The Federal Energy Regulatory Commission on Oct. 8 signed off on an Aug. 29 application from Niagara Generation LLC for approval of the sale of Niagara Generation and its 53-MW power plant to Sterling Energy Group.
Under the approved deal, USRG Finance Co. LLC will sell and Sterling Energy Group will purchase 100% of the ownership interests in Niagara Generation. Niagara Generation owns and operates an approximately 53-MW facility located in Niagara Falls, N.Y. It is interconnected with the transmission system controlled by New York Independent System Operator (NYISO). Niagara Generation is an exempt wholesale generator (EWG) and authorized to sell electric energy, capacity and ancillary services at market-based rates.
Sterling is an Indiana corporation privately owned by shareholders. It is an energy company with operations in power generation and oil and gas production and transmission. Sterling is held by a group of individual private investors and entities, most of whom hold less than a 5% ownership interest.
Crawfordsville Energy is a direct wholly-owned subsidiary of Sterling, FERC noted. Crawfordsville Energy holds a purchase contract with the city of Crawfordsville, Ind., for the acquisition of a 25-MW power plant currently owned and operated by Crawfordsville Electric Light & Power. Crawfordsville Energy expects to close on this transaction by Dec. 31, 2013. Crawfordsville is an EWG but does not yet own or control any generation assets.
With respect to competition, Niagara Generation stated that the transfer of an approximately 53-MW facility in the NYISO market (which is currently not operating) represents approximately 0.13% of the NYISO market, the relevant market.
Parties also seeking approval of this deal at New York PSC
Niagara Generation, USRG Finance and Sterling had also filed a joint request with the New York State Public Service Commission on Sept. 3 for approval of this deal. Niagara Generation owns and operates Niagara Generation Facility which is an approximately 53 MW facility that can burn bituminous coal, petroleum coke, biomass and tire-derived fuel. Petitioners asked for expedited action on this petition so that this transaction may close on or before Nov. 30, 2013.
The facility was originally constructed as a coal-fired, fluidized bed cogen supplying both electricity and steam. Electricity from the facility was originally sold to Niagara Mohawk Power (NiMo) under a long-term power purchase agreement that was subsequently terminated as part of NiMo’s restructuring process. Thereafter, the facility operated as a merchant supplier of electric power in the wholesale markets administered by NYISO.
In April 2002, the commission authorized WPS Power Development to acquire the facility from Central Hudson Energy Services. In January 2007, the commission authorized Niagara Generation to acquire all of WPS’s ownership interest in the facility and to continue to operate the facility as a wholesale supplier of electric power under lightened regulation.
After its acquisition of the facility, USRG Finance made substantial investments designed to permit the facility to be co-fired using biomass and obtained a contract from the New York State Energy Research and Development Authority under the Main Tier of the commission’s Renewable Portfolio Standard program.
“Unfortunately, the low level of the payments received under that agreement and the substantial decline in wholesale market prices occurring in recent years have made operation of the Facility uneconomic,” said the Sept. 3 application. “As a result, Niagara Generation informed the Commission by letter dated February 7, 2013 of its intention to place the Facility into inactive or mothballed status effective May 9, 2013. The Facility ceased operations on that date and has remained in mothballed status at all times thereafter.”