142 FERC 62,199 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES

Transcription

1 142 FERC 62,199 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Pasco Cogen, Ltd. Lake Investment, LP NCP Lake Power, LLC Teton New Lake, LLC Auburndale LP, LLC Auburndale GP, LLC Dade Investment, LP NCP Dade Power, LLC Docket No. EC ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES (Issued March 11, 2013) On February 8, 2013, Pasco Cogen, Ltd. (Pasco), Lake Investment, LP (Lake Investment), NCP Lake Power, LLC (NCP Lake), Teton New Lake, LLC (Teton New Lake), Auburndale LP, LLC (Auburndale LP), Auburndale GP, LLC (Auburndale GP), Dade Investment, LP (Dade Investment), and NCP Dade Power, LLC (NCP Dade) (collectively, Applicants) filed an application pursuant to section 203 (a)(1)(a) and 203 (a)(2) of the Federal Power Act (FPA) 1 requesting Commission authorization for the disposition of jurisdictional facilities associated with the direct change in upstream ownership of Pasco, Lake Cogen, Ltd. (Lake Cogen), and Auburndale Power Partners, Limited Partnership (Auburndale) 2 resulting from the sale of 100 percent of the limited and general partnership interests of Pasco, Lake Cogen, and Auburndale to Quantum Lake GP, LLC (Quantum Lake GP), Quantum Lake LP, LLC (Quantum Lake LP), Quantum Pasco GP, LLC (Quantum Pasco GP), Quantum Pasco LP, LLC (Quantum Pasco LP), Quantum Auburndale GP, LLC (Quantum Auburndale GP), and Quantum Auburndale LP, LLC (Quantum Auburndale LP) (collectively, Buyers) pursuant to a Purchase and Sale Agreement (PSA)(the Proposed Transaction). The jurisdictional facilities involved in the Proposed Transaction are the interconnection facilities held by 1 16 U.S.C. 824b (2000), as amended by the Energy Policy Act of 2005, Pub. L. No , 1289, 119 Stat. 594 (2005). 2 Applicants note that because Lake Cogen and Auburndale own qualifying facilities they are exempt from section 203 of the FPA and not included as Applicants in this filing.

2 Docket No. EC Pasco, Lake Cogen, and Auburndale and their respective market-based rate tariffs, power purchase agreements, and associated books and records. Pasco is a Florida limited partnership and an exempt wholesale generator authorized to sell electric energy, capacity and certain ancillary services at market-based rates. Pasco owns a 121 megawatt (MW) dual-fueled (oil and natural gas) combinedcycle cogeneration facility (Pasco Facility) in the Tampa Electric Company (TEC) balancing authority area (BAA). All of the output of Pasco s cogeneration facility is sold to TEC under a long-term tolling agreement that expires in NCP Dade owns a 2 percent general partner interest in Pasco, and Dade Investment owns a 98 percent limited partner interest in Pasco. NCP Dade and Dade Investment are Delaware limited liability companies and indirectly wholly-owned by Atlantic Power Corporation (Atlantic Power). Atlantic Power is an independent power producer that owns interests in a diversified fleet of power generation projects located in the United States and Canada. Atlantic Power also owns contractual entitlements to a portion of the transmission system rights resulting from the Path 15 Upgrade Project. 3 It is a publicly traded corporation listed on both the Toronto and New York stock exchanges. No investor in Atlantic Power holds a 10 percent or greater voting interest. Lake Cogen is a Florida limited partnership that owns a 121 MW dual-fueled (oil and natural gas) combined-cycle qualifying cogeneration facility (Lake Cogen Facility) located in the Progress Energy Florida BAA. The Progress Energy Florida BAA is also known as Florida Power Corporation (FPC) BAA. Lake Cogen is authorized by the Commission to sell electric energy, capacity, and certain ancillary services at marketbased rates. Lake Cogen currently sells all of the power from the facility to FPC. Lake Investment owns a 48.9 percent limited partner interest in Lake Cogen, NCP Lake owns a 1 percent general partner interest in Lake Cogen, and Teton New Lake owns a 50.1 percent limited partnership interest in Lake Cogen. Lake Investment, NCP Lake, and Teton New Lake are Delaware limited liability companies and indirectly wholly-owned by Atlantic Power. Auburndale is a Delaware limited partnership that owns and operates an approximately 155 MW qualifying cogeneration facility (Auburndale Facility) located in the FPC BAA. Auburndale is authorized by the Commission to sell electric energy, capacity, and certain ancillary services at market-based rates. All but approximately 24 MW of the output of the Auburndale facility is committed to FPC. The Auburndale facility s remaining energy is sold into the wholesale market at market-based rates. Auburndale GP owns a 1 percent general partner interest in Auburndale, and Auburndale LP owns a 99 percent limited partner interest in Auburndale. Auburndale GP and 3 The Path 15 Upgrade Project is an 83-mile 500 Kv transmission line located in Central California.

