U.S. utility holding company Xcel Energy plans to pay $650 million to buy the Mankato Energy Center, a gas-fired electricity plant, from peer Southern Power.
The Mankato Energy Center consists of two gas-fired power generators, one of which began operations in 2006. Construction on the second generator is expected to be done by mid-2019.
Xcel is buying the existing plant's output under a long-term contract and was set to do the same with the new one. Instead, with the purchase, the generators would become part of the company's rate base. Securing the Mankato gas plant is value for its customers as it will provide significant cost savings and operating flexibility for the long term.
When the new generator comes online, the Mankato center will have a generation capacity of 760 megawatts of electricity, making it the largest gas operation in Xcel's portfolio. The two Mankato generators together are expected to operate as a single high-efficiency natural gas-fired combined cycle power plant.