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

Gas-Powered Electricity

In the past four years, TVA has bought, leased or built four gas-powered plants and could buy another gas generating plant next month.

• TVA signed a long-term lease in 2007 for the Caledonia combined-cycle gas plant near Columbus, Miss., which generates 813 megawatts of power

• TVA bought the 810-megawatt Southaven Combined-Cycle Combustion Turbine Plant in DeSoto County, Miss., in 2008. Seven States Power Corp., a Chattanooga-based cooperative of TVA distributors, owns 90 percent of the plant leased back to TVA.

• TVA built the 550-megawatt Lagoon Creek gas plant in Haywood County in West Tennessee last year and dedicated the new generating facility in June.

• TVA is building a new gas-fired combined cycle plant at the John Sevier Fossil Plant near Rogersville, Tenn. That plant will generate 880 megawatts of electricity.

• TVA plans to buy the 968-megawatt Magnolia combined cycle gas plant near Ashland, Miss., at the end of August.

Source: Tennessee Valley Authority

TVA may compete against natural gas suppliers for home heating in the Tennessee Valley, but for its own power TVA increasingly is turning to gas to generate its electricity.

The Tennessee Valley Authority announced an agreement Thursday to buy its biggest natural gas power plant.

TVA wants to acquire the 968-megawatt Magnolia combined-cycle gas-fired plant near Ashland, Miss., which TVA now purchases power from on the open market from the plant's current owner, Kelson Limited Partnership, a subsidiary of Kelson Energy.

TVA declined to reveal the purchase price in advance of a board vote next month.

But TVA spokesman Duncan Mansfield said the federal utility will buy the plant for less than half of the nearly $1 billion expense of what it would cost to build a similar new plant.

The Magnolia plant is the fifth gas-powered plant TVA has bought, built or leased in the past four years as it shifts more of its fossil generation from coal to natural gas.

TVA reached an agreement in April with the U.S. Environmental Protection Agency and environmental groups to shut down 20 of its oldest coal-fired generating units to help reduce smog and gases that contribute to global warming.

"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," TVA Senior Vice President Bob Irvin said in a statement Thursday.

TVA now purchases most of the power generated by the Magnolia plant, which is located within TVA's seven-state region. Buying the 8-year-old facility should help lower TVA's costs, Mansfield said.

Magnolia would be TVA's third combined cycle gas plant, which uses waste heat from the generation process to turn additional turbines to make more electricity.

One of those combined cycle plants - the Southaven plant in DeSoto County, Miss., - is jointly owned with a cooperative of TVA distributors known as Seven States Power Corp.

The Chattanooga-based Seven States Power, which owns 90 percent of the Southaven plant it leases back to TVA, also is considering buying some or all of the Magnolia plant, officials said.

"We have an interest in possibly acquiring this plant to lease back to TVA, but those discussions are still very preliminary," said Phillip Burgess, communications director for Seven States Power and its affiliate group, the Tennessee Valley Public Power Association.

The TVA board will vote on the proposed plant purchase Aug. 17 and the deal could be completed by Aug. 30, pending approval of the Federal Energy Regulatory Commission.