3 Docket No. EC Auburndale LP are Delaware limited partnerships and indirectly wholly-owned by Atlantic Power. The following entities are Buyers to the Proposed Transaction: Quantum Lake LP and Quantum Lake GP are limited liability companies organized under the laws of the state of Delaware, and are licensed to conduct business as foreign limited liability companies. Applicants note that Quantum Lake LP will acquire the limited partnership interests in Lake Cogen, and Quantum Lake GP will acquire the general partnership interests in Lake Cogen. Applicants state that Quantum Lake LP and Quantum Lake GP were each formed on December 21, 2012 for the purposed of acquiring, owning, operating, managing, and financing the Lake Cogen Facility, and do not have any subsidiaries or own any equity interests in other businesses. Applicants state that since formation, Quantum Lake LP and Quantum Lake GP have conducted no business other than that in connection with negotiation of the PSA and associated transactions. Quantum Lake LP and Quantum Lake GP are direct and wholly-owned subsidiaries of Quantum (Lake) Utility Investments, LLC (Quantum Lake Investments). Quantum Lake Investments is managed by Quantum Utility Generation, LLC (QUG), a company owned by Quantum Energy Partners, LLC (QEP) and members of a management team experienced in the power sector (QUG Management). The majority of the capital for Quantum Lake Investments is provided by investment funds managed by QEP or its affiliates, not including QUG Management (collectively, QEP Funds). Applicants state that the remaining capital for Quantum Lake Investments is to be provided by QUG Management and CPP Investment Board Lake Inc. (CPPIB Lake), an affiliate of the Canada Pension Plan Investment Board (CPPIB). Quantum Pasco LP and Quantum Pasco GP are limited liability companies organized under the laws of the state of Delaware, and are licensed to conduct business as foreign limited liability companies. Applicants note that Quantum Pasco LP will acquire the limited partnership interests in Pasco, and Quantum Pasco GP will acquire the general partnership interests in Pasco. Applicants state that Quantum Pasco LP and Quantum Pasco GP were each formed on December 21, 2012 for the purpose of acquiring, owning, operating, managing, and financing the Pasco Facility, and do not have any subsidiaries or own any equity interests in other businesses. Applicants state that since formation, Quantum Pasco LP and Quantum Pasco GP have conducted no business other than that in connection with negotiation of the PSA and associated transactions. Quantum Pasco LP and Quantum Pasco GP are direct and wholly-owned

4 Docket No. EC subsidiaries of Quantum (Pasco) Utility Investments, LLC (Quantum Pasco Investments). Quantum Pasco Investments is managed by QUG. The majority of the capital for Quantum Pasco Investments is provided by the QEP Funds. Applicants state that the remaining capital for Quantum Pasco Investments is to be provided by QUG Management and CPP Investment Board Pasco Inc. (CPPIB Pasco), an affiliate of CPPIB. Quantum Auburndale LP and Quantum Auburndale GP are limited liability companies organized under the laws of the state of Delaware, and are licensed to conduct business as foreign limited liability companies. Applicants note that Quantum Auburndale LP will acquire the limited partnership interests in Auburndale, and Quantum Auburndale GP will acquire the general partnership interests in Auburndale. Applicants state that Quantum Auburndale LP and Quantum Auburndale GP were each formed on December 21, 2012 for the purpose of acquiring, owning, operating, managing, and financing the Auburndale Facility, and do not have any subsidiaries or own any equity interests in other businesses. Applicants state that since formation, Quantum Auburndale LP and Quantum Auburndale GP have conducted no business other than that in connection with negotiation of the PSA and associated transactions. Quantum Auburndale LP and Quantum Auburndale GP are direct and whollyowned subsidiaries of Quantum (Auburndale) Utility Investments, LLC (Quantum Auburndale Investments). Quantum Auburndale Investments is managed by QUG. The majority of the capital for Quantum Auburndale Investments is provided by the QEP Funds. Applicants state that the remaining capital for Quantum Auburndale Investments is to be provided by QUG Management and CPP Investment Board Auburndale Inc. (CPPIB Auburndale), an affiliate of CPPIB. QEP is a provider of private equity capital to the global energy industry through the QEP Funds and other similar investment vehicles. Affiliates of the QEP Funds are engaged in business in multiple sectors within the energy industry with particular emphasis on the North American oil and gas upstream, midstream, and power generation sectors in the United States and Canada. CPPIB Lake, CPPIB Pasco and CPPIB Auburndale, each of which is a Delaware corporation and wholly-owned indirect subsidiary of CPPIB, are investment vehicles formed by CPPIB for the purpose of holding its ownership interest in Quantum Lake Investments, Quantum Pasco Investments, and Quantum Auburndale Investments. CPPIB, in turn, is a professional investment management organization that invests the assets of the Canada Pension Plan to the extent funds are not needed to pay current benefits. CPPIB was incorporated as a federal Crown corporation in 1997, pursuant to the Canada Pension Plan

