WASHINGTON, March 19 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order:
Big Sky Wind, LLC
Edison Mission Energy
Suzlon Wind Energy Corporation
EverPower Wind Holdings, Inc.
Docket No. EC14-54-000
ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES
(Issued March 19, 2014)
On February 7, 2014, as supplemented on March 13, 2014, Big Sky Wind, LLC (Big Sky), Edison Mission Energy (Edison), Suzlon Wind Energy Corporation (Suzlon), and EverPower Wind Holdings, Inc. (EverPower) (collectively, Applicants) filed an application under section 203(a)(1)(A) of the Federal Power Act (FPA) requesting Commission authorization for the disposition of jurisdictional facilities (Proposed Transaction). Specifically, the Proposed Transaction entails two parts. Under Part 1, Suzlon will acquire the membership interests in Big Sky from Edison's subsidiary, Edison Mission Midwest II. Under Part 2, no more than 120 days after Edison's indirect ownership in Big Sky is transferred to Suzlon, Suzlon will sell the membership interests in Big Sky to Everpower. The affected jurisdictional facilities consist of Big Sky's market-based rate tariff, agreements, interconnection facilities, and related books and records.
Big Sky, an exempt wholesale generator (EWG) with market-based rate authority, owns and operates a 240 megawatt (MW) wind-powered generating facility (Facility) located in Bureau and Lee Counties, Illinois and within the control area of the PJM Interconnection, L.L.C. (PJM). According to Applicants, the PJM control area is the relevant market for the Facility. Big Sky is an indirect wholly-owned subsidiary of Edison whose corporate parent is Edison International.
Edison, through various subsidiaries and affiliates, is engaged in the business of operating, owning or leasing, acquiring, developing, and selling energy and capacity from independent power production facilities and in hedging and trading activities. Edison owns or controls over 8,000 MWs of electric generation facilities throughout the United States, as well as an interest in a generation facility near Istanbul, Turkey. Within the PJM control area, Edison indirectly owns generating facilities amounting to approximately 2,250 MW.
Suzlon is owned by Suzlon Energy Limited, an India-based multinational wind power company that is engaged in selling, installing, and manufacturing wind turbine generators. Applicants state that, as of early 2013, Suzlon, in combination with another company, has a total constructed and scheduled capacity of more than 4,300 MW in North America. Through maintenance arrangements, Suzlon provides services at the direction of the owner to more than 60 wind farms across the United States (including Big Sky), which are home to more than 1,250 wind turbines.
According to Applicants, Suzlon does not directly own, operate, or control any generating facilities. Indirectly, Suzlon owns two wind-powered generators located in the state of Texas. Suzlon and its affiliates do not own or operate, either directly or indirectly, any electric transmission facilities in the United States, other than limited interconnection facilities. In addition, neither Suzlon nor any of its affiliates owns or controls inputs to electric power production, including intrastate natural gas transportation; intrastate natural gas storage or distribution facilities; sites for generation capacity development; physical coal supply sources; and ownership of or control over those who may access transportation of coal supplies.
Everpower is engaged in developing, owning, and operating wind-powered generation resources in the United States. EverPower is owned by Trireme Energy Investments, Inc. (Trireme Energy Investments), which, in turn, is approximately 92.5 percent owned by Trireme Energy Holdings, Inc. (Trireme Energy Holdings) and approximately 7.5 percent owned by individuals holding management positions in Trireme Energy Investments. None of the individuals owns a 10 percent or greater interest. Trireme Energy Holdings is owned by Terra Firma III, a limited partnership that is part of a private equity management business. The private equity management business consists of private equity funds, including Terra Firma III, and is owned by an individual investor, Guy Hands. No private equity fund other than Terra Firma III has an ownership interest in EverPower.
According to Applicants, EverPower does not directly own, operate, or control any generating facilities. Everpower indirectly wholly owns the following EWGs that own or control generation within the PJM control area: Big Savage, LLC, owner and operator of an approximately 139.4 MW wind-powered generating facility located in Somerset County, Pennsylvania and the adjacent Allegheny County, Maryland; and Highland North LLC, Krayn Wind LLC, and Patton Wind Farm, LLC, owners and operators of wind-powered generating facilities that, combined, total approximately 167.5 MWs and are located in Cambria Count, Pennsylvania. EverPower also owns within the PJM control area a limited number of sites for generation capacity development. Applicants state that Terra Firma III and Guy Hands do not hold an ownership interest and are not affiliated with any entity that holds an ownership interest of 10 percent or more in any asset subject to the Commission's jurisdiction and within the PJM control area, other than assets described above.
According to Applicants, on December 17, 2012, Edison and certain of its subsidiaries (collectively, the Edison Debtors) filed under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois. According to Applicants, the Proposed Transaction will help resolve the Chapter 11 proceedings.
Under the Proposed Transaction, Part 1, Suzlon will acquire 100 percent of the membership interests in Big Sky that Edison owns indirectly. Big Sky owns the 240 MW Facility. Under Part 2 of the Proposed Transaction, EverPower will acquire from Suzlon 100 percent of Suzlon's membership interests in Big Sky. Applicants explain that the Proposed Transaction is a two-part format in order to reconcile Suzlon's interest in Big Sky with its intent to not become a long-term owner or operator of Big Sky. According to Applicants, at present, Suzlon is a lender to Big Sky and holds a first priority mortgage lien in the Facility. According to Applicants, Suzlon must first acquire Big Sky from Edison for a nominal price in order to extinguish the first priority mortgage lien.
