AUSTIN, Texas (AP) — The city of Austin bought a wood chip-fueled biomass power plant in East Texas for $460 million to break away from a punitive contract, a move energy officials called 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.

Austin Energy General Manager Jackie Sargent said the city is now off the hook for escalating annual payments under a 20-year, $2.3 billion agreement with Southern Company slated to run through 2032, the Austin American-Statesmen repo...