Calpine Corporation has announced it will sell its Mankato Power Plant, a 375-MW natural gas-fired, combined-cycle power plant in Minnesota. Southern Power will buy the facility for $395.5 million plus working capital and price adjustments.
The Mankato plant provides electricity to Northern States Power, a subsidiary of Xcel Energy Inc., through July 2026, pursuant to a tolling agreement. In addition, a 345-MW expansion is currently in advanced development to serve a 20-year tolling agreement with Northern States Power. The expansion will add a natural gas-fired combustion turbine and a heat recovery steam generator to the plant, increasing overall power production and efficiency of the facility. Commercial operation of the expansion is expected by June 2019.
“Mankato is a modern, efficient, and well-performing plant under long-term contract to the local utility and with an expansion in advanced development. This sale is another step in our capital allocation plan to divest plants in non-core regions when we see an attractive value opportunity,” said Calpine President and CEO Thad Hill.
Calpine plans to allocate proceeds of the sale to corporate debt reduction and other corporate purposes. The transaction is projected to close in the fourth quarter of 2016, subject to customary closing conditions, antitrust review under the Hart-Scott-Rodino Act, and approval from the Federal Energy Regulation Commission.