Merom Generating Station
(photo courtesy of Hoosier Energy)

Terre Haute-based Hallador Power Co. LLC has announced plans to acquire the Merom Generating Station in Sullivan County from Bloomington-based Hoosier Energy. The deal includes a power purchase agreement in which Hoosier Energy will purchase energy produced at the coal-fired plant.

Financial terms of the deal were not disclosed. Hallador Power, a newly-formed subsidiary of Hallador Energy Co. (Nasdaq: HNRG), says it will acquire the 1-gigawatt plant in return for assuming certain decommissioning costs and environmental responsibilities.

Hoosier Energy announced plans to retire the Merom plant in May 2023. The company says Hallador would be able to operate the plant at a much lower cost.

“This is an ideal outcome for Hoosier Energy and its member distribution cooperatives, continuing our commitment to provide reliable, affordable and sustainable power,” Hoosier Energy Chief Executive Officer Donna Walker said in written remarks. “It’s a positive development for current Merom employees and Sullivan County as well, preserving more than 100 jobs and a major economic driver for the area. Several milestones must still be achieved prior to completing the transaction, and we will remain diligent as this process continues to progress.”

Through the PPA, Hoosier Energy will purchase 100% of the plant’s energy and capacity through May 2023 and reduce those purchases to 22% of energy and 32% of capacity beginning in June 2023 through 2025.

The two companies have an existing renewable PPA that was signed last May representing 150 megawatts of solar generation and 50 MW of battery storage. That agreement will be retained, though its start date will be delayed until the Merom plant is retired.

“As the future owner and operator of Merom, Hallador secures demand for up to half of its coal production for years to come,” said Hallador Energy CEO Brent Bilsland. “This transaction is an example of how Hallador intends to help the market transition from coal to renewable energy by providing base load capacity in the near term utilizing existing coal-fired power generation while transitioning to renewables in the longer term. It’s a great transaction for all involved parties.”

As part of the deal, Hoosier Energy will retain more than 5,700 acres of land, which it says has potential for economic redevelopment.

The deal is expected to close in mid-July pending government and financial approvals.