Hallador Energy Company (NASDAQ: HNRG) signed a three-year agreement to sell substantially all of its remaining accredited capacity to a utility customer for planning years 2026 through summer 2028. The capacity pricing is approximately double the levels currently in the company's forward sales book and is expected to generate approximately $86 million of cumulative revenue over the three-year term.

The agreement covers capacity at Hallador's Merom facility. Brent Bilsland, Chairman and Chief Executive Officer, stated the transaction "establishes a step change for higher capacity pricing at our Merom facility and reflects the strength of demand we are seeing in the market."

Bilsland indicated that assuming these increased pricing levels continue, the company's capacity revenues could potentially increase to approximately $130 million annually starting in 2029, in addition to energy revenue. The company expects the majority of this incremental capacity revenue to translate directly to operating cash flow due to the largely fixed cost structure of the Merom power plant.

Hallador Energy is a vertically-integrated Independent Power Producer based in Terre Haute, Indiana. The company operates through two core businesses: Hallador Power Company, which produces electricity and capacity at its one gigawatt Merom Generating Station, and Sunrise Coal, which produces and supplies fuel to the Merom Generating Station and other companies.

The company is also developing a proposed 515MW natural gas-fired simple cycle project through the ERAS program, according to the press release statement.