Independent power producer Atlantic Power has agreed to sell its Manchief power plant to an Xcel Energy subsidiary Public Service of Colorado (PSCo).

Manchief is located in Morgan County, near Brush, Colorado on the Eastern plains of the state. The 300MW gas-fired peaking facility entered commercial operation in July 2000.

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PSCo is the existing customer and the power plant is dispatchable by the customer under the terms of the power purchase agreement (PPA). PSCo would acquire Manchief from Atlantic Power at the end of the PPA term in 2022.

Atlantic Power president and CEO James Moore said: “We are pleased to announce this transaction, which is a positive financial outcome for Atlantic Power and also helps our customer to meet its power needs.

“By retaining Manchief for the next three years, we will continue to realise the cash flows for the remaining PPA term.

“In addition, upon expiration of the PPA in 2022, the sale of the plant will provide us with a cash purchase price that eliminates uncertainty about post-PPA revenue and will support continued debt reduction.”

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Completion of the deal is subject to receipt of regulatory approvals from the Colorado Public Utilities Commission and the Federal Energy Regulatory Commission (FERC).

The sale is expected to close in May 2022. The $45.2m deal is subject to working capital and other customary adjustments.

Atlantic Power intends to use the proceeds to reduce the remaining principal amount of its senior secured term loan.

Earlier this month, Atlantic Power agreed to acquire equity ownership interests in two contracted biomass plants in North Carolina and Michigan, US.