Gas-fired power plant purchased by CPS Energy

CPS Energy said it has entered into an agreement to purchase an existing natural gas-fired power plant in Seguin, Texas.

Rio Nogales is an 800 MW combined-cycle gas plant that will replace the energy output of the 871 MW J.T. Deely, a two-unit coal plant, planned to come offline in 2018.  CPS Energy said purchasing the plant allows the San Antonio utility to avoid a minimum of $1 billion in costs that would have been required to keep Deely, the utility's oldest coal plant, operational and compliant with expected environmental regulations.

"We are avoiding the continuous costs of environmental retrofits to Deely, starting with a $565 million scrubber.  This investment is in power that does not emit particulate matter or sulfur dioxide and supports abundant natural gas resources in Texas, rather than coal from Wyoming,” said Doyle Beneby, CPS Energy president and CEO.

Rio Nogales is currently owned by a Tenaska Capital Management LLC affiliate, which has entered into a purchase and sale agreement with CPS Energy. The 10-year old plant is expected to be operational for the next 30 to 40 years.

Purchase of the plant is expected to be finalized in early April 2012.

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