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FERC Issues Order Authorizing Disposition of Jurisdictional Facilities Re Broken Bow Wind II, LLC Under EC14-144(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, Nov. 3 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order: Broken Bow Wind II, LLC Docket No. EC14-144-000 ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES (Issued November 3, 2014) On September 15, 2014, Broken Bow Wind II, LLC (Applicant) filed an application (Application) pursuant to section 203(a)(1)(A) of the Federal Power Act (FPA) requesting Commission authorization for the sale of 50 percent of the membership interests in Broken Bow II Wind Holdings LLC (Broken Bow Holdings) to Consolidated Edison Development, Inc. (ConEdison Development), which will transfer the membership interests to ConEdison Newco (ConEdison Newco, together with ConEdison Development, Buyer) (Transaction). According to Applicant, the jurisdictional facilities involved in the Transaction are Applicant's market-based rate tariff, interconnection facilities, and associated contracts, books, and records. Applicant is a wholly-owned indirect subsidiary of Sempra Energy, a public utility holding company based in San Diego, California that, through subsidiaries and affiliates, provides electric, natural gas, and energy-related products and services to customers. Applicant is both a qualifying small production facility (QF) and an EWG, authorized by the Commission to sell energy, capacity and ancillary services at market-based rates. Applicant owns and operates a 75 megawatt (MW) wind-powered generation facility (Facility) that is interconnected to a tie line owned by the Nebraska Public Power District (NPPD) in the Southwest Pool, Inc. (SPP), the relevant market. Applicant will sell the full output of the Facility to NPPD, an unaffiliated third party, pursuant to a long-term power purchase agreement (PPA). ConEdison Newco will be a wholly owned subsidiary of ConEdison Development, which is an indirect wholly-owned subsidiary of Consolidated Edison, Inc. (CEI). According to the Application, no ConEdison Development affiliates own or control generation capacity in the SPP market or in any markets first-tier to SPP. Broken Bow II Wind Energy, LLC is a wholly owned subsidiary of Sempre Energy. Under the Transaction, Buyer will acquire from Broken Bow II Wind Energy, LLC 50 percent of the membership interests of Broken Bow Holdings, which directly owns 100 percent of the ownership interests in Applicant. As a result of the Transaction, Applicant will be jointly owned in equal shares indirectly by subsidiaries of Sempra Energy and ConEdison Development. Applicant states that the Transaction is consistent with the public interest and will have no adverse effect on competition, rates, or regulation, nor will it result in any cross-subsidization or the pledge or encumbrance of utility assets to any associated company. With respect to horizontal market power, Applicant states that the Transaction will not change the market share of generating capacity that Sempra Energy holds in the relevant market of SPP. Applicant states that the transfer of 50 percent of the membership interests in Applicant to Buyer will have a deconcentrating effect on the relevant market, because ConEdison Development affiliates currently do not own or control generation in the SPP market. In addition, because no ConEdison Development affiliates own or control generation capacity in the SPP market, there is no market overlap. Moreover, given that the capacity of the Facility is committed under the PPA with the NPPD, the Transaction will not change the amount of uncommitted capacity that ConEdison Development affiliates own or control in the SPP market. According to Applicant, there are no horizontal market power concerns raised as a result of the Transaction. With regard to vertical market power, Applicant states that the Transaction will not cause Applicant or any ConEdison Development affiliate to gain the ability or incentive to affect prices or outputs in the downstream electricity markets or to discourage entry by new generators. Applicant adds that the Transaction will not involve any input to electricity production owned by any party or affiliate. According to Applicant, there are no vertical market power concerns raised as a result of the Transaction. With regard to rates, Applicant adds that the Transaction will have no effect on its wholesale rates because Applicant will continue to sell the energy output from its facility to NPPD pursuant to a long-term PPA, which will not be affected by the Transaction and such sales will be made under market-based rates. Applicant states that neither it nor any ConEdison Development affiliates serve transmission customers in the SPP market, so the Transaction will not have any effect on rates for transmission service. According to Applicant, the Transaction will have no adverse effect on wholesale ratepayers or transmission customers. With regard to regulation, Applicant states that the Transaction will not affect the manner or extent to which the Commission, any state, or any other federal agency may regulate it. Applicant will maintain its market-based rate tariff on file with the Commission and will continue to operate following the Transaction under the tariff without change. Applicant adds that it has no retail customers, thus, the authority or ability of state regulators will not be adversely affected. According to Applicant, the Transaction does not impair federal or state jurisdiction. Applicant states that the Transaction will not result in the cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company. Applicant states that, because the Transaction does not involve a franchised public utility with captive customers, there is no potential for harm to customers and the Transaction does not raise any cross-subsidization concerns. Applicant adds that it is a merchant generator that sells the full output of the Facility to an unaffiliated customer, NPPD, pursuant to Applicant's market-based rates, and the only business of Buyer will be that of owning membership interests, directly or indirectly in Applicant. In addition, Applicant represents 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 or in the future: (1) any transfer 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 issuance 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 pledge or encumbrance 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 contract 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 16, 2014, with comments, protests or interventions due on or before October 6, 2014. None was 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) (2014). Any opposed or untimely filed motion to intervene is governed by the provision of Rule 214. 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, Applicant is advised that it must comply with the requirements of Order No. 652. In addition, Applicant shall make appropriate filings under section 205 of the FPA, to implement the Transaction. 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 the 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. After consideration, it is concluded that the Transaction is consistent with the public interest and is hereby authorized, subject to the following conditions: (1) The Transaction is authorized upon the terms and conditions described in this Order 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 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 (2014) shall be made; (6) Applicant shall make appropriate filings under section 205 of the FPA, as necessary, to implement the Transaction; (7) Applicant must inform the Commission of any change in circumstances that would reflect a departure from the facts the Commission relied upon in authorizing the Transaction; and (8) Applicant shall notify the Commission within 10 days of the date that the Transaction 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 (2014). 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 (2014). Steve P. Rodgers Director, Division of Electric Power Regulation - West TNS 18EstebanLiz-141104-30FurigayJane-4922587 30FurigayJane (c) 2014 Targeted News Service |