Panda, Sunbury to build 1GW Pennsylvania gas plant

OREANDA-NEWS. February 19, 2015. Private equity-backed developer Panda Power Funds and privately held Sunbury Generation have formed a joint venture to build a 1,000MW natural gas-fired plant in central Pennsylvania's Snyder County, at the site of the retired Sunbury coal-fired plant.

The Panda Hummel plant, expected to begin commercial operation in the second half of 2017, cleared the 2017-18 PJM capacity market auction held in May 2014. The clearing price in that auction was \\$120/MW-day, meaning the plant will be able to earn \\$44mn in capacity revenue from June 2017 to May 2018, if it is operational. PJM West peak assessments in the same period average \\$45/MWh.

Panda did not disclose the cost of the plant. Funding for the company's recent combined cycle plant projects in Virginia and Pennsylvania ranged between \\$734/kW and \\$786/kW, suggesting a price tag of \\$734mn-\\$786mn for the Hummel project.

The Panda Hummel Station will take advantage of low-cost Marcellus shale gas supplies to produce power for eastern US markets. The plant will have access to Crestwood's Marc I Hub Line and Williams' Transcontinental gas pipelines and to Regency Energy Partners' network of gathering pipelines serving Marcellus producers.

The plant will gain access to those pipelines through a 35-mile (56km) lateral to be built by a subsidiary of UGI Energy Services. UGI Sunbury will file for federal approval to construct and operate the \\$160mn pipeline later this year. The 20-inch diameter pipeline will be able to transport 193mn cf/day (5mn m?/day) of gas. It is expected to be in service in early 2017.

In addition to serving Hummel Station, the new pipeline will supply gas and support distribution systems operated by UGI Penn Natural Gas and UGI Central Penn Gas.

Power-plant construction will take about 30 months and will begin upon completion of financing and other conditions, Panda said.

Sunbury Generation and Corona Power, its general partner, were formed in 2006 and bought the Sunbury coal-plant which shut in 2014. Hummel Station will supply more than twice as much electricity as the coal plant it replaces while reducing air emissions, Panda said.

The plant is Panda Power Funds' third project in Pennsylvania. The 829MW Liberty power plant, located in Towanda, Pennsylvania, is expected to begin operating in the first quarter of 2016. The 829MW Patriot plant near Williamsport, Pennsylvania, should be completed in the second quarter of 2016.