Xcel Energy has agreed to purchase the Mankato Energy Center power plant for $650 million, turning the Minneapolis-based energy provider from a contract holder at the plant to its owner.
Xcel customers who currently receive power from the natural gas plant should see financial benefits from the deal. Existing plant employees will be offered jobs with Xcel.
“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, Xcel Energy—Minnesota, South Dakota, North Dakota president, in a statement.
Clark added that the plant helps Xcel’s efforts to deliver reliable electricity at lower costs, while the company continues transitioning to cleaner energy sources and reduced reliance on coal.
The acquisition is also part of a larger plan Xcel has to retire several power plants and allow other contracts to expire in the mid-2020s. As those plans come to fruition, Xcel’s ownership of Mankato Energy Center ensures its power supply in the Mankato area is secure.
The plant is currently owned by Southern Power, a subsidiary of Atlanta-based Southern Company. Xcel has purchased power from the plant’s first unit since 2006 and has an agreement, starting in 2019, for energy sourced from a currently under-construction second unit.
When the unit is complete it will bring the combined-cycle plant’s capacity to 760 megawatts. The plant is operated by about 27 employees, and if Xcel absorbs them, they will be offered the option to join the almost 100 staff members Xcel already employs in the Mankato area, across several facilities.
“Xcel Energy has a long history of serving customers in the Mankato area,” said Clark. “Securing this plant gives us the opportunity to deepen our ties to the community.”
The deal is pending regulatory approval, with completion expected by mid-2019.