By William Opalka

Talen Energy last week announced the sale of three Pennsylvania power plants for $1.51 billion to help satisfy regulators’ demands to divest assets in PJM.

The 704-MW combined-cycle Ironwood plant is being sold to a subsidiary of Calgary-based TransCanada for $654 million. The Holtwood and Lake Wallenpaupack hydroelectric projects, with a combined generating capacity of 292 MW, are being sold to a subsidiary of Quebec-based Brookfield Renewable Energy Partners for $860 million.

FERC had ordered the divestiture when it approved the company’s formation from the generation assets of PPL and Riverstone Holdings last year. Talen, which had proposed two divestiture packages, last month offered a third option that included the three plants it is selling in addition to the Charles P. Crane coal-fired plant in Bowleys Quarters, Md. (See Talen Seeks Change in Divestiture Options.)

However, the company didn’t wait for FERC to rule on the new request. “We had very attractive offers for those three assets and we decided to move forward at this time,” spokesman George Lewis said.

“We’re not done yet,” Lewis added, saying Talen is evaluating offers for the 399-MW Crane plant and six former Riverstone generators in New Jersey that were part of the first two divestiture options.

The transactions announced last week are expected to result in net proceeds of approximately $1.16 billion. Talen said it plans to use the proceeds to retire pre-payable and maturing debt, positioning it for acquisitions outside the Mid-Atlantic. Both transactions are expected to close in the first quarter of 2016, pending regulatory approvals.

In a research note, UBS Global Research said the Ironwood sale was in line with expectations at an enterprise multiple (enterprise value divided by earnings before interest, tax, depreciation and amortization (EBITDA)) of 8.

But the hydro purchase price represented an EV/EBITDA of 18, about $200 million more than Wall Street expectations. “After factoring in tax obligation on the sale, we see the transaction as adding +$2/[share] in value assuming debt paydown,” UBS said.

Brookfield said the hydro assets were complementary to its 417-MW Safe Harbor facility 8 miles upstream from Holtwood. Holtwood and Wallenpaupack are licensed through 2030 and 2045, respectively.

“These high-quality assets provide a unique opportunity to leverage our operating platform and hydroelectric expertise in a market facing significant coal retirements and increasing reliance on renewables,” Brookfield CEO Sachin Shah said.

Including the Talen sale, Canadian companies have agreed to purchase $11.7 billion in U.S. utility and power assets this year, Bloomberg reported.

Analysts say U.S. utility assets are more profitable than those in Canada. If Canadian utilities want to grow, “it’s going to be on the acquisition side, and there’s a lot more opportunity in the States,” Rebecca Hazan, a fund manager at Leon Frazer & Associates, told Bloomberg.