Entergy Corp. last Thursday said that its subsidiary, Entergy Mississippi Inc. (EMI), has signed a purchase and sales agreement (PSA) to acquire a 480 MW power plant in Mississippi from Central Mississippi Generating Co. LLC (CMGC) for $88 million.
Located near Kosciusko, MS, in EMI's central region, the Attala plant is a natural gas-fired, combined-cycle generating facility. The plant will be 100% owned by EMI and closing is expected to be completed in late 2005 or early 2006.
The purchase is contingent upon obtaining necessary approvals from various federal agencies, state permitting agencies and the Mississippi Public Service Commission, including authorization for cost recovery and the filing of notification under the Hart-Scott-Rodino antitrust law.
"The acquisition of a high-quality, efficient, load-following generation resource such as Attala will help meet our regulated utility's generating capacity needs and will provide fuel cost benefits," said Entergy CEO J. Wayne Leonard, Entergy's chief executive officer. "This transaction is well aligned with our disciplined, market point of view for capital deployment."
Entergy Mississippi plans to invest $20 million in facility upgrades at the Attala plant with transaction costs estimated at $3 million, bringing the total capital cost of the project to approximately $111 million or $231/kW.
Built originally by Duke Energy North America, the plant was purchased by PG&E National Energy Group in 2000. It is one of dozens of power plants built across the South during the past decade.
In early 2004, CMGC foreclosed on the plant's assets and began negotiations with Entergy that eventually led to a purchase and sale agreement. Before finalizing the purchase, Entergy was given the opportunity to perform due diligence at the plant to assess its overall condition and performance, and no adverse findings were reported.
Entergy and CMGC had previously executed a power purchase agreement in July 2004 for 100% of the plant's output. The agreement is set to expire at closing or in March 2008.
Leonard hinted at a pending power plant purchase by Entergy in a conference call with investors earlier this year following the release of Entergy's fourth quarter and full year 2004 earnings results.
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