Tenaska Washington Partners LP and Puget Sound Energy Inc. (PSE) are asking the Federal Energy Regulatory Commission for a quick approval on a PGE deal to buy a 271-MW, gas-fired power plant from Tenaska.
Under sections 203(a)(1)(B) and (D) of the Federal Power Act, Tenaska Washington Partners and PSE on Oct. 4 requested prior authorization for PSE to acquire from Tenaska Washington the Tenaska Ferndale Cogeneration Station and associated interconnection equipment located in Whatcom County, Wash. Tenaska Washington owns and operates the facility, a topping cycle cogenerator with a capacity of about 271 MW (summer rating). The facility is interconnected to PSE’s transmission system. Until Dec. 31, 2011, the full output of the facility was sold to PSE under a power purchase agreement (PPA) dating from 1991.
The plant, which began operation in 1994, consists of two GE 7EA combustion turbines, two ABB-CE heat recovery steam generators, and a single GE steam turbine. It has a 280 MW nominal net winter rating and a 245 MW nominal net summer rating and a heat rate of 8,382 BTU/kWh (net annual average).
Tenaska Washington is a Washington limited partnership that is owned by two general partners: Tenaska Washington I LP, which is the sole managing general partner and has a 73.5% general and limited partnership interest; and EMPECO IV Inc., which has a 26.5% general partnership interest, and no managing general partner or equivalent rights or interests.
Plant little used since the 2011 end of a power contract
“Since the expiration of the PPA, Tenaska Washington has not been selling power to any other counterparty and the Facility was dispatched by PSE only twice under special non-market driven situations,” the parties told FERC. “After the Transaction, PSE will own and operate the Facility and control its entire output, as it did prior to the expiration of the PPA. PSE is a resource-deficient integrated utility and the Transaction will allow PSE to acquire a combined cycle facility for a very competitive price compared to the cost of building a new one. In addition, PSE will rely on the Facility to provide redispatch service under the Agreement for a Temporary Operational Support Program (Redispatch Agreement) among PSE, the Bonneville Power Administration (BPA) and the City of Seattle. The redispatch service is necessary to alleviate transmission congestion affecting the reliable operation of the Federal Columbia River Transmission System (FCRTS) operated by BPA that will allow BPA to avoid curtailing transmission service on the FCRTS.”
This transaction will have no adverse effect on competition, Tenaska and PSE told the commission. A Competitive Analysis Screen prepared by Reed Consulting shows that, even after completion of the transaction, PSE continues to be resource-deficient and has no available economic capacity in nine out of ten study periods. The applicants requested expedited action on this application. They intend to close the transaction by early November 2012 upon receipt of commission authorization, Hart-Scott-Rodino Act approval, and a determination from the Washington Utilities and Transportation Commission that the facility meets Washington State’s greenhouse gas emissions performance standards (EPS).
PSE wants to acquire the facility before a lower EPS standard is put in place by Washington State’s Department of Commerce. While the facility currently meets the 1,100 lb/MWh standard, it would not meet the lower EPS. Consequently the transaction would not close under the acquisition agreement. “While PSE has long supported sound public policy to reduce greenhouse gas emissions, PSE is also committed to providing its customers with safe, reliable and affordable electricity,” the application said. “Given the imminent rule change PSE seeks expedited treatment to acquire the Facility.”
PSE is a wholly-owned subsidiary of Puget Energy Inc. and is an investor-owned utility that provides retail electric and natural gas services in a service territory covering approximately 6,000 square miles in the Puget Sound region of the state of Washington. As the result of a transaction completed in February 2009, Puget Energy is indirectly owned by a consortium of investors consisting of Macquarie Infrastructure Partners, Macquarie-FSS Infrastructure Trust, Macquarie Capital Group Limited, Macquarie Infrastructure Partners II, Canada Pension Plan Investment Board, British Columbia Investment Management Corp. and Alberta Investment Management.
The 3,260 MW of generation currently owned or controlled by PSE includes the capability of four owned hydro projects totaling 192 MW, eight simple cycle combustion turbines plus one diesel generator totaling 615 MW, all or portions of five combined cycle gas-fired plants totaling 1,003 MW, portions of four coal units at the Colstrip power plant in Montana totaling 677 MW, and three wind facilities totaling 773 MW. PSE also has control of an additional 739 MW of hydroelectric capacity through its long-term Mid-Columbia purchase contracts.