On October 8, Hallador Energy announced that its subsidiary, Hallador Power Company, had signed six-year capacity and energy agreements with an investment-grade utility in MISO Zone 6, covering deliveries from the Merom Generating Station in Sullivan County, Indiana, from June 1, 2029, through May 31, 2035. The agreements were executed October 7, are effective upon signing, and, according to Hallador, require no regulatory approval. Hallador did not name the counterparty, and this article does not guess at it.
The headline figures are these. The capacity agreement covers an annual average of 225 MW of Merom’s accredited capacity, for approximately $271 million of capacity revenue over the term. The energy agreement covers an annual average base quantity of 200 MW, which Hallador estimates would generate approximately $422 million of revenue based on current forward prices. Together, the two agreements are worth roughly $693 million on Hallador’s estimates, and they lift the company’s total forward sales book to $3 billion at the segment level. That last number is a segment figure that includes intercompany coal sales; on a consolidated basis, which excludes those transactions, the forward book is approximately $2.48 billion.
Hallador’s own characterization of the deal is the part that matters most for this market. The capacity agreement is the company’s third announced in 2026, it carries the highest capacity price Hallador has contracted to date, and it is priced more than 20 percent above the capacity contract the company announced in March. A seller does not usually volunteer the comparison to its own prior deal unless it wants the market to read the direction of travel. Read it that way: in Zone 6, the price of accredited capacity is rising, and it is rising fast enough that a contract signed this month beats one signed seven months ago by more than a fifth.
What was actually sold
The distinction between the two agreements is the whole story, and it is worth being precise about it, because the capacity market exists precisely to separate these two products. The capacity agreement sells accredited megawatts: the buyer’s right to count Merom’s capacity toward its resource adequacy obligation in Zone 6. The energy agreement sells megawatt-hours: actual electricity from Merom’s two units, on a unit-contingent basis, meaning deliveries follow the units’ actual output and Hallador has no obligation to buy replacement power when a unit is offline or under required maintenance.
The terms allocate risk in ways that reveal who had leverage. The energy agreement carries a fuel price floor and recovery of qualifying excess fuel costs, which protects Hallador’s margin against higher fuel prices. It also gives the buyer seasonal reduction rights, including the ability to reduce the base quantity to zero for up to 90 days per contract year. Unit-contingent sales price lower than firm sales precisely because they carry no replacement-power risk. The buyer, in other words, accepted the plant’s outage risk and paid for fuel protection, in exchange for a long-dated claim on accredited capacity it evidently decided it could not wait to secure.
That is a different bargain from the one the MISO auction offers, and the difference is the point. MISO’s Planning Resource Auction is a residual, prompt auction: it runs shortly before each June 1 planning year and clears four separate seasonal prices. A load-serving entity that waits for the auction buys capacity a few months before it needs it, at whatever price that season’s balance of supply and demand produces. A buyer that signs a bilateral deal in October 2026 for deliveries beginning June 2029 is buying something else entirely: certainty, six years out, about both quantity and price, for a specific plant in a specific zone.
The price, translated
Hallador did not disclose a per-unit capacity price for this contract, and this article does not invent one. But the disclosed totals allow a straightforward translation, and it is worth doing carefully. Dividing approximately $271 million by the contracted quantity — an annual average of 225 MW over six years — implies an average of roughly $550 per MW-day. That is arithmetic from Hallador’s own figures, not a disclosed price, and it should be read as an average across seasons and years, not as a flat rate for any single season.
Hallador’s own forward-sales table tells a consistent story. Across its full contracted portfolio, the average contracted accredited capacity price rises from $244 per MW-day in 2026 to $478 in 2029, $502 in 2030, and $499 for 2031 through 2035. The new contract sits at the top of that progression, which is exactly what “highest capacity price yet” would predict. On a combined basis, Hallador’s contracted capacity and energy revenue per megawatt-hour rises from $46 in 2026 to $73 in 2030 and $75 for 2031 through 2035. The direction is unambiguous even if the exact price of any single contract is not disclosed: the company’s contracted revenue per unit is climbing steeply as the decade advances.
Set that against the auction’s own prints. MISO’s 2026 Planning Resource Auction, for the planning year that began June 1, 2026, cleared summer at $424.30 per MW-day in Local Resource Zones 1 through 7, which include Indiana, but fall at $33.92, winter at $35.97, and spring at $7.61. Annualized across the four seasons, that is roughly $126 per MW-day — a number that conceals more than it reveals, because the seasonal spread is the market’s real message. Summer capacity in MISO is scarce and expensive; capacity in the other three seasons is, by the auction’s verdict, nearly free.
Why Zone 6, and why now
Zone 6 is Indiana, and Indiana is where the load-growth story has lately been most concrete. Hallador’s chief executive, Brent Bilsland, framed the deal in those terms, saying investment is flowing into Indiana as data center projects shift or are delayed in other states, driving demand for reliable, accredited power that is increasingly scarce. No data center customer is a party to these agreements, and none is named; the demand signal here is indirect, transmitted through a utility buyer that needs accredited capacity to serve load in its zone.
That timing matters. The deliveries do not begin until June 2029. A buyer signing in 2026 for 2029 is not covering next summer. It is making a judgment about the second half of the decade: that accredited capacity in Zone 6 will be harder to buy, or more expensive, or both, when 2029 arrives. The seller’s judgment is the mirror image. Hallador has now contracted approximately 95 percent of Merom’s accredited capacity through 2035 and approximately two-thirds for 2036 through 2040. A plant once exposed to the auction’s seasonal lottery is now, for the better part of a decade, a contracted asset.
