TransAlta Corporation has entered into a long‑term tolling agreement with Puget Sound Energy (PSE) to convert its Centralia Unit 2 facility from coal to natural‑gas generation. The 700‑MW plant will be dedicated to PSE, which will hold exclusive rights to the unit’s capacity, energy output, ancillary services, and dispatch authority through the end of 2044.
The conversion requires TransAlta to invest approximately US$600 million, yielding a build multiple of about 5.5. Final investment decision is expected in early 2027, and the plant is slated to cease coal‑fired operations by December 31 2025. Commercial operation of the gas‑fired unit is projected for late‑2028, after which the tolling contract will provide a stable revenue stream for TransAlta and a lower‑emission power source for the Pacific Northwest.
Strategically, the project extends the useful life of a legacy asset, cuts the plant’s emission intensity by roughly 50 %, and aligns TransAlta’s portfolio with its broader low‑carbon generation goals. For PSE, the agreement supports reliability and clean‑energy targets while giving TransAlta a long‑term cash flow that can underpin future growth initiatives.
TransAlta’s Q3 2025 financial results showed a net loss of CAD 49 million and a decline in adjusted EBITDA to CAD 238 million from CAD 315 million in Q3 2024. Management remains confident in its 2025 guidance, citing disciplined cost management and the strategic value of projects like Centralia. The conversion is therefore positioned as a key element of the company’s transition strategy amid a challenging earnings environment.
CEO John Kousinioris said, “Our Centralia facility has a long history of providing reliable and affordable power in the Pacific Northwest. Extending its useful life and shifting to natural gas will lower emissions by about 50 percent and reinforce our commitment to clean‑energy delivery.”
The long‑term tolling contract provides PSE with a predictable, low‑carbon supply while giving TransAlta a secure, long‑term revenue stream that supports its capital allocation strategy and regulatory compliance efforts.
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