FERC on Aug. 29 approved a July 31 application from Alcoa Power Generating and BAIF U.S. Renewable Power Holdings LLC under Section 203 of the Federal Power Act for BAIF to purchase four hydroelectric facilities (the Tapoco Project) and the accompanying transmission facilities from Alcoa Power.
In addition, as part of the proposed transaction, Alcoa Power intends to convey to the Tennessee Valley Authority certain limited transmission facilities at a substation in order to create a three-way interconnection point among TVA, BAIF U.S. and Alcoa Power.
All the covered transmission facilities are located in Tennessee and North Carolina and are interconnected to the TVA and Duke Energy Carolinas transmission systems. The Tapoco Project totals 351 MW consisting of the following facilities: Calderwood (140.4 MW), Cheoah (118 MW), Chilhowee (52.2 MW) and Santeetlah (40.4 MW).
Alcoa Power is a subsidiary of aluminum maker Alcoa (NYSE:AA) that owns and operates limited generation facilities and limited discrete transmission facilities in various locations throughout the United States. The facilities are used in conjunction with Alcoa Power’s primary focus of providing electric power to aluminum smelters owned in whole or in part by Alcoa.
BAIF U.S. is an indirect subsidiary of Brookfield Americas Infrastructure Fund, which is a limited partnership between affiliates of Brookfield Asset Management Inc. and certain passive private equity investors. Brookfield Asset Management, an Ontario corporation, is a global alternative asset manager focused on property, renewable power, infrastructure assets, and private equity. It currently has approximately $150bn of assets under management. Brookfield Asset Management is a publicly-traded company listed on the Toronto Stock Exchange, the New York Stock Exchange, and the Euronext Amsterdam Exchange. Brookfield Asset Management’s upstream ownership in BAIF U.S. is held through its ownership interest in Brookfield Renewable Energy Partners LP.
Under the proposed transaction, BAIF U.S. will acquire the hydroelectric generation and transmission facilities through its subsidiary, Smoky Mountain Holdings (HoldCo). Applicants state that the plan is for HoldCo to have two subsidiaries in which the assets would be placed: Brookfield Smoky Mountain Hydropower for the generation assets and Smoky Mountain Transmission for the transmission assets. After closing, BAIF U.S. will indirectly own 100% of the Tapoco Project and the Tapoco Transmission facilities.
In addition, as part of the proposed transaction, Alcoa Power intends to convey to TVA certain limited transmission facilities at the South Plant substation in order to create a three-way interconnection point between TVA, Smoky Mountain Transmission and Alcoa Power. Applicants state that this will allow any two parties to access each other’s facilities without using the third party’s facilities.
Applicants told FERC that BAIF U.S. does not own or control generation capacity and is not affiliated with any entity that owns or controls generation capacity, in the TVA or Duke Energy Carolinas balancing authority areas. Applicants also stated that following the BAIF U.S. acquisition of the Tapoco Project and the Tapoco Transmission facilities, BAIF U.S. will own or control only a de minimis amount of generation capacity in the TVA and Duke regions.