FERC approves ArcLight buy of 50% of CPV Shore power project

The Federal Energy Regulatory Commission on July 3 approved a purchase by ArcLight Capital Partners LLC of 50% of the in-development CPV Shore power plant in New Jersey.

On May 31, CPV Shore LLC applied with FERC for authorization for the disposition of jurisdictional facilities resulting from the acquisition of 50% of the indirect equity interests in CPV Shore by a special-purpose entity, which will be a wholly owned direct or indirect subsidiary of the ArcLight Energy Partners Fund V LP (Fund V). The jurisdictional facilities associated with the transaction consist of CPV Shore’s market-based rate tariff and related books and records.

The purchase will be a newly formed special-purpose direct or indirect subsidiary of Fund V. Fund V is managed by ArcLight Capital Partners LLC, which also manages and controls various other funds. Each of those funds is a private equity investment fund with a focus on the independent power sector. The funds are affiliated with ArcLight Energy Marketing LLC, a marketer of electric power and natural gas, which does not own or control any electric facilities in the United States.

The ArcLight funds are affiliated in the PJM Interconnection market with:

  • Panther Creek Power Operating LLC, which is the lessee and operator of a 94-MW (nameplate) qualifying facility (QF). The Panther Creek facility is interconnected to the transmission system owned by Metropolitan Edison.
  • Scrubgrass Generating Co. LP, which owns and operates an approximately 94.7-MW (nameplate) small power production facility, which is interconnected to the transmission system owned by Pennsylvania Electric (Penelec). Scrubgrass sells its facility’s energy and capacity to Penelec under a long-term power purchase agreement.
  • Westwood Generation LLC, which owns a 36-MW (nameplate) generation facility.

Purchase is from developer Competitive Power Ventures

Competitive Power Ventures Holdings LLC (CPV), through its subsidiaries, develops, owns, and manages natural gas-fired and renewable generation facilities throughout the United States. Warburg Pincus Private Equity IX LP and Warburg Pincus Equity Partners Liquidating Trust have a collective ownership interest of 95.2% of the voting shares in CPV. Individuals hold the remaining outstanding ownership interests in CPV.

CPV Shore, an indirect wholly owned subsidiary of CPV, is developing and will own and operate a 725 MW (nameplate), gas-fired combined-cycle facility (CPV Shore Facility) that will be interconnected to transmission facilities owned by Jersey Central Power & Light within the PJM footprint. The plant is expected to be in-service in 2015.

CPV has only one affiliate in the PJM market, CPV Maryland LLC. CPV holds a 50% indirect ownership interest in CPV Maryland. CPV Maryland is developing and will own and operate a 725 MW (nameplate), gas-fired combined-cycle facility to be located in Charles County, Md. The CPV Maryland Facility will be interconnected to transmission facilities owned by Potomac Electric Power.

In this now-approved transaction, membership interests in CPV Shore will be indirectly acquired by the ArcLight purchaser through an acquisition of 50% of the Class A membership interests in an intermediate special-purpose holding company (CPV Shore Holdings). CPV Shore Holdings holds the membership interests in CPV Shore and is engaged in no other business. CPV will retain all of the remaining Class A membership interests together with all of the management rights in CPV Shore. As a result, the ArcLight purchaser will indirectly hold 50% of the interests in CPV Shore, and CPV Shore will become an indirect partially owned subsidiary of Fund V. CPV will remain the sole managing entity of CPV Shore and retain the day-to-day rights to manage CPV Shore.

With respect to competition, all of CPV Shore’s electric generating capacity is committed to be sold into the PJM wholesale markets. Applicant and its affiliates will own or control 1,450 MW of capacity in the PJM market, upon completion of both the CPV Shore and CPV Maryland facilities. In addition, the purchaser and its affiliates currently own or control 225 MW in the PJM market. Following the transaction, applicant will be affiliated with a total combined capacity of 1,675 MW (1,450 MW plus 225 MW), which represents 0.9% of the total installed capacity in the PJM market of 181,896 MW. Thus, according to applicant, the transaction will not raise any horizontal market power concerns.

CPV Shore said in its May 31 application that it participated in PJM’s 2012 forward capacity auction (Reliability Pricing Model or “RPM”) and cleared 661 MW of capacity for delivery in the 2015/2016 delivery year. In PJM’s 2013 auction, CPV Shore cleared its capacity for delivery in the 2016/17 delivery year. CPV Shore also participated in a New Jersey solicitation conducted in accordance with the requirements of the New Jersey Long-Term Capacity Pilot Program and was selected, along with two other (unaffiliated) entities, to enter into Standard Offer Capacity Agreements with four Electric Distribution Companies with a term of 15 years.

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.