AUSTIN, Texas (AP) — Energy officials say Austin has bought a wood chip-fueled biomass power plant in East Texas for $460 million to break away from a punitive contract, calling it one of the largest single purchases in the city’s history.

Southern Company, owner of the Nacogdoches Generating Facility, accepted the offer made by Austin Energy on Wednesday.

“Acquiring the biomass plant relieves our obligation to make escalating capacity payments to a third party and, over time, reduces the associated cost impacts to our customers,” said Jackie Sargent, Austin Energy’s General Manager. “This transaction is consistent with our efforts to manage our portfolio of generation resources in a responsible and cost-effective manner.”

Austin Energy is also acquiring the plant’s holding company.

Sargent added the utility projects to save $275 million in purchasing the plant. The city has been the plant’s lone client since 2012.

The City Council approved the plant’s purchase in March.