TVA bids $466 million for – Facility needed
The three-unit, 810-megawatt combined-cycle combustion turbine plant is owned by Southaven Power LLC and located in Southaven, Miss. Southaven built the plant for $490 million five years ago. Now it is selling the plant as part of a Chapter 11 bankruptcy proceeding in Charlotte, N.C., involving parent Cogentrix Energy LLC.
TVA’s offer is subject to approval by the bankruptcy court and the Federal Regulatory Commission.
Southaven would be TVA’s fifth acquisition in two years of a financially distressed gas-fired plant for peak power needs. TVA previously bought plants or sites for other natural gas plants in Gleason and Brownsville, Tenn.; Columbus, Miss., and Marshal County, Ky.
‘The good news is that we were able to bid on and buy this plant for substantially less than what it would cost to build such a unit,’ TVA president and CEO Tom Kilgore told the utility’s board Thursday. ‘The bad news is that we are about out of places where we can go buy these distressed assets.’
As a combined-cycle plant, the Southaven facility reuses heat produced during the initial gas burn to achieve greater efficiency and operate at a lower cost. Both combined-cycle and simple-cycle gas turbines rely on natural gas, which is often twice as expensive as either coal or nuclear fuel.
But these plants, which operate only for brief periods, still represent a cheaper option than buying extra power on the spot market from other utilities. TVA spent more than $1.4 billion on outside power purchases last year and is aiming to reduce that in the future.
TVA, which serves 8.7 million consumers in seven southeastern states, now owns or leases 83 simple-cycle combustion turbine units and three combined-cycle units at nine sites across the Tennessee Valley.