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Xcel looking to acquire Mankato Energy Center

Xcel Energy is seeking regulatory approval to purchase Mankato Energy Center, a 760-megawatt natural gas power plant. The center is part of Southern Power, a subsidiary of Atlanta-based Southern Co.

The plant currently provides power to Xcel Energy customers under a power purchase contract, Xcel said when making Tuesday's announcement.

"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, the company said in a news release. 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. These benefits include more flexibility, according to Xcel, as the company continues to add renewable energy and analyze the future of "always-on power plants," as well as reducing the risk from expiring power purchase agreements in the next decade.

Xcel owns the Prairie Island nuclear plant in Red Wing, one of those baseload plants.

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.

Xcel Energy has purchased power from the plant's first unit since 2006 and has an agreement for the energy from the under-construction second unit beginning in 2019. Xcel Energy agreed to purchase the plant for $650 million. Current employees will be offered jobs with Xcel Energy.

The Mankato Energy Center is a natural gas combined-cycle plant. The second unit, now under construction, will bring total capacity to 760 megawatts of electricity. About 27 employees currently operate and maintain the plant. The facility was originally built by Calpine Corporation and sold to Southern Power in 2016.

Xcel Energy's purchase is dependent on regulatory approval, expected in mid-2019.

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