Oglethorpe to purchase gas-fueled combined cycle units for $531MM in Georgia

Source: Oglethorpe Power Corporation

Oglethorpe Power Corporation announced that it has entered into a purchase and sale agreement with an affiliate of KGen Power Corporation to acquire two combined cycle generating facilities in Murray County, Ga.

The Murray I and Murray II natural gas units, located just outside Dalton, Ga., have a combined summer planning reserve generating capacity of approximately 1,220 megawatts. The purchase price, exclusive of working capital and other closing adjustments, is approximately $531 million.

Oglethorpe Power announced in October 2010 that it had entered a non-binding agreement to purchase existing gas-fired facilities but did not identify the seller or location for reasons of confidentiality. Since that time, the corporation has completed its due diligence, and its Board and Member Systems have approved the transaction.

The acquisition is still subject to applicable regulatory approvals, the approval of KGen Power stockholders, and other customary closing conditions. If the transaction is completed, closing is expected in April 2011.

"This acquisition of an existing, low-cost and proven facility in Georgia to help meet our Members' future power supply needs is a good strategic fit for our power supply portfolio," said Elizabeth B. Higgins, executive vice president and chief financial officer. If successful, this will be Oglethorpe Power's third power generating facility acquisition over the last two years.

Oglethorpe Power will cancel a 605-megawatt combined cycle plant currently under development if the Murray purchase is completed. The corporation had not announced a final location for that facility but had been considering property it already owns in Monroe County, Ga., among other options.

Independently from the combined cycle facilities acquisition, Oglethorpe Power has deferred development of a previously announced 100-megawatt biomass plant in Warren County, Ga. as it continues to monitor regulatory and legislative developments related to biomass electricity generation.

Oglethorpe Power engaged Sutherland as legal counsel for the transaction and is not utilizing a financial adviser.

Oglethorpe Power is the nation's largest power supply cooperative with approximately $6.5 billion in assets, serving 39 Electric Membership Corporations (EMCs) providing power to more than 4.1 million Georgians.

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