On October 7, 2026, Hallador Energy Company announced a definitive agreement with Duke Energy Indiana, LLC, to sell power and capacity credits from its Merom Generating Station. The deal, executed by Hallador Power Company, LLC, covers a six-year term from June 1, 2029, through May 31, 2035.
The agreement consists of two main components. First, Duke Energy Indiana will purchase an annual average of 225 megawatts of accredited capacity for approximately $271 million over the contract term. Second, the utility will purchase an annual average of 200 MW of electricity. The energy portion is unit contingent, meaning deliveries follow the actual output of Merom Station’s two generating units, and Hallador has no obligation to purchase replacement power during maintenance outages.
Regarding pricing, the energy agreement includes a fuel price floor and seasonal base adders that increase over the contract term, allowing Hallador to recover certain excess fuel costs. Based on current forward prices, Hallador estimates the energy agreement will generate approximately $422 million in revenue over the six years.
In addition to the power sales, Hallador will sell Zonal Resource Credits (ZRCs) exclusively from Merom Station’s two units. Under the Master Power Purchase and Sale Agreement, Hallador will provide an annual average of 225 ZRCs per day. Duke Energy Indiana will pay approximately $271 million for these credits over the term.
The transactions increase Hallador’s total forward sales book to $3 billion at the segment level. Approximately 95% of Merom’s accredited capacity is now contracted through 2035, with two-thirds contracted for the period from 2036 through 2040.
To secure these obligations, Hallador is required to maintain standby letters of credit with varying amounts throughout the contract term, ranging from $2.7 million to $12 million.
