Calpine Corp has signed a memorandum of understanding to acquire the Sacramento Municipal Utility District’s 72 MW geothermal power plant for $13 million, Dow Jones reports.

The US company plans to make a down payment of $10.6 million on closure of the deal and pay the remaining $2.4 million over 2 years.

Under the terms of the deal, Sacramento Municipal Utility will purchase 50 MW of power from the plant at market prices until 2001. It will also retain an option to buy 10 MW of peak power until 2005. The power station is located near Middletown, California.