IRVING, Texas, Oct. 13, 2017 /PRNewswire/ -- Luminant, a
subsidiary of Vistra Energy (NYSE: VST), 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.
Curt Morgan, Vistra Energy's
president and chief executive officer, said, "This announcement is
a difficult one to make. It is never easy to announce an action
that has a significant impact on our people. Though the long-term
economic viability of these plants has been in question for some
time, our year-long analysis indicates this announcement is now
necessary. These employees have kept both plants reliably powering
Texas for decades, and we greatly
appreciate their service."
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. 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.
Luminant estimates that approximately 450 employees will be
impacted by the Sandow plant and Three Oaks mine closure. Eligible
and affected employees will be offered severance benefits and
outplacement assistance.
As part of the closure process, today Luminant filed a 90-day
notice of suspension of operations with ERCOT, which will trigger a
60-day reliability review. 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.
Luminant will take the necessary steps to responsibly
decommission the facility in accordance with all federal and state
regulations. In addition, ongoing reclamation work will continue at
Three Oaks Mine.
Big Brown Site
Over the last few years, the Big Brown
team has made tremendous operational adjustments to remain viable
given the challenging market conditions. However, despite these
best efforts, the economics of operating Big Brown do not make it a
sustainable option for our fleet. The company will explore a sales
process for the site during the ERCOT notification period.
Turlington Mine, which supplies Big Brown, was already scheduled
to wind down operations by the end of 2017. Reclamation work will
continue there.
Luminant estimates that about 200 employees will be impacted by
the Big Brown closure. Eligible and affected employees will be
offered severance benefits and outplacement assistance.
As part of the closure process, today Luminant filed a 120-day
notice of suspension of operations with ERCOT, which will trigger a
60-day reliability review. Luminant is extending the 90-day notice
to 120 days to permit a more complete sales process and give ERCOT
additional time to conduct their reliability analysis. 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. We expect
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.
Media
Allan Koenig
214-875-8004
Media.Relations@vistraenergy.com
Analysts
Molly Sorg
214-812-0046
Investor@vistraenergy.com
About Vistra Energy
Vistra Energy is a premier
Texas-based energy company focused
on the competitive energy and power generation markets through
operation as the largest retailer and generator of electricity in
the growing Texas market. Our
integrated portfolio of competitive businesses consists primarily
of TXU Energy and Luminant. TXU Energy sells retail electricity and
value-added services (primarily through our market-leading TXU
Energy™ brand) to approximately 1.7 million residential and
business customers in Texas. Luminant generates and sells
electricity and related products from our diverse fleet of
generation facilities totaling approximately 18,000 MW of
generation in Texas, including
2,300 MW fueled by nuclear power, 8,000 MW fueled by coal, and
7,500 MW fueled by natural gas, and is a large purchaser of
renewable power including wind and solar-generated electricity. The
company is currently developing one of the largest solar facilities
in Texas by capacity.
Cautionary Note Regarding Forward-Looking
Statements
This press release includes forward-looking
statements, which are subject to risks and uncertainties. All
statements, other than statements of historical facts, are
forward-looking statements. These statements are often, but not
always, made through the use of words or phrases such as "may,"
"should," "could," "predict," "potential," "believe," "will likely
result," "expect," "continue," "will," "anticipate," "seek,"
"estimate," "intend," "plan," "project," "forecast," "goal,"
"target," "would" and "outlook," or the negative variations of
those words or other comparable words of a future or
forward-looking nature. Readers are cautioned not to place
undue reliance on forward-looking statements. Any such
forward-looking statement involves uncertainties and is qualified
in its entirety by reference to the discussion of risk factors
under "Risk Factors" and the discussion under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Form 10-Ks and Form 10-Qs filed by Vistra Energy
Corp. and other important factors that could cause actual results
to differ materially from those implied by such forward-looking
statements.
Any forward-looking statement speaks only at the date on which
it is made, and except as may be required by law, Vistra Energy
undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which it is made
or to reflect the occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible to predict all of
them; nor can Vistra Energy assess the impact of each such factor
or the extent to which any factor, or combination of factors, may
cause results to differ materially from those contained in any
forward-looking statement.
View original
content:http://www.prnewswire.com/news-releases/luminant-to-close-two-texas-power-plants-300536238.html
SOURCE Vistra Energy