The agreements are effective upon signing and require no regulatory approval. The capacity agreement, Hallador’s third announced in 2026, is priced at the highest capacity price the Company has contracted to date and more than 20% above the capacity contract announced in March.

The agreements increase Hallador’s total forward sales book to $3 billion at the segment level and leave a majority of Merom’s expected production through 2040, contracted to investment-grade counterparties.

These agreements come as Hallador continues to advance its 460-megawatt Turtle Creek natural gas project adjacent to the existing Merom Generating Station. The company submitted an air permit application for the project on September 25. Once approved, Turtle Creek would expand the Company’s total generating capacity by over 40% and advance its transformation into a multi-fuel independent power producer.

Overview of Capacity and Energy Agreements

Under the capacity agreement, the Utility will purchase an annual average of 225 MW of Merom’s accredited capacity for approximately $271 million of capacity revenue over the term. The energy agreement is unit contingent: deliveries follow the actual output of Merom’s two units, and Hallador has no obligation to buy replacement power when a unit is offline or under required maintenance. The energy agreement has an annual average base energy quantity of 200 MW, subject to seasonal reduction rights. Energy pricing includes a fuel price floor and recovery of qualifying excess fuel costs, which protects Hallador’s margin against higher fuel costs. Hallador sells a mix of unit-contingent and firm energy; unit-contingent sales price lower because they carry no replacement-power risk, and Merom’s uncommitted energy may be sold on either basis. Based on current forward prices, the Company estimates the energy agreement would generate approximately $422 million of revenue over the term.

With these agreements, approximately 95% of Merom’s accredited capacity is under contract through 2035 and approximately two-thirds contracted for 2036 through 2040. The table below shows the contracted position by year, rising from $46 per MW-hour for 2026 to an average of $73 in 2030 from executed contracts.