EL7.AI
StocksMedium•22 October 2026•
4 min read

TransAlta targets $1 billion in gas assets, including $750 million in debt

Key Facts

1The acquisition agreement is valued at US$1 billion, including the assumption of US$750 million in project debt.
2The company issued 18,230,000 shares at C$19.20 per share, raising gross proceeds of about C$350 million to fund the cash component of the acquisition.
3The two targeted gas plants near Denver have a combined capacity of 318 megawatts.
4The power purchase agreements have a weighted average term of 27 years, with full pass-through of fuel, operating, maintenance and capital expenditure costs to customers.
5The company expects the assets to add about US$33 million in annual free cash flow.

TransAlta's agreement to acquire gas-fired power generation assets in Colorado, announced in June 2026, has a total value of US$1 billion, including the assumption of US$750 million in project debt, according to the company's filing with the U.S. Securities and Exchange Commission. The deal combines the assumption of these liabilities with funding for the cash component through a share offering the company completed in June. The agreement covers the Mountain Peak Power and Canyon Peak Power plants near Denver, TransAlta said in its second-quarter results statement. The two plants have a combined capacity of 318 megawatts and use natural gas to generate electricity during periods of peak demand. The company described the facilities as "fully contracted natural gas peaking power plants." These contracts and the assets' financing structure place the deal's details at the heart of the company's plans to increase cash flow and direct it toward other growth opportunities.

To fund the cash component of the acquisition, TransAlta issued 18,230,000 common shares at C$19.20 per share, according to its statement announcing the offering's completion. Gross proceeds totaled about C$350 million, representing the proceeds from the share issuance allocated to this part of the financing. This equity financing comes alongside the assumption of project debt included in the acquisition's announced U.S. dollar value. The company said in its announcement of the agreement that the debt associated with each asset is non-recourse to the parent company. It also said the debt fully amortizes over the contract terms and carries an investment-grade rating. It described the financing obligations as "non-recourse project debt that fully amortizes over the contract terms and carries an investment-grade rating." This structure ties the assets' debt repayment schedule to the two power plants' contract periods, under the terms the company outlined when announcing the acquisition.

The power purchase agreements for the two plants have a weighted average term of 27 years, according to the acquisition presentation filed with the U.S. Securities and Exchange Commission. TransAlta said the agreements increase the share of its business under contract and extend its overall contract duration. Their terms include full pass-through of fuel, operating, maintenance and capital expenditure costs to customers, according to the same presentation. These contracted assets come against a backdrop of lower adjusted earnings in the second quarter of 2026 compared with the corresponding period. Adjusted earnings before interest, taxes, depreciation and amortization totaled C$291 million, compared with C$349 million in the second quarter of 2025, according to the results statement. In Alberta, the average spot electricity price was C$29 per megawatt-hour during the second quarter, compared with C$40 a year earlier, according to Investing's coverage of the company's results and earnings call. This decline in electricity prices provides a market backdrop to the results, while the targeted Colorado assets are backed by long-term power purchase agreements and cost pass-through provisions.

When announcing the acquisition agreement, TransAlta expected the two plants to add about US$80 million annually to adjusted earnings before interest, taxes, depreciation and amortization. It also estimated expected free cash flow from the assets at about US$33 million annually, according to the deal announcement. Management presented these expected contributions as part of its plan to redirect cash flow toward other growth opportunities. It named Centralia and data centers in Alberta among the opportunities to which it intends to allocate that cash flow. It said in the announcement that these opportunities include "other growth prospects such as Centralia and Alberta data centers." As for upcoming disclosures, TransAlta plans to release its third-quarter 2026 results before markets open on Tuesday, November 3, 2026. The company set the date in its earnings release announcement, making it the next regular financial disclosure after the second-quarter results in which it outlined details of the two Colorado plants.