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Matters

Exelon To Sell Legacy Texas Generating Assets

May 4, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Exelon told investors yesterday during an earnings call that it will sell the portfolio of its ExGen Texas Power LLC subsidiary, which includes nearly 3,500 MW of gas-fired generation in ERCOT

ExGen Texas Power includes Wolf Hollow I (704 MW), Colorado Bend I (498 MW), Handley (1,265), Mountain Creek (825 MW), and ExTex LaPorte (~150 MW)

ExGen Texas Power LLC does not include Exelon's two recent new build CCGT units in Texas (Wolf Hollow II and Colorado Bend II, each of which is about 1,100 MW).

The new build CCGTs are not part of the announced divestiture process.

Exelon executives said that in 2014, ExGen Texas Power LLC raised $675 million of non-recourse project finance for the assets, which currently has a balance of approximately $650 million.

With a downturn in ERCOT power prices, executives said that the ExGen Texas Power LLC assets have been under pressure, with the plants struggling to generate adequate cash flows.

Due to the combination of challenged cash flows and Exelon's decision not to inject additional equity into ExGen Texas Power LLC, it has come to terms with the lenders to pursue an orderly sale of the ExGen Texas Power LLC assets on the lender's behalf, Exelon CFO Jonathan Thayer said

Exelon reported that the "modest" current earnings and all of the debt from the ExGen Texas Power LLC plants are still included in its financial outlook. However, Exelon sees the ultimate exit from these assets being accretive to its EPS and debt to-EBITDA multiples starting in 2018.

Turning to the new build CCGTs, Exelon said that commercial operation is to begin during the second quarter, with the units available for this summer.

Exelon also reported that during the first quarter, it decided to discontinue the sales process of the Mystic 8 & 9 assets. Exelon had been exploring a sale of these assets as a direct result of interest received from potential buyers. However, during the sales process Exelon ran into some issues with the fuel supply agreement that need to be addressed. Exelon stressed that it had said it would only divest the Mystic units if it could realize a price greater than the value the plants brought to the company. While executives indicated that the Mystic 8 & 9 units would be reviewed annually, executives said that continuing to own these assets does not impact Exelon's commitments on its debt-to-EBTIDA target and debt reduction plans

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