Xcel Energy Announces Sale of Recently Acquired 760-Megawatt Natural Gas Plant in Minnesota

Xcel Energy Inc. will sell the Mankato Energy Center, a 760-megawatt natural gas-fired power plant, to Denver-based Southwest Generation, according to an April 6 filing with the Minnesota Public Utilities Commission. Xcel purchased the facility from Southern Power for $650 million in January through a non-regulated affiliate after Minnesota regulators rejected the company’s earlier proposal that would have included the costs in the rate base. The company is now selling the plant for $680 million and plans to use the net gain from the sale to support its corporate giving and COVID-19 relief efforts. The sale will allow the company to continue its focus as a fully regulated utility, according to Xcel. The transaction is expected to close in the third quarter of 2020.

Xcel Energy has committed to carbon-free electricity by 2050 expects to continue its focus on leading the nation’s clean energy transition as a fully regulated utility.

The proceeds from the sale will primarily be used to lower Xcel’s overall financing needs and improve credit metrics, with the net gain from will fund its corporate giving efforts, including support related to COVID-19 recovery.

The company said that the terms, conditions, or parties to the existing power purchase agreements for either Mankato Energy Center I or Mankato Energy Center II will not change as a result of the sale.

The existing affiliate arrangement approved by Minnesota regulators will remain in effect until the sale to Southwest Generation is completed. Southwest Generation currently provides energy under long-term contracts to Xcel Energy’s Colorado operating company from the Arapahoe and Fountain Valley plants.