FERC Issues Order to CPV Cimarron Renewable Energy Company, LLC on Order Authorizing Disposition and Acquisition of Jurisdictional FacilitiesTargeted News Service
WASHINGTON, Oct. 26 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order:
Docket No. EC12-141-000
CPV Cimarron Renewable Energy Company, LLC
Cimarron Wind Energy Holdings, LLC
Cimarron Wind Energy Holdings II, LLC
ORDER AUTHORIZING DISPOSITION AND ACQUISITION OF JURISDICTIONAL FACILITIES
(Issued October 26, 2012)
On September 18, 2012, CPV Cimarron Renewable Energy Company, LLC (CPV Cimarron), Cimarron Wind Energy Holdings, LLC (NextEra Cimarron Holdings) and Cimarron Wind Energy Holdings II, LLC (NextEra Cimarron Holdings II and, together with NextEra Cimarron Holdings, the NextEra Entities) (collectively, Applicants) filed an application pursuant to sections 203(a) (1) (A) and section 203(a) (2) of the Federal Power Act (FPA). Applicants are requesting Commission authorization for the upstream change in ownership in CPV Cimarron that will occur as the result of the sale by CPV Renewable Energy Company (CPV Renewable Energy) and CPV Cimarron Holding Company, LLC (CPV Holding) of all of their membership interests in CPV Cimarron to NextEra Entities (the Proposed Transaction). The affected jurisdictional facilities are a market-based rate tariff, wholesale power sale agreements, associated books, records, accounts, related agreements, and limited interconnection facilities.
CPV Cimarron is a Delaware limited liability company that is in the process of developing and constructing a 165.6 megawatt (MW) wind-powered electric project (the Cimarron Project) that it will own and operate. The Cimarron Project is located in Gray County, Kansas. The Cimarron Project will be composed of wind turbine generators and associated facilities and equipment necessary for the interconnection of the Cimarron Project to the transmission grid and the generation and sale of electricity at wholesale. The Cimarron Project will be interconnected with the transmission system owned by Sunflower Electric Power Corp.(Sunflower) and will be within Sunflower's balancing authority area. CPV Cimarron has entered into a twenty year power purchase agreement with the Tennessee Valley Authority (TVA) pursuant to which TVA will purchase all of the power available from the Cimarron Project once the Cimarron Project reaches commercial operation. Prior to the Cimarron Project reaching commercial operation, CPV Cimarron will sell test power into the Southwest Power Pool (SPP) market. CPV Cimarron is an exempt wholesale generator (EWG) and has received Commission authorization to sell electric energy at market-based rates.
CPV Renewable Energy owns 99 percent of the membership interests in CPV Cimarron, and CPV Holding owns the remaining 1 percent of the membership interests in CPV Cimarron. CPV Renewable Energy is in the business of developing renewable energy projects in the United States, and through its affiliates has wind and solar projects under development. CPV Holding is a direct, wholly-owned subsidiary of CPV Renewable Energy. CPV Holding's only business is owning its interest in CPV Cimarron. CPV Renewable Energy and CPV Holding are indirect, wholly owned subsidiaries of Competitive Power Ventures Holdings, LLC (Competitive Power Ventures), which is engaged in electric power development and asset management throughout the United States.
NextEra Cimarron Holdings II is a wholly owned subsidiary of NextEra Cimarron Holdings. NextEra Cimarron Holdings in turn is a wholly-owned, direct subsidiary of ESI Energy, LLC (ESI Energy). ESI Energy is a wholly-owned direct subsidiary of NextEra Energy Resources, LLC (NextEra Resources), which in turn is a wholly-owned indirect subsidiary of NextEra Energy, Inc. (NextEra).
NextEra Resources is the merchant power subsidiary of NextEra. NextEra Resources' subsidiaries currently own and operate merchant generating facilities located in 22 states and Canada with a combined net generating capacity of over 16,000 MW.
According to Applicants, within the Sunflower balancing authority area, the only generation currently owned or controlled by NextEra, NextEra Resources or any of their affiliates is a 112 MW wind generation project (the Gray County Project) owned by Gray County Wind Energy,LLC. Applicants state that the entire output of the Gray County Project is fully committed to Kansas City Power & Light Company (KCP&L) pursuant to a long-term contract. In addition, an indirect subsidiary of NextEra Resources, Ensign Wind, LLC, is constructing a 98.9 MW wind generation facility (the Ensign Project) within the Sunflower balancing authority area which is expected to enter operation later this year. Applicants state that the entire output of the Ensign Project is fully committed to KCP&L pursuant to a long term contract.
Applicants state that currently, CPV Renewable Energy holds 99 percent of the membership interests in CPV Cimarron and CPV Holding will own the remaining 1 percent, which collectively constitutes 100 percent of the direct ownership interests in CPV Cimarron. Applicants' state that at the closing of the Proposed Transaction CPV Renewable Energy and CPV Holding will sell and transfer all of their ownership interest in CPV Cimarron to the NextEra Entities in return for payment of the purchase price amount set forth in the Transaction Agreement. Applicants state that NextEra Cimarron Holdings will acquire 99 percent of the membership interest in CPV Cimarron and NextEra Cimarron Holdings II will acquire the remaining 1 percent such that NextEra Cimarron Holdings will own, directly and indirectly, 100 percent of CPV Cimarron. CPV Renewable Energy and CPV Holdings will cease to have any ownership interests in, or control over, CPV Cimarron.
