Big Cajun II
Environmental Liability Transfer (“ELT”)
Transferring legacy environmental risk to protect long-term asset value
Problem
Atlas Holdings is the sponsor of Pelican Power (“Pelican”) which purchased the Big Cajun II Power Plant in 2024. The coal-fired Big Cajun II power station has significant liabilities related to closing its ash ponds at the site that were placed in operation in the early 1980s. Kindle Energy (“Kindle”) is the Asset manager for Pelican Power and is responsible for finding the most cost-effective risk-adjusted solution to closing the ponds.
Solution
Kindle analyzed the liabilities prior to the closing on Pelican’s Big Cajun II purchase and issued a Request for Proposal to a group of experienced environmental and engineering firms in Q1 2024. By the end of Q1 2025, Kindle selected a partner and closed the transaction which transferred all liabilities for coal combustion residual (“CCR”) waste management units at the Big Cajun II power station from Pelican to the Forsite Development (“Forsite”) who will manage and close the CCR units in accordance with environmental laws while Pelican continues to operate the generation assets.
Impact
Transferred Liabilities
Avoided Liabilities
Ongoing Cost Mitigation
Clean-Up Cost Mitigation
Kindle led the transaction that allowed Pelican to alleviate known and unknown risks inherent in a volatile environmental regulatory environment and focus resources on other critical environmental and operational priorities across the Pelican portfolio. Transferring liability removed the client from ownership in case of a spill or environmental event like the Dan River incident of 2014 which led to over $100MM in fines and a probationary period for Duke Energy. The ELT significantly reduces the risk of Pelican being liable for any significant future clean-up costs related to the closure. The liability transfer is set at a fixed price to Forsite and the plant does not have exposure to higher costs to close the ponds.
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