TVA Agrees To Purchase Southaven Natural Gas Power Plant

April 3, 2008

TVA has agreed to purchase a three-unit, 810-megawatt combined-cycle combustion turbine facility owned by Southaven Power, LLC and located in Southaven, Miss., for a purchase price of $461.3 million.

In addition to the purchase price, TVA will also pay $5 million to Southaven in connection with the termination of an operation and maintenance agreement currently held by a Southaven affiliate. Southaven is a wholly owned indirect subsidiary of Cogentrix Energy, LLC.

The agreement to purchase the natural gas-fired power plant was reached at the conclusion of a bankruptcy auction process, and was presented for approval by the U.S. Bankruptcy Court in Charlotte, N.C., where Southaven is undergoing Chapter 11 bankruptcy proceedings. The closing of the transaction is subject to its approval by the court, which is expected within the next few days, and approval by the Federal Energy Regulatory Commission.

“This is a great outcome for TVA and its customers, and it is a natural fit with the goals of our Strategic Plan,” said TVA Chief Operating Officer Bill McCollum. “We continue to diversify our fleet through acquisitions of natural gas plants such as Southaven, and by adding nuclear capacity with the restart of Browns Ferry Unit 1 and the completion of Unit 2 at Watts Bar. In addition, we plan to help meet our customers’ power needs with a robust plan for energy efficiency and demand management.”

The demand for power in the Tennessee Valley continues to grow. Last summer, TVA met its all-time peak demand of 33,482 megawatts, and TVA forecasts that the growth trend will continue with peak demand growing about 1.9 percent each year.

“Combined-cycle combustion turbines are an extremely efficient method of meeting power demand, and the purchase price of Southaven is much less than the cost to build comparable new generation,” McCollum said.

TVA owns or leases 83 combustion turbine peaking units and three combined- cycle units located on nine separate sites across the Tennessee Valley.

TVA is the nation’s largest public power provider and is completely self- financing. TVA provides power to large industries and 159 power distributors that serve approximately 8.8 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

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John Moulton, Knoxville, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000

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