Combined Cycle

Xcel Acquiring Gas-fired Mankato Energy Center from Southern for $650M

Xcel Energy is buying a natural gas power plant from a subsidiary of Atlanta-based Southern Co. for $650 million, according to the companies.

Minneapolis-based Xcel agreed to purchase the gas turbine combined cycle Mankato Energy Center, which Southern Co. acquired in 2016 and was its first asset in the Midcontinent Independent System Operator territory. Mankato has been providing power to Xcel customers under a power purchase contract.

The facility will have a generating capacity of 760 MW once an expansion is completed early next year. The completion of the sale, subject to regulatory approval and other closing conditions, is expected to be mid-2019. 

“Securing the Mankato gas plant is a great value for our customers as it will provide significant cost savings and operating flexibility for the long term,” said Chris Clark, president, Xcel Energy—Minnesota, South Dakota, North Dakota. “As we continue to transition to cleaner energy sources and reduce reliance on coal, this plant will help us continue to deliver reliable electricity while keeping bills low.”

Xcel Energy is planning for several power plant retirements and contract expirations in the mid-2020s, including Sherco coal-fired units in Minnesota. Acquiring this plant now provides certainty that energy from these newer generating units will be available and benefit customers over the life of the plant compared to simply purchasing the output.

Xcel Energy currently has nearly 100 employees in the Mankato area with several facilities, including a power plant and a service center. The company is also building a new transmission line in the area to deliver low-cost energy to customers throughout the region.

Southern bought the Mankato Energy Center from Calpine Corp. for $395.5 million. The Xcel subsidiary Northern States Power had a PPA running through 2026.

Calpine first proposed to build the Mankato facility in 2004. A 345-MW expansion was initiated last year, according to reports.