Applicants state that the Proposed Transaction is consistent with the public interest and will have no adverse effect on competition, rates, or regulation. With respect to horizontal market power, Applicants state that the Proposed Transaction raises no concerns. As for Part 1 of the Proposed Transaction, Applicants state that Suzlon does not currently own and is not affiliated with any entity that owns generating facilities in the PJM control area. According to Applicants, after Part 1 is completed, Suzlon will only own 240 MW within the PJM market, a de minimus amount. As for Part 2 of the Proposed Transaction, Applicants assert that combining EverPower's capacity of 306.9 MW with Big Sky's 240 MW Facility would result in EverPower being affiliated with a de minimus amount of approximately 0.32 percent of the total installed capacity in the PJM market.
With regard to vertical market power, Applicants state that the Proposed Transaction raises no concerns. Applicants state that the Proposed Transaction does not result in any vertical combination of upstream inputs to electric generation, such as transmission facilities or natural gas pipelines, with downstream generating capacity. Applicants assert that neither Big Sky, Suzlon, nor EverPower own interstate or intrastate natural gas facilities, nor does any of them control coal supplies or barges and rail cars used the transportation of coal supplies. Furthermore, Applicants assert that the generation capacity to be transferred will remain subject to the functional control of PJM.
In addition, Applicants note that although several affiliates of EverPower hold leasehold interests in property that is or will be used for the construction of planned generating facilities, EverPower is not increasing its rights to generation capacity development sites by virtue of the Proposed Transaction, and none of the other Applicants own or control any such sites for generation capacity development that raise entry barrier concerns.
With regard to rates, Applicants state that the Proposed Transaction will not have an adverse effect. Applicants state that output from the Facility will continue to be sold under market-based rates. Applicants also state the Proposed Transaction involves a generation facility rather than a transmission facility and, therefore, involves no transmission customers.
With regard to regulation, Applicants state that the Proposed Transaction will not have an adverse effect. Applicants state that following the closing of Part 1 of the Proposed Transaction, the Facility will continue to be subject to regulation by the Commission. Similarly, following the closing of Part 2 of the Proposed Transaction, EverPower and the Facility will continue to be regulated by the Commission in the same manner as before. In addition, Applicants state that the Proposed Transaction will not have an adverse effect on state regulation.
Applicants state that, based on facts and circumstances known to it or that are reasonably foreseeable, the Proposed Transaction will not result in, at the time of the closing or in the future, cross-subsidization of a non-utility associate company or the pledge or encumbrance of assets of a traditional public utility that has captive customers or that owns or provides transmission service over jurisdictional facilities for the benefit of an associate company. Specifically, Applicants state that the Proposed Transaction does not involve a franchised public utility with captive customers and will not result in: (1) any transfer of facilities between a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, and an associate company; (2) any new issuance of securities by a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, for the benefit of an associate company; (3) any new pledge or encumbrance of assets of a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, for the benefit of an associate company; or (4) any new affiliate contract between a non-utility associate company and a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, other than non-power goods and service agreements subject to review under sections 205 and 206 of the FPA.
The filing was noticed on February 10, 2014, with comments, protests, or interventions due on or before February 28, 2014. None were received. Notices of intervention and unopposed timely filed motions to intervene are granted pursuant to the operation of Rule 214 of the Commission's Rules of Practice and Procedure (18 C.F.R. section385.214) (2013). Any opposed or untimely filed motion to intervene is governed by the provisions of Rule 214.
Information and/or systems connected to the bulk system involved in this transaction may be subject to reliability and cybersecurity standards approved by the Commission pursuant to FPA section 215. Compliance with these standards is mandatory and enforceable regardless of the physical location of the affiliates or investors, information database, and operating systems. If affiliates, personnel or investors are not authorized for access to such information and/or systems connected to the bulk power system, a public utility is obligated to take the appropriate measures to deny access to this information and/or the equipment/software connected to the bulk power system. The mechanisms that deny access to information, procedures, software, equipment, etc., must comply with all applicable reliability and cybersecurity standards. The Commission, North America Electric Reliability Corporation or the relevant regional entity may audit compliance with reliability and cybersecurity standards.
Order No. 652 requires that sellers with market-based rate authority timely report to the Commission any change in status that would reflect a departure from the characteristics the Commission relied upon in granting market-based rate authority. The foregoing authorization may result in a change in status. Accordingly, Applicants are advised that they must comply with the requirements of Order No. 652. In addition, Applicants shall make any necessary filings under section 205 of the FPA to implement the Proposed Transaction.
After consideration, it is concluded that the Proposed Transaction is consistent with the public interest and is authorized, subject to the following conditions:
(1) The Proposed Transaction is authorized upon the terms and conditions and for the purposes set forth in the application;
(2) The foregoing authorization is without prejudice to the authority of the Commission or any other regulatory body with respect to rates, service, accounts, valuation, estimates or determinations of costs, or any other matter whatsoever now pending or which may come before the Commission;
(3) Nothing in this order shall be construed to imply acquiescence in any estimate or determination of cost or any valuation of property claimed or asserted;
(4) The Commission retains authority under sections 203(b) and 309 of the FPA to issue supplemental orders as appropriate;
(5) If the Proposed Transaction results in changes in the status or upstream ownership of Applicants' affiliated qualifying facilities, an appropriate filing for recertification pursuant to 18 C.F.R. section 292.207 (2013) shall be made;
(6) Applicants shall make appropriate filings under section 205 of the FPA, as necessary, to implement the Proposed Transaction; and
(7) Each of Suzlon and EverPower shall notify the Commission within 10 days of the dates that the dispositions of jurisdictional facilities have been consummated.
This action is taken pursuant to the authority delegated to the Director, Division of Electric Power Regulation - West, under 18 C.F.R. section 375.307 (2013). This order constitutes final agency action. Requests for rehearing by the Commission may be filed within 30 days of the date of issuance of this order, pursuant to 18 C.F.R. section 385.713 (2013).
Steve P. Rodgers
Division of Electric Power Regulation - West
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