Applicants state that while consummation of the Proposed Transaction will result in an upstream change in the ownership of CPV Cimarron, CPV Cimarron will continue to own its assets including its FPA-jurisdictional contracts and facilities.
Applicants' state that the Proposed Transaction is consistent with the public interest and will not adversely affect competition, rates, and regulation; nor will it result in cross-subsidization of an associate company or the pledge or encumbrance of utility assets.
Applicants state that the Proposed Transaction will not adversely effect competition in the relevant geographic market for the Proposed Transaction. Applicants state that since the Cimarron Project is CPV Cimarron's sole asset and is located within the Sunflower balancing authority area, the Sunflower balancing authority area is the relevant geographic market for purposes of evaluating the effect of the Proposed Transaction on competition.
With regard to horizontal market power, Applicants state that the Cimarron Project is the only generation asset owned or controlled by CPV Cimarron, and the Gray County Project and the Ensign Project are the only generation assets owned or controlled by the NextEra Entities or their affiliates within the Sunflower balancing authority area. Applicants state that the entire output of all three projects is fully committed under long term contracts to non-affiliated entities. Therefore Applicants state that the Proposed Transaction raises no horizontal market power concerns.
Applicants state that the Proposed Transaction does not raise any vertical market power concerns because CPV Cimarron will not own or control transmission facilities other than the limited interconnection facilities necessary to connect the Cimarron Project to Sunflower's transmission system. Applicants state that the NextEra Entities and their affiliates do not own or control transmission facilities within the Sunflower balancing authority area other than the limited interconnection facilities that connect the Gray County Project and the Ensign Project to the Sunflower's transmission system. Applicants also state that within the Sunflower balancing authority area, neither CPV Cimarron nor the NextEra entities and their affiliates owns or controls intrastate natural gas pipelines, natural gas local distribution facilities, coal transportation facilities or other relevant vertical inputs to electric generation. Applicants state that since the Proposed Transaction does not raise any vertical market power concerns, they do not need to provide a competitive screen analysis with respect to vertical competition.
Applicants state that the Proposed Transaction will have no adverse effect on rates. Applicants contend that the Proposed Transaction will not have any adverse effect on rates because CPV Cimarron will sell power to its customers pursuant to negotiated rates under its market-based rate tariff on file with the Commission. Applicants, also state that they do not have any transmission customers whose rates could be affected by the Proposed transaction.
Applicants state that the Proposed Transaction will not affect the manner or extent to which the Commission, any state, or any other federal agency may regulate the Applicants. Applicants state that following the Proposed Transaction, the Commission will be able to exercise the same regulatory authority over CPV Cimarron that it had prior to the Proposed Transaction.
Applicants state that the Proposed Transaction will not result in cross-subsidization of a non-utility associate company or pledge or encumbrance of utility assets for the benefit of an associate company. Applicants state that the Proposed Transaction does not involve any franchised public utility with captive
customers and therefore falls within one of the safe harbors set forth in the FPA section 203 Supplemental Policy Statement.
In addition, Applicants state that based on facts and circumstances known to it or that are reasonably foreseeable, the transaction will not result in, at the time of the transaction of in the future, cross-subsidization of a non-utility associate company or pledge or encumbrance of utility assets for the benefit of an associate company. Applicants state that the transaction will not result in, now or in the future : (1) any transfers of facilities between a traditional 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 issuances of securities by a traditional 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 pledges or encumbrances of assets of a traditional 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 contracts between a non-utility associate company and a traditional 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.
The filing was noticed on September 18, 2012, with comments, protests, or interventions due on or before October 9, 2012. Tennessee Valley Authority filed a timely motion to intervene. 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. Asection 385.214). Any opposed or untimely filed motion to intervene is governed by the provisions of Rule 214.
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.
The foregoing authorization may result in a change in status. Accordingly, the Applicants are advised that they 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 determinations of cost, or any other matter whatsoever now pending or which may become 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 the upstream ownership of the Applicants' affiliated qualifying facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R. Asection 292.207 (2012) shall be made;
(6) Applicants shall make the appropriate filings under section 205 of the FPA, as necessary, to implement the Proposed Transactions;
(7) Applicants must inform the Commission of any change in circumstances that would reflect a departure from the facts the Commission relied upon in authorizing the Proposed Transactions; and
(8) Applicants shall notify the Commission within 10 days of the date that the disposition of jurisdictional facilities under the Proposed Transactions 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. Asection 375.307. 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. Asection 385.713.
Steve P. Rodgers
Division of Electric Power Regulation - West
16 U.S.C. Asection 824b (2006).
120 FERC As 61,060 (2007).
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. As 31,175, order on reh'g, 111 FERC As 61,413 (2005).
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