Hallador Energy Co., through its new subsidiary Hallador Power Co. LLC, will acquire Hoosier Energy’s 1-Gigawatt (GW) Merom Generating Station in Sullivan County, Indiana, in return for assuming certain decommissioning costs and environmental responsibilities. The transaction, which includes a 3.5-year power purchase agreement (PPA), is scheduled to close in mid-July 2022.

Hoosier will purchase 100% of the plant’s energy and capacity through May 2023, reducing purchases to 22% of energy output and 32% of its capacity beginning in June 2023 and through 2025. The companies’ existing renewable PPA — signed in May 2021 and representing 150 MW of solar generation and 50 MW of battery storage — will be retained, with its start date delayed until Merom’s eventual retirement.

“As the future owner and operator of Merom, Hallador secures demand for up to half of its coal production for years to come,” Hallador Energy CEO Brent Bilsland said. “With current and anticipated market power and fuel prices, we’re confident this investment will provide value to our shareholders. In addition, the parties will be keeping their existing solar/battery storage PPA in place providing a path for Merom’s transition to renewable energy when the coal plant is eventually retired.”

In January 2020, Hoosier Energy announced a new Long Range Resource Plan, which included the expected retirement of Merom in May 2023. Hoosier said at the time it would sell the plant if the right deal came to fruition. After entertaining interest from a number of different parties, the company found Hallador, which the company said is able to operate the plant at a much lower cost given ownership and control of fuel supply.

“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 President and CEO Donna Walker said. “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.”

Hoosier will retain approximately 5,760 acres of land. The new PPA provides additional capacity to Hoosier as well, another important element of the deal.