5 Docket No. EC Investment Board Act. CPPIB is governed and managed independently of the Canada Pension Plan and operates at arm s length from the Canadian government. CPPIB, through various vehicles in addition to CPPIB Lake, CPPIB Pasco, and CPPIB Auburndale, has other investments in infrastructure, including passive investments in energy companies. Applicants state that neither CPPIB nor any of its affiliates owns a 10 percent or greater voting share in, or otherwise controls, any energy-related company in the United States, except for CPPIB s ownership interest in Puget Holdings LLC (Puget Holdings). CPPIB Lake s, CPPIB Pasco s, and CPPIB Auburndale s affiliate, CPPIB Investment Board (USRE II), Inc. (USRE II), holds an approximate percent interest in Puget Holdings, which in turn indirectly holds 100 percent of the stock of Puget Energy, Inc., the parent company of Puget Sound Energy, Inc. (PSE). Applicants state that PSE transmission facilities are geographically remote from the relevant markets and are subject to an open access transmission tariff. USRE II also holds approximately 15 percent of the outstanding units in Noble Environmental Power, LLC (NEP), a Delaware limited liability company. Applicants state that based on NEP s website, NEP has a 726 MW wind generation portfolio and approximately 1800 MW of wind parks under development. Applicants state that NEP s operating wind projects are geographically remote from the relevant market. Applicants state that none of QEP, QEP Funds, QUG Management, CPPIB Lake, CPPIB Pasco, CPPIB Auburndale, or any of their affiliates owns a 10 percent or greater voting interest in or controls any electric generation facilities in any market relevant to the Proposed Transaction. In addition, Applicants state that aside from CPPIB Lake, CPPIB Pasco, CPPIB Auburndale s affiliation with PSE, neither QEP, QEP Funds, QUG Management, CPPIB Lake, CPPIB Pasco, CPPIB Auburndale, nor any of their affiliates currently own a 10 percent or greater voting share or control any electric transmission or distribution facilities in the United States, aside from the limited equipment necessary to connect generation facilities to the transmission grid. Applicants state that neither QEP, QEP Funds, QUG Management, CPPIB Lake, CPPIB Pasco, CPPIB Auburndale, or any of their affiliates currently own a 10 percent or greater voting share or control any inputs to generation in the TEC and FPC BAAs. Applicants further state that neither QEP nor any of its affiliates currently own or control any generating capacity in the TEC and FPA BAAs. Pursuant to the PSA, dated January 30, 2013, and entered into by and among Lake Investment, NCP Lake Power, Teton New Lake, NCP Dade, Dade Investment, Auburndale LP, Auburndale GP (collectively, Sellers), Atlantic Power, Buyers, and QUG, on the date the Proposed Transaction is consummated the following series of

