Texas-based utility company CPS Energy has agreed to acquire a 1,710-megawatt generation portfolio in the US state from Talen Energy Corporation for US$785 million.

The portfolio, located in the South Zone of the Electric Reliability Council of Texas (Ercot), includes natural gas plants in Corpus Christi and Laredo. The transaction is expected to close in the second quarter of 2024.

J.P. Morgan is acting as exclusive financial adviser to CPS Energy, and Dykema Gossett as legal adviser. RBC Capital Markets is serving as exclusive financial adviser to Talen, and Kirkland & Ellis as legal adviser.

"The purchase of these assets furthers CPS Energy's commitment to deliver reliable and affordable energy supply to one of the nation's fastest growing communities, while also balancing our commitment to reduce carbon emissions by 2030," says Rudy Garza, president and chief executive officer of CPS Energy.

"The investments we are making to purchase and improve the performance of these plants provide cost benefits when compared to building new assets, which means reliability now at a lower price for our community. In addition to these facilities, as our community continues to grow, we are also adding low and zero-carbon resources as well as energy storage to enable that additional growth."

Under the terms of the agreement, which is subject to customary closing conditions, CPS Energy will acquire all assets associated with Talen's 897 MW Barney Davis and 635 MW Nueces Bay natural gas-fired generation facilities, both located in Corpus Christi, as well as its 178 MW natural gas-fired generation facility in Laredo,.

The acquistions support CPS Energy's generation plan, approved in 2023 by its board of trustees. It secures an additional 1,710 MW of power for the greater San Antonio community and will be available as soon as this summer.

The addition of these units aligns with the generation plan, which includes the retirement of older units and the addition of a blend of gas, solar, wind, and energy storage.

The plants in Corpus Christi and Laredo are expected to be operational for the next 25 years.