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FERC Issues Order Authorizing Disposition of Jurisdictional Facilities re RE Rosamond One LLC et al Under EC14-20(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, Dec. 11 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order: UNITED STATES OF AMERICA 145 FERC s 62,173 FEDERAL ENERGY REGULATORY COMMISSION RE Rosamond One LLC Docket No. EC14-20-000 RE Rosamond Two LLC ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES (Issued December 11, 2013) On November 1, 2013, RE Rosamond One LLC (Rosamond One) and RE Rosamond Two (Rosamond Two) (together, the Rosamond Entities or Applicants) filed an application pursuant to section 203 (a)(1) of the Federal Power Act (FPA) requesting Commission authorization for the disposition of jurisdictional facilities resulting from a transfer of the Rosamond Entities from their upstream owner, Recurrent Energy, LLC (Recurrent), to Gamma Genco CV II LLC (Gamma II) (Proposed Transaction). The jurisdictional facilities associated with the Proposed Transaction consist of the Rosamond Entities' market-based rate schedules, interconnection facilities, and related books and records. Rosamond One and Rosamond Two are Delaware limited liability companies that are each developing a 20 megawatt (MW) alternating current solar generation facility (Facility) located in Kern County, California. The Facilities are located on adjacent sites within the California Independent System Operator Inc. (CAISO) balancing authority area (BAA). The Rosamond Entities are exempt wholesale generators under the Public Utility Holding Company Act of 2005. The Rosamond Entities have each filed an application to sell energy, capacity, and ancillary services at market based rates. Each Facility will be a qualifying small power production facility (QF) and will be interconnected to the transmission system owned by Southern California Edison Company (SCE) and operated by CAISO. The Rosamond Entities anticipate that each Facility will commence commercial operation by December 6, 2013. All of the output from the Rosamond One Facility will be sold to the City of Santa Clara pursuant to a 25-year power purchase agreement (PPA). All of the output from the Rosamond Two Facility will be sold to SCE pursuant to a 20-year PPA. Rosamond One is wholly-owned by RE Rosamond One Holdings LLC. Rosamond Two is wholly-owned by RE Rosamond Two Holdings LLC. RE Rosamond One Holdings LLC and RE Rosamond Two Holdings LLC are wholly-owned by Recurrent Energy Development Holdings, LLC, whose membership interests are, in turn, wholly-owned by Recurrent Energy, LLC (Recurrent). All of Recurrent's regular ownership interests are owned by Sharp US Holding, Inc., a Delaware corporation. Sharp US Holding, Inc. is a wholly-owned subsidiary of Sharp Corporation (Sharp), which is a Japanese multinational corporation. Applicants state that neither Sharp nor Sharp US Holding, Inc. is a public utility under section 201 (e) of the FPA, and neither Sharp nor Sharp US Holding, Inc. controls any generation or transmission facilities in the United States other than the generation and related interconnection facilities indirectly owned by Recurrent. Applicants state that through common indirect ownership or control by Recurrent, the Rosamond Entities are affiliated with the following entities that own generation facilities located within the CAISO BAA: (1) McKenzie Entities - Each of the RE McKenzie 1 LLC, RE McKenzie 2 LLC, RE McKenzie 3 LLC, RE McKenzie 4 LLC, RE McKenzie 5 LLC and RE McKenzie 6 LLC (collectively, the "McKenzie Entities) is a Delaware limited liability company that owns a solar generation facility near Galt, California, within the Sacramento Municipal Utility District (SMUD) BAA. Together the McKenzie Entities control a total of 30 MW of capacity. All of the output of these facilities is sold to SMUD pursuant to long-term PPAs. (2) Bruceville Entities - Each of RE Bruceville 1 LLC, RE Bruceville 2 LLC and RE Bruceville 3 LLC (Bruceville Entities) is a Delaware limited liability company that owns and operates a solar generation facility near Elk Grove, California, within the SMUD BAA. Together the Bruceville Entities control a total of 15 MW of capacity. All of the output from the facilities owned by the Bruceville Entities is sold to SMUD pursuant to long-term PPAs. (3) Dillard Entities - Each of RE Dillard 1 LLC, RE Dillard 2 LLC, RE Dillard 3 LLC and RE Dillard 4 LLC (Dillard Entities) is a Delaware limited liability company that owns and operates a solar generation facility near Sloughhouse, California, within the SMUD BAA. Together the Dillard Entities control a total of 9.4 MW of capacity. All of the output from the facilities owned by the Dillard Entities is sold to SMUD pursuant to long-term PPAs. (4) Kammerer Entities - Each of RE Kammerer 1 LLC, RE Kammerer 2 LLC and RE Kammerer 3 LLC (Kammerer Entities) is a Delaware limited liability corporation that owns and operates a solar generation facility near Elk Grove, California, within the SMUD BAA. Together the Kammerer Entities control a total of 15 MW of capacity. All of the output from the facilities owned by Kammerer