FERC approves sale of hydro plants by FirstEnergy to LS Power

The Federal Energy Regulatory Commission, in its Nov. 1 approval of the sale by FirstEnergy (NYSE: FE) to LS Power Development LLC of several hydroelectric facilities, had to mollify the Seneca Nation over the largest of those facilities, which the nation claims for itself.

On Sept. 4, the companies filed an application for the approval of the transfer to the LS Power companies of certain commission-licensed hydroelectric generation facilities with an aggregate generating capacity of approximately 526 MW.

Each of the LS purchasing companies is an indirect wholly-owned subsidiary of LS Power Development, a developer, owner and operator of independent power projects. The facilities are all located within the control area of the PJM Interconnection.

They are the:

  • 451 MW Seneca Pumped Storage Station;
  • the 52 MW Lake Lynn Hydroelectric Station;
  • the Allegheny Lock and Dam Unit Nos. 5 and 6 with a combined capacity of 14 MW;
  • the 2.4 MW Millville Project;
  • the Dam Nos. 4 and 5 Hydro Stations with a combined capacity of 2.9 MW;
  • the Luray and Newport Projects with a combined capacity of approximately 2.4 MW; and
  • the Shenandoah and Warren Projects with a combined capacity of 1.7 MW.

“We find that the Proposed Transaction does not raise horizontal market power concerns,” FERC wrote. “Applicants have demonstrated that the Proposed Transaction will have a de minimis impact on the amount of generation held by the LS Purchasers and their affiliated companies within the relevant market, PJM. Further, Applicants have shown that the Proposed Transaction will actually decrease market concentration in the PJM market because the market share of FirstEnergy and its affiliates is larger than that of the LS Purchasers and their affiliates, thus the HHI change is slightly negative. We note that no party raised horizontal market power issues in this proceeding.”

There was an objection from the Seneca Nation, which claims control of the Seneca pumped storage facility and has plans to seek its own FERC license for this facility. The nation’s objection was not so much to the approval of the sale, but was an effort, which the commission in essence approved, to preserve certain accounting treatment related to the facility.

“The section 203 authorization in this proceeding does not prejudge the Commission’s determination in the license transfer proceeding or the competitive relicensing proceedings involving the Seneca Project,” said FERC in addressing the nation’s complaint. “The authorization in this proceeding is made under section 203 of the [Federal Power Act], and is not an authorization for the licensee to transfer the Facilities until authorization is also received pursuant to section 8 of the FPA.”

Section 8 of the FPA provides that the voluntary transfer of any license can only be made with the written approval of the commission. The project can be operated while the transfer proceeding is ongoing, but the licensee remains the current licensee until the commission approves the transfer and whatever conditions it imposes are satisfied.

FirstEnergy has indicated that it needs to clear up the dispute with the Seneca Nation before this sale deal with LS Power is completed.

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.