There is a contrast here with the capacity market to the east that this desk has covered at length, and it is worth stating briefly rather than re-litigating. In PJM, the regular capacity auction has cleared at its price collar’s cap for three consecutive auctions, most recently at $325 per MW-day for 2028/29, while PJM’s own uncapped simulation put the clearing price near $555. The MISO bilateral deal’s implied average sits in that same neighborhood — but it got there by negotiation, not by an auction the rules would not let clear, and it runs for six years rather than one. The comparison is imperfect: different markets, different products, different years. But it sharpens the question both markets are asking. When the auction cannot produce a price that both sides trust, buyers and sellers find another way to transact, and the bilateral price becomes the market’s truest available signal.
What survival to 2029 is worth
The deeper implication concerns the existing fleet. Merom is a coal plant of about one gigawatt, owned by an independent power producer that also mines the coal that fuels it through its Sunrise Coal business. Conventional wisdom about coal capacity in organized markets has long held that it faces a slow squeeze: environmental costs rising, energy margins thinning, accreditation methodologies increasingly skeptical of inflexible units. The Merom deal complicates that story without refuting it. What the buyer is paying for is not coal as a fuel. It is accreditation: the verified, deliverable contribution of two specific units to Zone 6 reliability during the hours when the zone is stressed. Accreditation is fuel-agnostic in principle, and this contract is evidence that, in practice, a coal plant that can demonstrate availability in the seasons that matter can still command a record price.
That has a corollary for retirements. Every capacity market debate eventually becomes a debate about which plants stay open, and the marginal plant’s decision turns on whether its forward revenue covers its going-forward costs. A six-year contract at a record price answers that question for Merom’s contracted share through 2035. It does not answer it for the fleet. But it does suggest that the retirement calculus for accredited, deliverable capacity in a tightening zone looks different from the calculus for uncontracted merchant capacity exposed to seasonal auction prices.
There is also a financing angle that deserves more attention than it usually gets. A one-year capacity commitment, however high the price, cannot underwrite a major investment; lenders discount it as a single year’s payment. A six-year contract can. Hallador is explicit that the Merom contracts strengthen its conviction in Turtle Creek, its proposed 460 MW natural gas project adjacent to Merom, for which it submitted an air permit application on September 25. Turtle Creek, if approved, would expand the company’s total generating capacity by more than 40 percent. The project still needs an interconnection agreement and a final investment decision, and neither is certain. But the sequence is instructive: contract the existing plant at a record price, then use the contracted cash flows and the demonstrated buyer appetite to support the case for new steel at the same site.
What this deal does not prove
A single bilateral contract, however striking, is a thin basis for sweeping conclusions, and the honest reading of this deal includes its limits. First, the counterparty is unnamed and the contract’s per-unit price is undisclosed, so the market cannot verify the price against anything but Hallador’s totals and its own characterization. The implied average near $550 per MW-day is derived, not disclosed, and seasonal variation means the actual price in any given season could differ substantially from that average.
Second, the energy revenue is an estimate, not a fixed payment. Hallador’s approximately $422 million figure rests on current forward prices, and the release’s own footnotes warn that actual revenue may differ materially for reasons including unit contingencies, fuel adjustments, and volume optionality — including the buyer’s right to reduce purchases to zero for up to 90 days a year. The capacity revenue is the firmer leg of the deal; the energy revenue is a forecast wearing a contract’s clothes.
Third, a bilateral deal is, by construction, not a market-clearing price. It reflects two parties’ private judgments about future scarcity, their alternatives, and their risk tolerance. It is entirely possible that the buyer overpaid for insurance it will not need, or that Hallador undersold capacity that will be worth more in 2031 than it is today. The deal proves that one buyer and one seller agreed on a price. It does not prove that price is the market’s price. What it does prove is narrower and still significant: that at least one investment-grade buyer in Zone 6 preferred to lock in accredited capacity for 2029 through 2035 at Hallador’s highest price yet, rather than take its chances in the auctions between now and then.
What to watch
Four things will determine whether this deal looks prescient or merely expensive. First, MISO’s seasonal auction prints between now and 2029: if summer prices in Zones 1 through 7 climb toward the bilateral deal’s implied average, the buyer’s foresight will look cheap; if they collapse, the premium will look like insurance bought at the top. Second, whether other Zone 6 bilaterals follow at comparable levels, which would confirm that this price is a market rather than an outlier. Third, accreditation: MISO’s seasonal accreditation methodology determines how many of Merom’s megawatts count, and any tightening of that methodology would change the value of what Hallador has sold. Fourth, Turtle Creek: whether the air permit, interconnection agreement, and final investment decision arrive, and whether the new gas plant can contract its own output on terms anywhere near those Merom just achieved.
The broader lesson is about where price discovery happens when auctions are not the only channel. Capacity markets were designed to replace bilateral haggling with transparent, competitive price formation. But a market that clears seasonally, promptly, and with extreme seasonal spreads leaves a gap that bilateral contracting fills: long-dated certainty for buyers who cannot afford to be short, and bankable revenue for sellers who cannot finance on one-year commitments. The Hallador deal is a reminder that the auction is a mechanism, not the market itself. When the mechanism’s price is too volatile, too seasonal, or too short-dated to plan around, the market routes around it — and the price it finds on the other side may be the most informative number in the region.—
Sources: Hallador Energy Company, “Hallador Executes $700M Sale, Record Price Lifts Forward Sales to $3 Billion” (Oct. 8, 2026), including the forward sales position table as of Sept. 30, 2026; MISO, 2026 Planning Resource Auction results (April 2026); prior Fracmoo coverage: “Energy vs. Capacity Markets: What Each One Actually Pays For” (Oct. 4, 2026) and “The Market Is Trying to Say $555. The Rules Only Let It Say $325.” (Oct. 15, 2026).