Southern Company subsidiary Southern Power said Thursday that it would acquire a natural gas-fired power plant in Minnesota from Calpine Corp. for $395.5 million, marking the wholesale power provider’s entry into the Midcontinent ISO.

The deal would give Southern Power the Mankato Energy Center in Southern Minnesota, a 375 MW combined-cycle facility that is currently being expanded. A natural gas-fired combustion turbine and a heat recovery steam generator are being added for a 345 MW expansion that’s expected to be in service by 2019.

The sale, which Calpine said is expected to close by the fourth quarter, would boost Southern Power’s natural gas generation portfolio to 10 facilities in fives states that include Georgia, North Carolina, Alabama and Florida. The company also provides solar, wind and biomass power, but natural gas accounts for 9,300 MW of its 11,700 MW generating mix. The Mankato plant is Southern Power’s first generating asset in the Midcontinent ISO.

For Calpine, which serves customers in 21 states and Canada, the sale is “another step in our capital allocation plan to divest plants in non-core regions,” said CEO Thad Hill. The company plans to use the proceeds to reduce debt and for other general purposes. Southern Power CEO Buzz Miller said the acquisition fits nicely with the company’s business plan to diversify its generation mix.

The Mankato Energy Center is contracted with Xcel Energy Inc. subsidiary Northern States Power through 2026. The expansion also has a 20-year power purchase agreement with Northern States.