Coal company

Peabody Energy

(BTU) - Get Report

and

CMS Energy

(CMS) - Get Report

agreed to co-develop a 1,600-megawatt power plant and coal mine in southern Illinois.

Each will own a 15% stake, and the remainder is expected to be owned by a number of Midwest municipal utilities and electric cooperatives, from which 53% of ownership is already secured.

"Selecting CMS Enterprises as operator marks significant progress in our development process, allowing Prairie State to move forward with a recognized leader to deliver clean, low-cost energy for the region," the St. Louis-based company said. "CMS Enterprises brings terrific expertise in power plant construction and operations that complements Peabody's skills."

CMS Enterprises will serve as lead developer, construction manager, and operator of the mine-mouth power plant and Peabody Energy will be lead developer of the Lively Grove Mine that will fuel the power plant for an estimated 30 years.

CMS Enterprises expects to make a long-term equity investment of about $200 million at the completion of construction.

Construction of the first 800-megawatt generating unit is expected to take about four years to complete and the second 800-megawatt unit will be completed shortly later.

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