Hallador Energy announced a three‑year capacity agreement with a utility customer that covers planning years 2026 through the summer of 2028. The deal secures all of the company’s remaining accredited capacity at its Merom plant and is priced at roughly twice the levels embedded in Hallador’s forward sales book, reflecting the scarcity of dispatchable power in MISO Zone 6.
The agreement is expected to generate about $86 million in cumulative revenue over the three‑year term and could lift Hallador’s annual capacity revenue to approximately $130 million starting in 2029, in addition to existing energy revenue. This represents a significant upside to the company’s cash‑flow profile and positions it to capture higher capacity prices as regional dispatchable resources retire.
The deal aligns with Hallador’s broader strategy to leverage the Merom plant’s scarce capacity and supports its plan to expand gas‑fired capacity under the ERAS program. Hallador finalized its application for the ERAS program, aiming for up to 515 MW of natural gas generation, with deposits totaling about $13 million made in December 2025. The capacity agreement provides a strong foundation for future long‑term capacity agreements and underscores the company’s confidence in the tightening MISO capacity market.
The pricing reflects a sharp increase in the MISO Planning Resource Auction, where summer 2025‑26 cleared at $666.50/MW‑day, a substantial rise from previous years. The scarcity of dispatchable power in Zone 6 is driven by retirements of thermal generation and a new demand reliability curve, creating a tailwind for Hallador’s capacity sales.
CEO Brent Bilsland said, "This transaction establishes a step change for higher capacity pricing at our Merom facility and reflects the strength of demand we are seeing in the market." He added, "It also provides a strong foundation as we negotiate additional long‑term capacity agreements. Assuming these increased pricing levels, our capacity revenues have the potential to increase more than two times to approximately $130 million annually starting in 2029, which would be in addition to energy revenue." Bilsland also noted, "As we continue to make progress on our proposed 515 MW natural gas‑fired simple cycle project via the ERAS program, we are thrilled to see these escalating capacity prices."
The company’s 2025 results showed a 16% year‑over‑year revenue increase to $469.5 million, net income of $41.9 million, and adjusted EBITDA tripling to $56 million. The capacity deal builds on this momentum, reinforcing Hallador’s trajectory toward higher profitability and a stronger balance sheet.
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