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Luminant To Close Two More Texas Power Plants

October 13, 2017

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

Luminant, a subsidiary of Vistra Energy, today announced that it will close two coal-fueled power plants in Central Texas: its two-unit Sandow Power Plant in Milam County and its two-unit Big Brown Power Plant in Freestone County. In total, approximately 2,300 MW of nameplate power will be taken offline in early 2018.

"These two plants are economically challenged in the competitive ERCOT market. Sustained low wholesale power prices, an oversupplied renewable generation market, and low natural gas prices, along with other factors, have contributed to this decision," Luminant said

Sandow Site

Earlier this week, the company and Alcoa entered into a contract termination agreement pursuant to which the parties agreed to an early settlement of a long-standing power and mining agreement. In consideration for the early termination, Alcoa made a one-time payment to Luminant. The settlement follows a decrease in wholesale power prices in ERCOT and the prior curtailment of Alcoa's smelter operation next to Sandow. Luminant said that the contract has helped shield Sandow from significant exposure to the downturn in the wholesale power market; "however, the standalone economics of the Sandow complex no longer support continued investment in the site in this low wholesale power price environment."

Also closing will be Three Oaks Mine, located primarily in Bastrop County, which supports this plant.

If ERCOT determines the Sandow units are not needed for reliability following this 60-day review, Luminant expects to cease plant operations on Jan. 11, 2018.

Big Brown Site

Luminant will explore a sales process for the Big Brown site during the ERCOT notification period.

Turlington Mine, which supplies Big Brown, was already scheduled to wind down operations by the end of 2017.

If ERCOT determines the Big Brown units are not needed for reliability following the 60-day review, and if the site has not been sold, Luminant expects to cease operations on Feb. 12, 2018.

Financial Impact

Vistra expects to record one-time charges of approximately $70 to 90 million in the fourth quarter of 2017 related to the expected retirements, including employee-related severance costs and non-cash charges for writing off materials inventory and a contract intangible asset associated with Big Brown. Vistra expects to record additional one-time charges in the fourth quarter of 2017 related to changes in the timing and amounts of asset retirement obligations for mining and plant-related reclamation obligations at these facilities.

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