6 Docket No. EC transactions will take place: (i) NCP Dade and Dade Investment will sell to Quantum Pasco GP and Quantum Pasco LP all of their respective rights in Pasco; (ii) Auburndale GP and Auburndale LP will sell to Quantum Auburndale GP and Quantum Auburndale LP all of their respective rights in Auburndale; and (iii) Lake Investment, NCP Lake and Teton New Lake will sell to Quantum Lake GP and Quantum Lake LP all of their respective rights in Lake Cogen. Upon consummation of the Proposed Transaction, Atlantic Power will no longer own any indirect interests in Pasco, Auburndale or Lake Cogen and Quantum Pasco Investments, Quantum Auburndale Investments, and Quantum Lake Investments will become the indirect owners of Pasco, Auburndale and Lake Cogen. Applicant states that the Proposed Transaction is consistent with the public interest and will not adversely affect competition, rates or regulations. With respect to competition, Applicants state that neither Buyers nor any of their affiliates own or control any generating capacity in the TEC and FPC BAAs, the relevant geographic markets. Applicants also state that because neither Buyers nor any of their affiliates currently conduct business in the same geographic market as Pasco, Lake Cogen, and Auburndale, the Proposed Transaction does not require a horizontal competitive screen analysis in the TEC and FPC BAAs. Therefore, Applicants assert that the Proposed Transaction raises no horizontal market power concerns. Applicants state that the Proposed Transaction raises no vertical market power concerns. Applicants note that the Proposed Transaction involves no transmission facilities, other than limited facilities necessary to interconnect the facilities owned by Pasco, Lake Cogen, and Auburndale to the transmission grid. In addition, Applicants state that none of Pasco, Lake Cogen, Auburndale, Quantum, or Buyers owns or controls fuel supplies, fuel delivery systems or other inputs to electricity markets or any new sites for electric generation that could raise vertical market power issues or barriers to entry in the TEC and FPC BAAs. Therefore, Applicants state that the Proposed Transaction does not require a vertical competitive screen analysis. With respect to rates, Applicants state that the Proposed Transaction will not have an adverse effect on rates because the power purchase agreements provide for marketbased rate sales and those agreements will not be impacted by the Proposed Transaction. Applicants also state that the sales of electric output not sold pursuant to an agreement are also made into the market at market-based rates. Applicants note that they do not have any transmission customers that are served on the limited facilities necessary to interconnect their generating facilities to the transmission grid. Therefore, Applicants state that the Proposed Transaction does not affect any transmission customers. With respect to regulation, Applicants state that the Proposed Transaction will not impair the ability of the Commission or any state regulatory authority to regulate the Applicants or any of their affiliates. Applicants state that the Commission will continue

7 Docket No. EC to have the same jurisdiction over Applicants and their FPA-jurisdictional facilities after the Proposed Transaction is consummated. Applicants also state that the Commission will be able to exercise the same jurisdiction over Applicants affiliates. The Proposed Transaction will have no effect on state commission regulation and is not subject to approval by any state commission. Applicant states that the Proposed Transaction will not result in crosssubsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company. Applicant asserts that the Proposed Transaction falls within one of the safe harbors adopted by the Commission for which detailed explanation and evidentiary support to demonstrate a lack of cross-subsidization is not required. Applicant more specifically states that the Proposed Transaction does not involve a franchised public utility with captive customers. Additionally, Applicant verifies that based on the facts and circumstances known to them or that are reasonably foreseeable, the Proposed Transaction will not result in, at the time of the Proposed Transaction or in the future: (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 services agreements subject to review under Sections 205 and 206 of the FPA. This filing was noticed on February 11, 2013, with comments, protests or interventions due on or before March 1, None were filed. 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 ). Any opposed or untimely filed motion to intervene is governed by the provision of Rule 214. When a controlling interest in a public utility is acquired by another company, whether a domestic company or a foreign company, the Commission s ability to adequately protect public utility customers against inappropriate cross-subsidization may be impaired absent access to the parent company s books and records. Section 301(c) of the FPA gives the Commission authority to examine the books and records of any person who controls, directly or indirectly, a jurisdictional public utility insofar as the books and

8 Docket No. EC records relate to transactions with or the business of such public utility. The approval of the transaction is based on such examination ability. Information and/or systems connected to the bulk power 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 databases, 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, NERC 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. 4 The foregoing authorization may result in a change in status. Accordingly, Applicants are advised that it must comply with the requirements of Order No.652. In addition, Applicants shall make appropriate 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 hereby 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 determination of cost 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 Reporting Requirement for Changes in Status for Public Utilities with Market- Based Rate Authority, Order No. 652, 70 Fed. Reg. 8,253 (Feb. 18, 2005), FERC Stats. & Regs. 31,175, order on reh g, 111 FERC 61,413 (2005).

9 Docket No. EC (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 the upstream ownership of Applicants affiliated Qualifying Facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R shall be made; (6) Applicants shall make appropriate filings under section 205 of the FPA, as necessary, to implement the Proposed Transaction; (7) Applicants must inform the Commission of any changes in circumstances that would reflect a departure from the facts the Commission relied upon in authorizing the Proposed Transaction; and (8) Applicants shall notify the Commission within 10 days of the date that the disposition of jurisdictional facilities has 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 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 Steve P. Rodgers Director Division of Electric Power Regulation West

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