By Amanda Durish Cook
FERC last week approved Wabash Valley Power Association’s acquisition of a 5% interest in two 800-MW coal-fired units at the Prairie State Energy Campus for $57 million — less than a quarter of what seller Peabody Energy paid (EC16-62).
Wabash Valley, an Indianapolis-based generation and transmission cooperative, said the transaction will add 83 MW to its 1,105 MW of generation capacity, most of which is in MISO.
Peabody Energy, which had paid $246 million for its share in Prairie State, agreed to sell to Wabash Valley following a competitive bidding process, part of a restructuring that has resulted in the sales of almost $500 million in assets since last year. Nevertheless, Peabody, the world’s largest private-sector coal company, said last month it may have to file for bankruptcy protection because of its inability to meet debt payments.
The city of Martinsville, Va., a customer of American Municipal Power, which has a 23% interest in Prairie State, filed a comment expressing concern that the sale would diminish the value of the southwestern Illinois facility and result in increased rates for its customers. The city said the sale price values the facility at about 80% less than the indebtedness for which the communities are liable under their power sales agreements.
The commission declined Martinsville’s request to conduct an inquiry into whether the sale would create a hardship for the communities paying debt service, saying it was outside the scope of its merger review authority. In addition, the commission said that the commenters “fail to explain [how the sale] might result in increased rates for wholesale customers.”
