CPS Energy announced the closing on the acquisition of Talen Energy Corporation's approximately 1,710-megawatt (MW) generation portfolio located in the South Zone of the Electric Reliability Council of Texas (ERCOT) market for $785 million, subject to customary net working capital adjustments.
These assets include natural gas plants in Corpus Christi and Laredo, Texas. CPS Energy and Talen previously announced the transaction on March 27, 2024.
Under the terms of the agreement CPS Energy has acquired all assets associated with the 897 MW Barney Davis and 635 MW Nueces Bay natural gas-fired generation facilities, both located in Corpus Christi, Texas, as well as its 178 MW natural gas-fired generation facility in Laredo, Texas.
This action supports CPS Energy's generation plan, approved in 2023 by its Board of Trustees, to power the greater San Antonio community into the future by securing an additional 1,710 MWs that are available immediately. The addition of these units aligns with the generation plan, which includes the retirement of older coal and gas units and the addition of a blend of more efficient gas generation along with solar, wind, and energy storage.
"This step marks CPS Energy's growing role as a regional energy utility, providing additional resiliency and reliability for our customers," said Rudy D. Garza, president and CEO of CPS Energy. "This acquisition adds critical capacity to our generation portfolio to continue to reliably serve one of the fastest-growing regions in the nation. Our customers will benefit from these investments for decades to come."
Talen President and Chief Executive Officer Mac McFarland said, "We are pleased to have completed our strategic transaction with CPS Energy. This transaction demonstrates our continued commitment to unlocking significant value for Talen, while also taking care of our people. We are pleased that these assets will support CPS Energy's efforts to provide reliable and cost-effective power generation through its diverse portfolio to its growing community."
CPS Energy's Vision 2027 plan includes its generation plan that contemplates the retirement of 2,249 MW of older and inefficient dispatchable generation capacity before 2030. CPS Energy has added 730 MW of solar energy and 50 MW of energy storage to date as part of its generation plan, with an additional 500 MW energy storage RFP in the works. With the addition of these facilities, environmental emissions will stay on track to meet the City of San Antonio's Climate Action and Adaptation Plan emissions reduction commitment by 2030. In addition, it provides CPS Energy the flexibility to add more renewable energy and storage with this benefit of firming capacity (power that is available as needed) in place.
The plants in Corpus Christi and Laredo are expected to be operational for the next 25 years. There are a combined total of 66 operations employees at these sites, and they all have retained employment with CPS Energy.
J.P. Morgan acted as exclusive financial advisor and Dykema Gossett PLLC acted as legal advisor to CPS Energy with respect to the Transaction. RBC Capital Markets, LLC served as exclusive financial advisor and Kirkland & Ellis LLP served as legal advisor for Talen.
