Hallador Energy Company signs US$700M Merom power sale through 2035
An unnamed MISO Zone 6 utility will buy Merom capacity and contingent power from June 2029, with part of the revenue tied to forward prices.
Ines Halvorsen
June 1, 2029, marks the start of a sale averaging 225 megawatts of Merom's accredited capacity after Hallador Energy Company NASDAQHNRG said its power subsidiary signed agreements on Oct. 7. Hallador estimates about US$700 million in revenue over the contract term, including capacity fees and energy sales calculated using current forward prices. The unnamed buyer is an investment-grade utility in MISO Zone 6, and the six-year agreements end May 31, 2035.
Hallador shares closed at US$13.65 on Nasdaq on Oct. 7, before the announcement, according to NASDAQHNRG at 4 p.m. EDT.
The capacity agreement accounts for about US$271 million over its term, while Hallador estimates the energy agreement will bring in about US$422 million at current forward prices. The energy leg has an annual average base quantity of 200 megawatts and follows actual output from Merom's two generating units.
Hallador described the new sale as priced above US$80 per megawatt-hour. It said the capacity leg has its highest contracted rate yet, more than 20 per cent above the capacity contract it announced in March. Across its wider book, contracted capacity and energy revenue per megawatt-hour rises to US$73.26 in 2030 from US$46.07 for the final quarter of 2026.
"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," Hallador president and chief executive Brent Bilsland said in the Oct. 8 release.
Signed Agreements Need No Regulatory Approval
The agreements took effect at signing and do not require regulatory approval, Hallador said. Certain other positions in its forward sales table are subject to approval from the Indiana Utility Regulatory Commission, according to the release's footnote.
The energy contract is unit contingent: Hallador has no obligation to buy replacement power when either Merom unit is offline or undergoing required maintenance. The utility can reduce the base energy quantity to zero for as many as 90 days a year, and the contract includes a fuel price floor and recovery of qualifying excess fuel costs.
Hallador's forward sales table reports US$2.99 billion in segment-level contracted revenue after the Oct. 7 deal, compared with US$2.48 billion on a consolidated basis. The segment figure includes US$509.39 million of intercompany coal sales that are excluded from the consolidated total. The table measures positions as of Sept. 30, adjusted for the Oct. 7 contract, and Hallador cautioned that actual revenue can vary with unit output and volume options.
About 95 per cent of Merom's accredited capacity is under contract through 2035, with about two-thirds contracted for 2036 through 2040. Those contracted shares cover capacity; the energy agreement's revenue estimate still depends on generated output and current forward prices.
In another long-term power sale, Constellation Energy Corporation NASDAQCEG said on Oct. 6 that a 20-year purchase agreement supports 890 megawatts of nuclear uprates in PJM. The first uprate is expected by 2028.
Read more: Constellation Energy Corporation signs 20-year Google pact for 890 MW of nuclear uprates
Under Hallador's signed agreements, Merom capacity and energy deliveries begin June 1, 2029, with energy volumes determined by the units' actual output.
