Welcome to PJM: Capital Power to acquire two natural gas plants, totaling 2.2 GW

Capital Power Corporation is making its entry into PJM territory with a $2.2 billion purchase.

The company announced that an indirect, wholly-owned subsidiary has entered into a definitive agreement with two subsidiaries of LS Power Equity Advisors to acquire 100% of the equity interests in Hummel Station, LLC, which owns the 1,124 MW Hummel Station, a combined-cycle natural gas facility in Shamokin Dam, Pennsylvania; and 100% of the equity interests in Rolling Hills Generating, L.L.C., which owns the 1,023 MW Rolling Hills plant, a combustion turbine natural gas facility in Wilkesville, Ohio.

The net purchase price of the acquisition is expected to be $2.2 billion, subject to customary post-closing adjustments, including working capital and estimated transaction expenses. The acquisition is expected to close in the third quarter of 2025.

The acquisition will serve as Capital Power’s “strategic entry” into the PJM territory, and will position the company as one of five North American independent power producers with over 10 GW of natural gas capacity.

“Capital Power’s acquisition of Hummel and Rolling Hills expands our U.S. generation fleet and advances our position as a leading North American power producer”, said Avik Dey, President and CEO of Capital Power. “With our expansion into the largest and most liquid power market in North America, we continue to deliver on our strategy. These plants will bolster our Flexible Generation portfolio and align with our commitment to provide reliable, affordable power solutions that support a balanced approach to the energy expansion. As a leading operator in North America, our ability to integrate these assets, optimize performance and enhance returns through our robust trading platform underpins the long-term value we expect these acquisitions will provide for our shareholders.”

The company argues that the acquisition continues its North American expansion and diversification strategy by increasing diversification in its portfolio: no single market will represent more than 30% net capacity.

Capital Power has also entered into an agreement with a syndicate of underwriters led by TD Securities and CIBC Capital Markets to issue 8,060,000 common shares of Capital Power, on a bought deal basis, at an issue price of $43.45 per common share, for total gross proceeds of approximately $350 million.

Additionally, the company will issue, at the offering price, 3,455,000 common shares for $150 million on a private placement basis to Alberta Investment Management Corporation. The common shares sold pursuant to the private placement will be subject to a statutory hold period of 4 months and one day from the closing date.

Net proceeds from Capital Power’s concurrent $500 million common share offering will fully address the equity funding requirement for the acquisition, the company said. The remaining funding will be sourced from a combination of some or all of the following: cash on hand from a prior equity issuance and asset divestitures; longer term debt financing; other immediately available funds, including potential draws under Capital Power’s existing credit facilities; and funding provided under acquisition term loan facilities.