Southern Power, a wholesale energy provider and subsidiary of Southern Company, announced that it has entered into an agreement to sell the Nacogdoches Generating Facility to Austin Energy for $460 million.

The 115-megawatt (MW) wood-fired biomass plant has a 20-year power purchase agreement with Austin Energy, with pricing above current ERCOT market prices

"The transaction, which is expected to close in mid-2019, will allow Austin Energy to avoid approximately $275 million in additional costs over the remaining term of the agreement," Austin Energy said

"Acquiring the biomass plant relieves our obligation to make escalating capacity payments to a third party and, over time, reduces the associated cost impacts to our customers," said Jackie Sargent, Austin Energy’s General Manager. "This transaction is consistent with our efforts to manage our portfolio of generation resources in a responsible and cost-effective manner."

The $460 million purchase price is subject to customary closing adjustments. The transaction is expected to close in mid-2019, subject to customary closing conditions. Proceeds will be used to strengthen the balance sheet of Southern Company, help meet projected equity needs and further de-risk financing plans.

Tags:
Texas   M&A   Munis and co-ops   Austin Energy  

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