FERC approves sale of 507-MW gas plant in California to AltaGas

The Federal Energy Regulatory Commission on May 13 signed off on the sale of a 507-MW, gas-fired power plant in California by Blythe Energy LLC to AltaGas Power Holdings (U.S.) Inc.

On April 2, Blythe Energy, and AltaGas Power Holdings (U.S.) filed an application under the Federal Power Act requesting authorization for the acquisition and disposition of jurisdictional facilities in connection with AltaGas indirectly acquiring 100% of the interests of Blythe from LS Power Equity Partners II PIE LP; LSP Blythe Blocker II SP LLC; LS Power Partners II LP; and LS Power Equity Partners II LP.

The FERC jurisdictional facilities affected by the transaction include generator interconnection facilities associated with Blythe’s generating facilities, Blythe’s market-based rate tariff, and contracts under Blythe’s market based-rate tariff. Blythe is an exempt wholesale generator witch FERC-granted market-based rate authority.

Blythe owns and operates a combined-cycle, natural gas-fired facility with a capacity of about 
507 MW near Blythe, Calif., and a 67-mile, 230-kV interconnection line extending from its power facility to the transmission grid controlled by the California Independent System Operator (CAISO). The output of Blythe’s generating facility is fully committed under a long-term tolling agreement with a non-affiliate, Southern California Edison (SCE).

Blythe is an indirect subsidiary of LS Power Development LLC, which develops, owns, and operates independent power projects in the United States.

AltaGas is an indirect wholly owned subsidiary of Canada’s AltaGas Ltd. (TSX: ALA). AltaGas Ltd. is an energy infrastructure business that directly, and indirectly through its subsidiaries, focuses on natural gas and power assets, and regulated utilities, primarily located in Canada, but with some generating assets in the Progress Energy-Carolinas balancing authority area (BAA), Midcontinent Independent System Operator BAA, and Public Service Co. of Colorado BAA. AltaGas is affiliated with power generation projects under various stages of development across the western and midwestern U.S. However, neither AltaGas nor its affiliates own or control any operational generation facilities in the CAISO BAA, or in any first-tier market, the companies told FERC.

AltaGas has been shooting to close on the deal this quarter

AltaGas said March 15 in announcing this deal that it hopes to close this US$515m purchase during the second quarter. It noted that Blythe is contracted under a power purchase agreement (PPA) through to July 2020 with Edison International (NYSE: EIX) subsidiary SCE. Contract provisions match PPA revenues to all major plant costs, AltaGas said in a statement.

The gas plant in Blythe, Calif., is run under an operating and maintenance agreement with a NextEra Energy (NYSE: NEE) subsidiary. NextEra commissioned the plant in 2003.

Blythe employs Siemens technology and has a low base load heat rate in the range of 7,000 to 7,500 Btu/kWh, low emissions, responsive start times and flexible ramp rates, AltaGas said.

“The acquisition of Blythe is an important addition to our power business,” said AltaGas Chairman and CEO David Cornhill at the time. “The power purchase agreement provides stable earnings and cash flow and with the infrastructure in place today, the facility is well positioned to access two premium power markets in California and Arizona in the future. The addition of natural gas-fired power generation to our energy infrastructure portfolio in the US provides another platform for growth to meet the increasing demand for clean sources of energy.”

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.