Entities is sold to SMUD pursuant to long-term PPAs. In addition, Recurrent controls sites in the CAISO market that have the cumulative potential for approximately 850 MW of generation capacity. Applicants state that Gamma II has two classes of membership interests: Class A interest that are passive, non-controlling tax-equity interests, and Class B interests. The Class B membership interests of Gamma II are wholly-owned by Sun Tap Energy (Pearl) LLC (Sun Tap Energy Pearl). The passive Class A membership interests of Gamma II are wholly-owned by Gran Torino Solar SW, LLC (Gran Torino Solar SW). Sun Tap Energy (Pearl) is a Delaware limited liability company that was formed for the purpose of holding membership interests in Gamma II. Sun Tap Energy (Pearl) is wholly-owned by KKR Solar Holdings Blocker II LLC (KKR Solar Holdings II), a Delaware limited liability company, and is controlled by KKR Solar Holdings II. Applicants state that neither Sun Tap Energy (Pearl) nor KKR Solar Holdings II is a public utility under section 201 (e) of the FPA, and such entities do not control any jurisdictional facilities other than generation that will be directly owned and controlled by Gamma II. KKR Solar Holdings II is wholly-owned by KKR Global Infrastructure Investors L.P. (KKR Infrastructure Fund), an investment fund affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR), and other investment vehicles affiliated with KKR (collectively, the KKR Funds), and is managed by KKR Infrastructure Fund. The KKR Funds indirectly own 95 percent of the active ownership interests in Gamma Genco CV LLC, which indirectly owns all of the membership interests in each of the McKenzie Entities, the Bruceville Entities, the Dillard Entities, and the Kammerer Entities. Applicants state that except for the indirect investments in the McKenzie Entities, the Bruceville Entities, the Dillard Entities, the Kammerer Entities, and the Rosamond Entities, KKR and its affiliates, including KKR Infrastructure Fund, do not own, control or operate generation or transmission in any region, other than the indirect interests in Texas Energy Future Holdings Limited Partnership (Texas Energy Future), and do not own or control potential inputs to electric power generation other than a minority interest in Colonial Pipeline Company (Colonial). Texas Energy Future, a Delaware limited partnership, indirectly owns Oncor Electric Utility Company (Oncor Electric) and Luminant Energy Company LLC (Luminant Energy), each a public utility, as well as certain other subsidiaries that operate within the Electric Reliability Council of Texas (ERCOT). Texas Energy Future is controlled by Texas Energy Future Capital Holdings LLC, which is in turn owned 37.05 percent by investment vehicles affiliated with KKR. The remaining interest in Texas Energy Future Capital Holdings LLC is owned by investment vehicles affiliated with TPG Capital, L.P., the Goldman Sachs Group, Inc. and other financial institutions. Oncor Electric, a Texas corporation, is an electric transmission and distribution utility that delivers power pursuant to cost-based rates approved by the Public Utility Commission of Texas and operates transmission and distribution lines within ERCOT. Luminant Energy, a Texas limited partnership, sells wholesale power primarily in the ERCOT market, and also sells wholesale power at market-based rates outside of ERCOT pursuant to its rate schedule on file with the Commission. Colonial Pipeline Company (Colonial) is indirectly owned (23.44 percent) by KKR and its affiliates. The Colonial pipeline system delivers liquid petroleum products running from supply centers in the Gulf Coast to customers located along the Eastern seaboard of the United States. Gran Torino Solar SW is a Delaware limited liability company that is a direct and wholly-owned subsidiary of Everlasting Resources, LLC (Everlasting), a Delaware limited liability company. Everlasting is a direct and wholly-owned subsidiary of Google Inc. (Google), a Delaware corporation. Gran Torino Solar SW does not own, control or operate generation or transmission in any region, other than a passive investment interest, and it is not affiliated with entities that own or control transmission facilities or potential inputs to electric power production. Gran Torino Solar SW is affiliated with Google Energy LLC (Google Energy), a Delaware limited liability company and wholly-owned subsidiary of Google. Google Energy is a power marketer authorized to sell energy, capacity, and ancillary services at market-based rates. Pursuant to long-term power purchase agreements, Google Energy controls the output of two generation facilities: (1) a 114 MW facility located in the Midcontinent Independent System Operator BAA, and (2) a 100.8 MW facility located in the Southwest Power Pool BAA. Gran Torino Solar SW also is affiliated with Danke Schoen Project LLC (Danke Schoen), a Delaware limited liability company and wholly-owned subsidiary of Google. Danke Schoen has a minority (28.081 percent), indirect upstream ownership interest in three project companies that own the facilities (Ivanpah I, Ivanpah II and Ivanpah III) comprising the approximately 