1. TransAlta to convert Centralia Unit 2 to natural gas, 700 MW capacity. 2. Conversion aims to reduce emissions by 50%, enhancing sustainability. 3. Long-term, fixed-price contract with Puget Sound Energy ensures revenue stability. 4. Estimated capital expenditure of US$600 million for the conversion process. 5. Target operational date set for late-2028, extending facility's life until 2044.
FAQ
Why Bullish?
The transition to cleaner energy sources secures long-term revenue and growth, similar to successful projects by utilities that switched from coal to natural gas or renewables, resulting in enhanced market confidence.
How important is it?
The planned conversion aligns with market trends favoring cleaner energy, indicating a positive outlook for TAC's future performance.
Why Long Term?
The project's benefits will materialize gradually, with significant cash flows expected post-commercial operation in 2028.
TransAlta Secures Long-Term Agreement for Coal-to-Gas Conversion at Centralia Facility
CALGARY, Alberta, December 09, 2025 (GLOBE NEWSWIRE) — TransAlta Corporation (NYSE: TAC) has officially signed a long-term agreement with Puget Sound Energy (PSE) to convert its Centralia Unit 2 facility in Washington from coal-fired generation to natural gas. This significant transition aims to enhance reliability and reduce emissions while securing long-term revenue.
Details of the Long-Term Agreement
The newly formed tolling agreement grants PSE exclusive rights to the facility's capacity and energy attributes, with a committed capacity of 700 MW. The contract is set to last for 16 years, terminating on December 31, 2044, and includes a fixed-price capacity payment structure.
John Kousinioris, President and Chief Executive Officer of TransAlta, highlighted the historical significance of the Centralia facility in providing reliable power to the Pacific Northwest. Kousinioris stated, “We are pleased to extend the useful life of this asset and support the ongoing reliability needs of PSE and its customers.”
Environmental Impact and Future Projections
The conversion project plans to lower the emission intensity of the facility by approximately 50%. It is scheduled to cease coal-fired operations by the end of 2025, signaling a major shift toward cleaner energy generation.
- Capital Expenditure: Approximately US$600 million will be invested for the conversion.
- Build Multiple: The project is projected to achieve a build multiple of around 5.5 times.
- Commercial Operation Date: Targeted for late-2028, the facility will operate until 2044 under the terms of the agreement.
TransAlta expects to declare a final investment decision (FID) after obtaining all necessary regulatory approvals, anticipated by early 2027. The Agreement is also subject to regulatory consents, including approval from the Washington Utilities and Transportation Commission.
TransAlta’s Commitment to Sustainable Energy
TransAlta’s strategy emphasizes long-term value for shareholders through sustainable practices. The company's commitment to reducing greenhouse gas emissions is evident, having achieved a 70% reduction in GHG emissions since 2015, translating to a decrease of 22.7 million tonnes CO2e.
As one of Canada’s largest producers of wind power and thermal generation, TransAlta aligns its operations with the United Nations Sustainable Development Goals and works intimately with local governments to ensure compliance with California's clean energy regulations.
About TransAlta Corporation
TransAlta is a renewable power generation company with a diverse portfolio, operating across Canada, the United States, and Australia. The company is committed to providing affordable and reliable power while actively participating in environmental stewardship and community engagement.
For more information on TransAlta, visit transalta.com.
Cautionary Note Regarding Forward-Looking Statements
This announcement contains forward-looking information as defined under Canadian and U.S. securities laws, which reflects management's current expectations and plans. Readers should exercise caution as actual results may vary due to various risks and uncertainties, and this information should not be used for purposes other than intended.