May 18 (Reuters) - Wisconsin Power and Light Co (WPL), a unit of Wisconsin power company Alliant Energy Corp, said Friday it exercised an option to buy the 600-megawatt Riverside power plant for about $392 million from U.S. generator Calpine Corp.
Riverside is a natural gas-fired combined cycle plant in Beloit, about 50 miles (80 kilometers) southeast of Madison, Wisconsin, the state capital. It began operation in 2004.
At $392 million, WPL is paying about $650,000 per megawatt, which is less than the estimated $1 million per megawatt cost of building a new combined cycle power plant.
WPL currently has a purchase power agreement for about 500 MW from Riverside. Under that agreement, WPL has the option to buy the plant if it exercises the option on or before May 31, 2012.
“We exercised our option because we believe purchasing Riverside allows us to better manage our generation fleet to reduce our reliance on market purchases, manage costs for our customers and remain flexible for the future,” John Larsen, President - WPL, said in a release.
Wisconsin regulators approved the purchase last month. The purchase is subject to approval from the U.S. Federal Energy Regulatory Commission (FERC) and under the Hart-Scott-Rodino Act.
WPL expects to close the purchase by the end of the year.
WPL supplies power to about 459,000 customers in Wisconsin.
Calpine operates power plants in 20 U.S. states and Canada capable of producing about 28,000 MW of electricity.