XML 54 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
Acquisitions, Development and Divestitures
3 Months Ended
Mar. 31, 2016
Acquisitions Development And Divestitures [Abstract]  
Acquisitions, Development and Divestitures
Acquisitions, Development and Divestitures

Talen Energy from time to time evaluates opportunities for potential acquisitions, divestitures and development projects. Development projects are periodically reexamined based on market conditions and other factors to determine whether to proceed with the projects, sell, cancel or expand them, execute tolling agreements or pursue other options. Any resulting transactions may impact future financial results.

Acquisitions

MACH Gen

See Note 6 in Talen Energy's 2015 Form 10-K for information on the November 2015 acquisition of the membership interests of MACH Gen. Various purchase accounting adjustments were made during the first quarter of 2016 that had an insignificant impact to PP&E and related deferred income taxes. The statement of income effect of these adjustments during the measurement period was also insignificant.

The purchase price allocation is considered by Talen Energy's management to be provisional due to pending finalization of valuations and could change materially in subsequent periods. Any changes to the provisional purchase price allocation during the measurement period that result in material changes to the consolidated financial results will be adjusted prospectively. The measurement period can extend up to a year from the date of acquisition. The items pending finalization include, but are not limited to, the valuation of PP&E, certain other assets and liabilities and deferred income taxes.

RJS Power

See Note 6 in Talen Energy's 2015 Form 10-K for information on the June 2015 acquisition of RJS Power.

Divestitures

Ironwood, C.P. Crane, Holtwood and Lake Wallenpaupack Power Plants

In February 2016, Talen Generation completed the sale of Talen Ironwood Holdings, LLC, which through its subsidiaries owned and operated the Ironwood natural gas combined-cycle plant in Pennsylvania, for $657 million, subject to customary post-closing purchase price adjustments. Talen Energy recorded a gain, net of transaction costs including the make-whole premium on the debt as described in Note 6, of $148 million, which is recorded to "(Gain) loss on sale" on the Statement of Income. Proceeds from the sale of Talen Ironwood Holdings, LLC were primarily used to repay the majority of Talen Energy's then outstanding short-term debt. At December 31, 2015, Talen Ironwood Holdings, LLC was considered an individually significant component of Talen Energy whose pre-tax income (loss) for the three months ended March 31, 2016 and 2015 was $4 million and $18 million. See Note 6 for additional information on the redemption of debt in connection with the sale.

In February 2016, Raven Power Marketing LLC, a wholly owned, indirect subsidiary of Talen Energy, completed the sale of C.P. Crane LLC, which owned and operated the C.P. Crane coal-fired power plant in Maryland. Talen Energy recorded a loss on the sale of $8 million, which is recorded in "(Gain) loss on sale" on the Statement of Income. The loss includes transaction costs.

In April 2016, Holtwood, LLC, a wholly owned, indirect subsidiary of Talen Energy, completed the sale of the Holtwood and Lake Wallenpaupack hydroelectric facilities in Pennsylvania for $860 million, subject to customary post-closing purchase price adjustments. Talen Energy expects to record a pre-tax gain of approximately $420 million in "(Gain) loss on sale" on the Statement of Income in the second quarter of 2016 related to this sale.

The sales satisfied the requirement to divest certain PJM assets to comply with a December 2014 FERC order approving the combination with RJS Power. See Note 1 in Talen Energy's 2015 Form 10-K for additional information.   

At March 31, 2016, the major component of assets held for sale related to the Holtwood and Lake Wallenpaupack hydroelectric facilities was $426 million of PP&E, which is included in the East segment.

Development

The NRC continues to review the Bell Bend, LLC (Bell Bend) COLA submitted in 2008 for the proposed nuclear generating unit to be built adjacent to the Susquehanna plant. Bell Bend does not expect to complete the COLA review process with the NRC prior to 2018. Talen Energy placed the NRC safety review (which supports issuance of their final safety evaluation report, the other key element of the COLA) on hold in 2014, due to a lack of progress by the reactor vendor with respect to its NRC design certification process, which is a prerequisite to the COLA. Talen Energy has continued to support the licensing project with a near term focus on obtaining the Final Environmental Impact Statement (FEIS). In April 2016, Talen Energy received notification from the NRC of the completion of its FEIS. Completion of the FEIS is a project milestone, but it does not change the timeline for other elements of the project that remain on hold. Bell Bend has made no decision to proceed with construction and expects that such decision will not be made for several years given the anticipated lengthy NRC license approval process. Additionally, Bell Bend does not expect to proceed with construction absent favorable economics, a joint arrangement with other interested parties and a federal loan guarantee or other acceptable financing and Talen Energy does not expect to make significant additional investments in the project in the near term. Talen Energy will continue to consider alternatives that may be available to support its objectives with respect to the future of this project, which could impact the project's ability to provide future economic benefit to Talen Energy. At March 31, 2016, $204 million of costs, which includes capitalized interest, associated with the licensing application were capitalized and are included on the Balance Sheet in noncurrent "Other intangibles." See Note 6 in the 2015 Form 10-K for additional information on the COLA.