FERC approves Wisconsin Public Service buy of Fox gas plant

The Federal Energy Regulatory Commission on Jan. 29 signed off on the plan by Wisconsin Public Service (WPSC) to buy the gas-fired Fox Energy Center power plant.

On Dec. 28, 2012, WPSC, Fox Energy Co. LLC (Fox Energy), Fox Energy OP LP (Fox OP) and Fox River Power LLC (Fox River) filed a joint application requesting commission authorization for WPSC to purchase and for Fox OP and Fox River to sell 100% of the membership interests in Fox Energy, the owner of the Fox Energy Center. The jurisdictional facilities consist of interconnection facilities, market-based rate tariffs, and associated contracts, books and records.

Fox Energy is a single asset company that engages in the production and sale of electricity from the Fox plant. Fox Energy sells this power under market-based rates and has no native load customers. Fox Energy’s principal customer is WPSC, which purchases approximately 500 MW and associated energy from the Fox plant and supplies the natural gas used by the plant to generate that amount of electric power. Fox Energy sells the energy equivalent of approximately 50 MW of the Fox plant’s output, related to the plant’s duct burning capability, in the Midwest Independent Transmission System Operator (MISO) organized markets.

Fox OP is owned by Aircraft Services Corp., which has a 1% general partnership interest, and General Electric Credit Corp. of Tennessee, which has a 99% limited partnership in Fox OP. Both of Fox OP’s owners are wholly-owned, indirect subsidiaries of the General Electric (NYSE: GE).

Fox River is a wholly-owned subsidiary of Tyr Energy, which in turn is owned by ITOCHU International, which holds a 20% interest, and I-Power Investment, which holds an 80% interest. ITOCHU International and I-Power Investment are wholly-owned subsidiaries of Japan’s ITOCHU Corp.

WPSC owns approximately 2,240 MW of summer seasonal capacity, and also purchases approximately 930 MW of summer seasonal capacity under long-term contracts which include the 500 MW purchase from the Fox plant. WPSC is a wholly-owned subsidiary of Integrys Energy Group (NYSE: TEG), which is a diversified energy holding company with both electric and gas distribution utility subsidiaries.

The Fox plant is a gas-fired combined-cycle facility with a summer rating of about 548 MW and a winter rating of around 638 MW. Based on summer conditions, the facility can produce about 500 MW (net) in combined-cycle operation, with an additional 50 MW of peaking capacity available with duct firing. WPSC acts as the scheduling agent to bid the energy from the Fox plant’s base capacity and the duct burners into the MISO market, and to settle all payments and charges with MISO.

Immediately after closing of this transaction, Fox Energy through an internal reorganization will be merged with and into WPSC, which will become the direct owner and operator of the Fox plant.

Wisconsin commission case for this transaction is ongoing

The Wisconsin Public Service Commission staff wrote a Jan. 11 confidential briefing memo for the commission that doesn’t take any particular strong position on whether WPS should be allowed to buy the Fox Energy Center. A heavily-redacted version of the memo was filed on Jan. 16 with the commission in the docket for this case. The case docket remained open as of Jan. 29.

On Oct. 12, 2012, Wisconsin Public Service filed an application for a Certificate of Authority to purchase Fox Energy. Under a Purchase and Sale Agreement (PSA) among the relevant entities, WPSC will pay $390m for Fox ($657/kW) and $50m for the early termination of an existing tolling agreement between WPSC and Fox by which WPSC currently purchases most of the Fox Energy Center’s output.

The Fox Energy Center is comprised of two General Electric (GE) model 7FB.01 combustion turbine generators. Calpine originally developed the Fox Energy Center under a Certificate of Public Convenience and Necessity (CPCN), which the commission issued in November 2002. Thereafter, Fox bought out and terminated the leasehold interest in the Fox Energy Center from Calpine, following which all of the assets and rights were returned/sold to Fox in October 2006.

Integrys Energy Group said in October 2012 that subsidiary WPSC had agreed to buy this plant. It said at the time that this transaction was expected to close on or around April 1, 2013, following various regulatory approvals.

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.