Press Release

SAN ANTONIO, Texas –Today, CPS Energy and Talen Energy Corporation (“Talen”) (OTCQX: TLNE) announced an agreement for CPS Energy to acquire Talen’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 at closing. These assets include natural gas plants in Corpus Christi and Laredo. The transaction is expected to close in the second quarter of 2024.  

Under the terms of the agreement, which is subject to customary closing conditions, CPS Energy will acquire all assets associated with Talen’s 897 MW Barney Davis and 635 MW Nueces Bay natural gas-fired generation facilities, both located in Corpus Christi, Tex., as well as its 178 MW natural gas-fired generation facility in Laredo, Tex.

This action supports CPS Energy’s generation plan, approved in 2023 by its Board of Trustees. It secures an additional 1,710 MWs of power for the greater San Antonio community and will be available as soon as this summer. The addition of these units aligns with the generation plan, which includes the retirement of older units and the addition of a blend of gas, solar, wind, and energy storage.

“The purchase of these assets furthers CPS Energy’s commitment to deliver reliable and affordable energy supply to one of the nation’s fastest growing communities, while also balancing our commitment to reduce carbon emissions by 2030,” said Rudy D. Garza, President & CEO of CPS Energy. “The investments we are making to purchase and improve the performance of these plants provide cost benefits when compared to building new assets, which means reliability now at a lower price for our community. In addition to these facilities, as our community continues to grow, we are also adding low and zero-carbon resources as well as energy storage to enable that additional growth.”

Talen President and Chief Executive Officer Mac McFarland said, “This transaction demonstrates our continued commitment to unlocking significant value for Talen, while also taking care of our people. We are happy that these assets will assist CPS Energy in its long-term strategy to serve its growing community with reliable and cost-effective power generation.”

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 approximately 65 operations employees at these sites, and they will have an opportunity to become CPS Energy employees at the closing of the acquisition.

J.P. Morgan is acting as exclusive financial advisor and Dykema Gossett PLLC is acting as legal advisor to CPS Energy with respect to the Transaction. RBC Capital Markets, LLC is serving as exclusive financial advisor and Kirkland & Ellis LLP is serving as legal advisor for Talen.