The Tennessee Valley Authority has entered its fourth and largest agreement to lease a power plant to a third party for an up-front payment and lease it back, a financial maneuver that frees up billions of dollars for other projects.
TVA secured a $2 billion leaseback agreement with a single-purpose entity called Cumberland Combined Cycle Generation LLC for the Cumberland gas-fired plant in Stewart County, Tennessee. The deal closed on May 26, TVA told investors in a financial update on Thursday.
TVA is still building the 1,450-megawatt plant 30 minutes southwest of Clarksville. The plant will supply enough power for around 850,000 homes when it enters operations in December, according to TVA. The agency, the largest public power provider in the U.S., will retain ownership and full operational control of the plant through a deal that works like a mortgage.
Cumberland Combined Cycle Generation is owned by an equity investor that contributed $200 million in cash on the closing date, according to TVA. The entity issued $1.8 billion in debt to finance the remainder of the deal.
(READ MORE: TVA rate changes would increase data center power bills, not residential)