TVA finalizes Magnolia gas plant buy

TVA finalizes Magnolia gas plant buy

September 1st, 2011 by Pam Sohn in Business Around the Region

Magnolia Combined Cycle Gas plantis located in Mississippi. TVA is buying the 968-megawatt plant from Kelson Energy. Contributed Photo

TVA finalized its purchase of the Magnolia Combined Cycle Gas Plant in northern Mississippi on Wednesday, paying $436 million for what will be the utility's biggest gas-fired power plant.

"At less than half the cost of new construction, the fully permitted Magnolia plant will be a cost-effective addition to the TVA system," Bob Irvin, senior vice president for TVA Strategy & Planning, said in announcing the purchase.

Combined-cycle gas plants generate electricity from gas turbines as well as from one or more generators powered by steam heated by the turbines' exhaust.

The three-unit Magnolia plant near Ashland, Miss., has a generation capacity of 968 megawatts, making it the fourth and largest high-efficiency, combined cycle gas plant acquired or leased by TVA since 2007, according to TVA spokesman Duncan Mansfield.

A fifth plant being built by TVA at the John Sevier site in East Tennessee is scheduled to come online in 2012.

TVA plans to sell the John Sevier plant for $900 million to $1 billion and lease it back for operation. The sale-leaseback plan is intended to help finance part of the $4.9 billion completion of Bellefonte Nuclear Plant in Hollywood, Ala., near Scottsboro.

Kim Greene, TVA group president of strategy and external relations, said Wednesday that the Magnolia acquisition is a good strategic fit for TVA, giving the federal utility greater generation flexibility in the western portion of its service territory.

The Magnolia deal was approved by the Federal Energy Regulatory Commission on Aug. 17 and by the TVA board of directors on Aug. 18, Mansfield said.

Magnolia's three generating units have provided power to TVA from time to time since the plant began operation in 2003. The facility sits on a 374-acre site and is connected to a 500-kilovolt TVA transmission line.

TVA acquired Magnolia from Kelson Limited Partnership, a wholly owned subsidiary of Columbia, Md.-based Kelson Energy Inc., which has owned the plant since 2005.

TVA provides electricity for 9 million people in parts of seven southeastern states.

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