Key Takeaways:
TransAlta Corp. agreed to buy two natural gas-fired peaking plants in Colorado from Blackstone Inc. for US$1 billion, adding 318 megawatts of fully contracted capacity with investment-grade off-takers.
"This acquisition adds new, high-quality, low-risk assets in a core market for us," said Joel Hunter, president and chief executive officer of TransAlta. "It strengthens our business risk profile, is immediately accretive to our free cash flow per share and establishes a strategic foothold in Colorado, a state we believe has accelerating growth potential."
The portfolio comprises the 162-MW Mountain Peak Power, operating since September 2025, and the 156-MW Canyon Peak Power, expected to reach commercial service in the third quarter. Both facilities use six GE LM2500XPRESS gas turbines and operate under tolling agreements with United Power Inc., rated A, and CORE Electric Cooperative, rated AA-. The contracts run 30 and 25 years respectively, with full pass-through of fuel, operating and capital costs.
The deal gives TransAlta a physical position in Colorado's power market, where data center construction is driving electricity demand growth. The company expects the assets to contribute about US$80 million in adjusted EBITDA and US$33 million in free cash flow annually, with potential upside from availability incentive payments. Closing is targeted for early in the fourth quarter, subject to Canyon Peak reaching commercial service and regulatory approvals.
The total consideration includes US$750 million of senior secured, non-recourse project debt that is fully amortizing over the contract terms and carries investment-grade ratings. The remaining US$250 million equity component is fully funded by a concurrent bought deal common share offering of 18.2 million shares at C$19.20 each, raising gross proceeds of about C$350 million. Underwriters led by CIBC Capital Markets and RBC Capital Markets have a 15 percent over-allotment option for an additional 2.7 million shares.
The project debt carries a 6.2 percent interest rate, with US$365 million allocated to Mountain Peak and US$385 million to Canyon Peak. TransAlta said the acquisition will deliver low-to-mid single digit accretion to free cash flow per share and that it expects to unlock operational, insurance and tax synergies. Cash flows from the assets will be redeployed into other growth opportunities, including the Centralia project and Alberta data centers.
The acquisition continues TransAlta's track record of accretive, on-strategy purchases that leverage its competitive advantages in the western U.S. The company, one of Canada's largest publicly traded power generators, operates a technology-diverse fleet across Canada, the U.S. and Western Australia. Combined with the expected recovery of Alberta power prices and the return to service of Centralia, TransAlta said credit metrics are expected to strengthen in the near term.
This article is for informational purposes only and does not constitute investment advice.
