FirstEnergy Corp. said Monday it had entered into a definitive agreement to sell its gas-fired power plant, the Fremont Energy Center in Fremont, Ohio, to American Municipal Power, Inc. of Columbus.

Under terms of the agreement, AMP would purchase the plant for about $485 million, based on its current capacity to generate 685 megawatts.

The transaction would close on or about July 1, 2011.

FirstEnergy bought the partially-built plant in January 2008 from the Calpine Corp., a bankrupt California company.

FirstEnergy has spent about $500 million on the plant, including about $253.6 million to purchase it.

AMP and FirstEnergy signed a memorandum of understanding in February announcing that they had begun non-binding negotiations.

The power plant, a natural gas combined cycle generation plant owned by FirstEnergy subsidiary, FirstEnergy Generation Corp., is still under construction but expected to be completed in a few months.

The plant includes two natural gas turbines and a steam turbine. The gas turbines are designed for use during times of peak demand.

The purchase price would be incrementally increased, not to exceed an additional $16 million, to reflect the completion of additional output and transmission capacity up to 707 megawatts.

AMP would reimburse FirstEnergy for construction costs incurred between Feb. 1 and the closing date if the transaction is completed. These costs would not exceed $25.3 million, said the Akron company.

Since its merger with Allegheny Energy in Pennsylvania, FirstEnergy said selling the Fremont plant is consistent with its efforts to "divest non-strategic assets and use the

proceeds to provide the company with additional financial strength and flexibility."