talen Energy Corporation for US$654 million. At closing, US$42 million in debt will be assumed and then repaid within 45 days of closing out of funds placed into escrow by the seller.
"This acquisition presents a unique opportunity in the current market environment and is a natural extension of our US northeast power business, strengthening our overall portfolio of assets in the region," said Russ Girling, TransCanada's president and chief executive officer. "This relatively new and highly efficient gas-fired power plant provides us with a solid platform from which to continue to grow our already substantial wholesale, commercial and industrial customer base in this market area."
The Ironwood power plant delivers energy into the PJM power market, North America's largest and most liquid energy region, which includes a three year forward capacity market. Strategically located in proximity to the Marcellus shale gas play, the facility is well positioned to access competitively priced natural gas in a market that is in the midst of transitioning away from coal-fired power generation to gas.
The acquisition is expected to be immediately accretive to earnings and cash flow and generate approximately US$90-US$110 million in earnings before interest, taxes, depreciation and amortization annually through a combination of capacity payments and energy sales.
"The Ironwood power plant will be very complementary to our US northeast operations, which now total over 4500 MW, and is consistent with our disciplined approach to growth in this important region where we have been operating on the power side since 1998," added William (Bill) Taylor, TransCanada's executive vice-president and president, Energy.
The acquisition will be financed with a combination of cash on hand and available debt capacity. The transaction is expected to close early in the 1Q16, subject to certain conditions being satisfied in the coming months.
Edited from press release by Angharad Lock
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/08102015/transcanada-enters-agreement-to-acquire-ironwood-power-plant-1568/