CPV Towantic change in upstream ownership made prior to the 785 MW combined cycle natural gas-fired electric generating facility begins commercial operation. The facility is expected to begin generating electricity in the second quarter of 2018. When complete, CPV Towantic will interconnect to The Connecticut Light and Power Company’s transmission system, and dispatch power into the ISO-New England control area.
On August 15, 2017, CPV Towantic, LLC and its enterprise of joint owners (the “Applicants”) submitted an application at FERC for authorization under Section 203(a)(1) of the Federal Power Act to transfer 10.8% of its upstream ownership to the Archmore International Infrastructure Fund II (A), (B) and (C) (“The Archmore Funds”). CPV Towantic pursuant to Order No. 669 is also requesting the Commission establish a shortened comment period of 21 days and issue an order authorizing the transaction on or before September 20, 2017. The Commission just reached a quorum with the confirmed and sworn in appointments of Acting Chairman Neil Chatterjee and Commissioner Robert F. Powelson. September 20, 2017, is FERC’s first scheduled open meeting since President Trump took the oath of office. The Commission is suffering from an uncanny-never seen before nor experienced backlog and CPV Towantic wants to leap frog to the top of Commission Staff’s list. CPV Towantic, LLC Application, Docket No. EC17-158-000. The Applicant’s position is not unique, countless energy projects and transactions have been on hold without a Commission quorum. Impacts are evident across the industry in both ISO/RTO and bilateral markets.
CPV Towantic Holding Company, LLC owns a 51% interest in CPV Towantic and GE Towantic Holdings, LLC owns 49% of such. After the transaction, The Archmore Funds will own a 22.03% interest in GE Towantic Holdings, thus a 10.8% indirect ownership interest in the CPV Towantic facility. The Archmore Funds are managed by UBS Asset Management Funds Ltd. (“UBS AMF”). UBS AMF owns and controls another electric generating facility in Connecticut – Waterside Power, LLC (“Waterside Power”). Waterside Power owns and operates a 69.8 MW oil-fired peaking facility in Stamford, CT. “All of the output of the Waterside Facility is sold in the wholesale markets administered by ISO-NE under a Contract for Differences with [The] Connecticut Light & Power Company that extends through May 31, 2024.” Id.
FERC is charged to review Section 203 applications under a public interest standard. Order No. 642 and the Commission’s Merger Policy Statement, require that Applicants demonstrate the proposed transaction’s effect on (1) competition; (2) rates; and (3) regulation; is consistent with the public interest. Revised Filing Requirements Under Part 33 of the Commission’s Regulations, Order No 642, FERC Stats. & Regs. ¶ 31,111 (2000), order on reh’g, Order No. 642-A, 94 FERC ¶ 61,289 (2001); Merger Policy Statement, FERC Stats. & Regs. ¶ 31,044. To satisfy the competition prong, Applicants must provide horizontal and vertical market analyses, which establish the proposed transaction is consistent with the public interest, unless as described in Appendix A to the Merger Policy Statement and Parts 33.3 and 33.4 of the Commission’s regulations, CPV Towantic “[a]ffirmatively demonstrates [(as it attempts to here)] that the merging entities do not currently conduct business in the same geographic markets or that the extent of the business transactions in the same geographic markets is de minimis [.]” 18 C.F.R. Sec. 33.3 (a)(2)(i). To satisfy the rates prong, Applicants must demonstrate that any impact on wholesale transmission service rates or on the rates charged to long-term full requirements customers is consistent with the public interest. In order to satisfy the regulation prong, Applicants must establish the transaction’s approval will not result in the creation of a regulatory gap between federal and state jurisdiction and that the facility will continue to be subject to the jurisdiction and authority of its current regulators. Lastly, CPV Towantic is required to demonstrate the proposed transaction “does not pose a risk of cross-subsidization and does not pledge or otherwise encumber utility assets.” CPV Towantic’s Application LLC Application at 17. An Applicant must satisfy this requirement pursuant Section 203(a)(4), unless Applicant’s proposed transaction falls under one of Order No. 669’s safe harbor exemptions such that the Applicant shows: (1) that a franchised public utility with captive customers is not involved (what CPV relies on here); (2) the transaction is not subject to state commission jurisdiction; or (3) the transaction is one where the public utility only transacts with non-affiliated entities.
FERC may review this Application swiftly and find it consistent with the public interest because despite the looming back-log and the new Commissioners just beginning their tenure, the Commission’s Secretary has issued a Notice providing that all Comments related to CPV Towantic’s Application are due on or before September 5, 2017 at 5PM. Such could be a sign that Acting Chairman Chatterjee, while leading the agency, may move pragmatically and expediently to resolve uncontested matters quickly.