Atlantic Power Corp. agreed to sell its 320-MW Manchief gas-fired generating station to Public Service Co. of Colorado for $45.2 million.

The plant, located in in Morgan County, Colo., entered service in July 2000. The Xcel Energy Inc. subsidiary buys the output of the plant under a 10-year power purchase agreement set to expire in April 2022. The transaction is set to close in May 2022.

Atlantic Power said it plans to use the proceeds to reduce the remaining principal amount of the company's senior secured term loan, according to a May 28 release.

"By retaining Manchief for the next three years, we will continue to realize 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," Atlantic Power President and CEO James Moore Jr. said in a statement.

The deal is subject to certain closing conditions and approvals, including approvals from the Colorado Public Utilities Commission and the Federal Energy Regulatory Commission.