FERC approves control change at Red Hills lignite plant

A Federal Energy Regulatory Commission official, under authority delegated by the commission, issued a Jan. 28 letter approval for a PurEnergy I LLC buy of the lignite-fired Red Hills power plant in Mississippi.

On Dec. 28, 2012, Choctaw Generation LP and PurEnergy I LLC submitted an application to FERC under the Federal Power Act requesting authorization for the sale by IPR-GDF SUEZ Generation North America (IPR-GSENA) of all of its interests in Choctaw Generation to PurEnergy. The jurisdictional facilities involved in the transaction include interconnection facilities, the Choctaw Generation’s market-based rate tariff and related agreements, and books and records.

Choctaw Generation is an exempt wholesale generator (EWG) with market-based rate authority. It is the lessee of an approximately 440 MW (net) lignite-fired generation facility located in Ackerman, Miss., within the Tennessee Valley Authority balancing authority area (TVA BAA). Choctaw Generation sells the output of its facility to TVA under a 30-year purchase power and operating agreement.

Choctaw Generation is wholly owned by Choctaw Generation and TPI Choctaw Generation. Choctaw Generation owns a 1% general partnership interest in Choctaw Generation and TPI Choctaw Generation owns a 99% limited partnership interest in Choctaw Generation. In addition, Choctaw Generation is an indirect, wholly owned subsidiary of IPR-GSENA, which, in turn, is an indirect, wholly owned subsidiary of GDF SUEZ SA, a French company.

PurEnergy is owned, according to the applicants, by three individuals, none of whom are involved in the energy industry other than through PurEnergy. PurEnergy, through various subsidiaries, owns interests in, and/or operates, entities that own or lease electric generation facilities, each of which is located within the California Independent System Operator market.

Applicants stated that PurEnergy does not own or operate any electric transmission or distribution facilities, except those limited interconnection facilities associated with their facilities necessary to connect to the transmission grid. Applicants told FERC that the documentation for the transaction has not yet been finalized. They said that consistent with the terms in a Term Sheet, IPR-GSENA will sell all of its equity interests in its wholly owned subsidiaries, Choctaw Generation and TPI Choctaw Generation, to PurEnergy or to wholly owned subsidiaries of PurEnergy. Applicants state that upon consummation of the transaction, Choctaw Generation will become an indirect wholly owned subsidiary of PurEnergy.

The companies stated that the transaction will not result in any combination of electric generating facilities or other jurisdictional facilities in the TVA relevant market, because PurEnergy does not own or control, directly or indirectly, any generating capacity in the TVA BAA.

TVA filed a timely notice of intervention in this proceeding, but raised no issues.

The Red Hills plant was built in 1999-2001 by Bechtel Engineering and Alstom Power, said the plant website. It went on line in 2001 and started commercial generation in 2002. Red Hills is an external bed design fluidized bed boiler that uses numerous ways of capturing heat to increase efficiency. At full load, the plant uses approximately 10,500 tons of locally-mined lignite coal per day.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.