San Antonio’s municipal utility 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, Texas. CPS Energy is also acquiring Talen’s 178 MW natural gas-fired generation facility in Laredo. The transaction is expected to close in the second quarter of 2024, subject to customary net working capital adjustments.  

The addition of these units aligns with CPS Energy’s generation plan, approved by the utility’s Board of Trustees in 2023. The generation plan includes the retirement of older units and the addition of a blend of gas, solar, wind, and energy storage.

Earlier this month CPS Energy informed ERCOT of its plan to retire three natural gas-fired units at the V.H. Braunig facility by March 31, 2025. The Braunig units, located in Bexar County, Texas, total 859 MW of capacity. Units 1, 2 and 3 came online in 1966, 1968 and 1970, respectively. ERCOT will now conduct grid reliability studies to determine whether to approve the retirement.

The Braunig units make up 2,249 MW of dispatchable generation capacity CPS Energy plans to retire by 2030. The utility has added 730 MW of solar energy and 50 MW of energy storage to date as part of its generation plan, with an additional 500 MW energy storage RFP in the works.

The plants to be acquired in Corpus Christi and Laredo are expected to be operational for the next 25 years. There are a total of approximately 65 employees at these sites who will have the opportunity to become CPS Energy employees at the closing of the acquisition.

The Nueces Bay power plant began operating in 2010 and uses two natural gas turbines operating in combined-cycle, with a re-powered steam turbine to generate power. Barney Davis has two natural gas-fired units which began operating in 1974 and 2010.

PJM cited concerns about reliability impacts the retirement of Wagner Units 3 and 4 would cause.

“PJM and the affected Transmission Owner performed a study of the Transmission System and found reliability concerns (wide area voltage drop and thermal violations in several transmission zones) resulting from the deactivation of these generating units,” the RTO told Talen in a letter Jan. 4.

In October, Talen Energy told PJM it planned to retire the 834 MW Wagner plant, which consists of three oil-fired units and a natural gas combustion turbine unit, as of June 1, 2025, citing environmental permitting and economic reasons.

But PJM is urging Talen to wait to retire Units 3 and 4 until the 2028 timeframe, when it said the transmission upgrades would be completed. According to the RTO, these upgrades were part of a solution identified to address reliability violations following the announced retirement of the adjacent 1,295 MW Brandon Shores facility, also owned by Talen and also requested to deactivate on June 1, 2025.

The Wagner retirements will not warrant additional upgrades, PJM said. These issues are being addressed by a set of proposed projects (PDF) that would expand the regional transmission system to accommodate electricity demand growth, generator retirements and future capacity needs.

PJM requested that Talen continue to operate Wagner units 3 and 4 under a Reliability Must Run (RMR) arrangement until the planned upgrades are completed. Talen is requested to respond in 30 days.

While PJM cannot compel a unit to remain in service, it can formally request that the owner continue operating the unit to support reliability. This process, detailed in Part V of the PJM Open Access Transmission Tariff, offers a deactivating unit the opportunity to remain in service and recover its operating costs until all necessary transmission upgrades are in place.

The H.A. Wagner station is located outside of Baltimore in Anne Arundel County, Maryland.

The 359 MW Wagner Unit 3 was completed in 1966 as a coal-fired unit that Talen converted to run on fuel oil at the end of 2023. Unit 4, commissioned in 1972, is a 415 MW oil-fired unit. Wagner Unit 1 is a 133 MW natural gas-fired unit that was built as a coal-fired unit in 1956. Talen retired the 136 MW coal-fired Wagner Unit 2 in 2020.

In explaining the need to retire Wagner Units 1, 3 and 4, Talen Energy said the “limited run hours on the Wagner Facilities are not sustainable to continue operations, especially in light of the amount of time the Wagner Facilities have recently been running in the market.”

Talen said the Wagner Facilities’ Title V air permit limits operation to capacity factors under 15% when operating on oil.