Hallador Energy Co said it had signed a $700-million agreement to supply a utility operating in MISO Zone 6 from the Merom Generating Station in Sullivan County, Indiana.
The six-year deliveries to the unnamed “investment-grade” customer will begin June 2029 and end May 2036, the Terre Haute-based power producer said in a press release.
“The agreements are effective upon signing and require no regulatory approval. The capacity agreement, Hallador’s third announced in 2026, is priced at the highest capacity price the company has contracted to date and more than 20 percent above the capacity contract announced in March”, Hallador said.
“The agreements increase Hallador’s total forward sales book to $3 billion at the segment level and leave a majority of Merom’s expected production through 2040, contracted to investment-grade counterparties”.
Hallador president and chief executive Brent Bilsland said, “As data center projects shift or are delayed in other states, investment is flowing into Indiana, driving demand for reliable, accredited power that is increasingly scarce across energy markets. That dynamic supports our long-term strategy, strengthens our pricing opportunities and allows us to contract with large, well-capitalized customers”.
The utility will purchase a yearly average of 225 megawatts (MW) of Merom’s accredited capacity for around $271 million of capacity revenue over the term, Hallador said. The two-unit coal-fired generation facility has a capacity of 1,080 MW.
“The energy agreement has an annual average base energy quantity of 200 MW, subject to seasonal reduction rights”, Hallador said. “Energy pricing includes a fuel price floor and recovery of qualifying excess fuel costs, which protects Hallador’s margin against higher fuel costs.
“Hallador sells a mix of unit-contingent and firm energy; unit-contingent sales price lower because they carry no replacement-power risk, and Merom’s uncommitted energy may be sold on either basis. Based on current forward prices, the company estimates the energy agreement would generate approximately $422 million of revenue over the term.
“With these agreements, approximately 95 percent of Merom’s accredited capacity is under contract through 2035 and approximately two-thirds contracted for 2036 through 2040”.
Hallador added it continues to pursue the 460-MW Turtle Creek gas project, proposed to rise next to Merom.
Hallador applied for a permit September. “Once approved, Turtle Creek would expand the company’s total generating capacity by over 40 percent and advance its transformation into a multi-fuel independent power producer”, Hallador said.
Last month it executed a $600 million senior secured loan to support Turtle Creek.
“In connection with the term loan facility, the company also has the ability to establish a super-priority revolving credit facility of up to $75 million with a similar tenor, creating a financing package of up to $675 million”, Hallador said September 17.
“Hallador expects to use borrowings from the facilities primarily to fund upcoming payment obligations under its turbine asset purchase agreement, transportation and refurbishment costs, pre-notice-to-proceed and other development costs and construction of the company’s proposed new and efficient 460-megawatt natural gas-fired Turtle Creek Gas project, which has an expected total project cost of less than $800 million”.
Bilsland said, “By leveraging existing infrastructure and critical generation equipment we have under contract, we believe we have positioned Turtle Creek to reach commercial operation on an accelerated timeline and at a capital cost well below comparable new generation projects”.
“With demand for reliable, dispatchable power continuing to grow in MISO, we believe the combination of speed to market and capital efficiency makes Turtle Creek a compelling opportunity for Hallador and its shareholders”, Bilsland added.
“What the team remains focused on executing is straightforward but not assured: the turbines have to load, clear export and be refurbished on schedule, and we have to contract the plant’s output at prices that justify the cost, as we have done at Merom”.