395 MW total Ivanpah Solar Electric Generating System currently under development and located in the CAISO BAA (the Ivanpah Project). Each of the three Ivanpah Project companies is an EWG with market-based rate authority. All of the power produced by the Ivanpah Project will be sold under long-term power purchase agreements with SCE and the Pacific Gas and Electric Company. According to the application, all of the membership interests in the Applicants will be transferred to Gamma II at closing. As a result of the Proposed Transaction, the entities acquired by Gamma II will no longer be affiliated with Recurrent or any of its affiliates, except for the QFs owned by Gamma Genco CV LLC (i.e., the McKenzie Entities, the Bruceville Entities, the Dillard Entities, and the Kammerer Entities). Applicants state that the Proposed Transaction is consistent with the public interest and will not adversely affect competition, rates or regulation. Applicants state that the Proposed Transaction will have no adverse effect on competition in the CAISO BAA, which is the relevant market. Applicants state that other than KKR's current indirect ownership of 95 percent of the membership interests in Gamma Genco CV LLC, and Gran Torino Solar SW's affiliation with a Google subsidiary that holds an indirect upstream minority interest in the Ivanpah Project, none of Sun Tap Energy (Pearl), Gran Torino Solar SW, or any of their affiliates owns (other than passive, non-controlling interests) or controls any generating capacity in or adjacent to the CAISO BAA. Applicants state that taking a conservative approach that ignores the control transferred to purchasers under effective PPAs, the combined generating capacity owned and controlled by the Rosamond Entities and their affiliates in the CAISO BAA is approximately 79 MW. Applicants state that the Rosamond Entities also are affiliated with 84 MW of imported power located within the SMUD BAA. Accordingly, Applicants state that the Rosamond Entities' affiliated capacity represents less than one percent of uncommitted generating capacity of uncommitted generating capacity in the CAISO BAA. Applicants therefore state that the Proposed Transaction does not raise any horizontal market power concerns. Applicants also state that the Proposed Transaction does not raise any vertical market power concerns because none of Applicants, Sun Tap Energy (Pearl), Gran Torino, or any of their affiliates, directly or indirectly, own or control transmission facilities in or adjacent to the CAISO market other than the limited interconnection facilities necessary to connect the generation facilities to the transmission grid. Applicants state that except for it's affiliation with the Colonial pipeline and sites for generation development, none of Applicants, Sun Tap Energy (Pearl), Gran Torino, or any of their affiliates, directly or indirectly, own or control inputs to electric power production. Applicants state that the Proposed Transaction will not have an adverse effect on any wholesale rates for electric power. Applicants state that the Rosamond Entities will continue to make sales of electric energy at market-based rates. The Proposed Transaction does not involve transmission rates or transmission customers. Therefore, Applicants conclude that the Proposed Transaction will have no adverse effect on rates for jurisdictional services. Applicants state that the Proposed Transaction will not impair the ability of the Commission or any state regulatory authority to regulate the Rosamond Entities or any of their affiliates. After the Proposed Transaction is consummated, the Commission will be able to exercise the same jurisdiction that it currently exercises over the Rosamond Entities and their facilities. Applicants state that the Proposed Transaction will have no effect on state commission regulation. Applicants state that the Proposed Transaction will not result in cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company. Applicants assert 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. Applicants more specifically state that the Proposed Transaction does not involve a franchised public utility with captive customers. Additionally, Applicants verify 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 November 4, 2013, with comments, protests or interventions due on or before November 22, 2013. 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. section 385.214). 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 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 Proposed 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, 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 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) 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 Applicant's affiliated Qualifying Facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R. section 292.207 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. section 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. section 385.713. Steve P. Rodgers Director Division of Electric Power Regulation - West TNS 18DejucosGrace-131212-30FurigayJane-4575140 30FurigayJane (c) 2013 Targeted News Service |