Dive Brief:
- PPL Corp. completed the spinoff of its competitive generation business, completing a five year transition into a company highly focused on its regulated utilities.
- Talen Energy, the new company formed with PPL's generation assets combined with those of Riverside Holdings, will be one of the largest independent generators in the country. Fierce Energy points out it held 15,000 MW of capacity in two major markets as of the deal's closing.
- Officials said the new, regulated-only PPL will maintain a strong balance sheet and cash flow, investment-grade credit ratings and a competitive dividend.
Dive Insight:
PPL has completed a multi-year process of retooling the company and on the first day of June announced the spinoff of its competitive generation business had been completed. Talen Energy, now one of the largest independent producers in the country, will be 65% owned by PPL and 35% by Riverstone.
The spinoff completes PPL's transition to a company solely focused on regulated utilities in both the United States and the United Kingdom, and was a process that involved the acquisition of Louisville Gas and Electric and Kentucky Utilities, as well as the expansion of the company's U.K. operations.
The company reaffirmed its 2015 forecast range of $2.05 to $2.25 per share for regulated utility earnings from ongoing operations.
PPL's former power plants in Pennsylvania and Montana are now part of Talen, but PPL Electric Utilities, the regtulated utility that serves 1.6 million Pennsylvania residents, was not affected by the transaction, and will remain part of PPL.
The deal gave Talen about 15,000 MW at closing, but as Fierce Energy notes, the company must divest more than 1,000 MW in PJM, a concession it made to federal regulators in order to gain approval. Talen's generation mix will be comprised of 43 percent natural gas or oil, 40 percent coal, 15 percent nuclear, and 2 percent hydro.
