Southern Power buys 375-MW gas-fired plant from Calpine for $395.5 million

Written By: Stratton Report
September 1, 2016

Southern Power

On September 1, Southern Power announced its purchase of the Mankato Energy Center from Calpine Corporation. The center will house two gas-fired units, the existing 375-MW Mankato Energy Center I and the under development 345-MW Mankato Energy Center II expansion.

Mankato Energy Center I sells power under a PPA with Northern States Power through 2026. The Mankato Energy Center II expansion will also sell power via a 20-year PPA with NSP, starting in June 2019.

According to Calpine, Mankato’s sale price was $395.5 million plus working capital and other customary purchase price adjustments. Calpine expects to use the money for corporate debt reduction.

Southern Power President and CEO Buzz Miller noted:

“Southern Power remains committed to the strategic development of a diverse generation mix, and the Mankato Energy Center is an excellent fit for Southern Power’s business model. We are proud to serve this region and look forward to expanding the output of the facility to meet the needs of our customers.”

Calpine President and CEO Thad Hill observed: “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. I would like to thank our Mankato team for their professionalism and commitment to operational excellence over the years.”

The project represents Southern Power’s first generating asset within MISO.