BENTON COUNTY — The staff of the Tennessee Valley Authority has negotiated an agreement to buy, subject to TVA board of directors’ approval, the 968-megawatt Magnolia Combined Cycle Gas Plant in northern Mississippi from Kelson Limited Partnership, a wholly owned subsidiary of Kelson Energy Inc.
Terms were not disclosed. But according to TVA, the purchase price will be less than half the cost of new construction.
The three-unit, natural gas-fired electric generating plant is located on a 374-acre site in Benton County near Ashland, and has been a source of purchased power for TVA since the plant began operation in 2003. Kelson has owned the facility since 2005.
The closing of the transaction is also subject to approval of the Federal Energy Regulatory Commission, among other conditions.
Bob Irvin, senior vice president for TVA Strategy & Planning, said, “The Magnolia plant offers a strong strategic, operational and financial fit for TVA and its vision to be a leader in low-cost and cleaner energy by 2020.”
The Magnolia plant is already connected to the TVA grid.
Magnolia will be TVA’s third combined-cycle gas plant, joining the new Lagoon Creek plant and the Southaven plant, which is jointly owned with Seven States Power Corp. A fourth plant, John Sevier, is under construction and scheduled to begin operation in 2012 in Northeast Tennessee. TVA also operates a fifth plant, Caledonia, which is under a long-term lease agreement.
Kelson Energy, based in Columbia, Md., is an independent power producer engaged in the business of owning and operating electric generating facilities.