Various project companies applied Nov. 1 at the Federal Energy Regulatory Commission for approval of a sale of assets, including three wind farms, from a partnership out of Japan and of NextEra Energy, to entities controlled by investor ArcLight Capital.
The applications were by Victory Garden Phase IV LLC, Sagebrush, Sagebrush Partner Sixteen, Alpha Joshua, Alpha Joshua (Prime), Beta Willow (Prime), Beta Willow and Beta Joshua. Under this proposed deal, TGP Mojave Wind LLC will acquire: all of the outstanding ownership interests in Victory Garden, a public utility with market-based rate authorization; and the ownership interests held by Sagebrush Partner Sixteen, Alpha Joshua, Alpha Joshua (Prime), Beta Willow (Prime), Beta Willow, and Beta Joshua in Sagebrush, which has an open access transmission tariff (OATT) on file with the commission.
As part of the acquisition of Victory Garden, the buyer will acquire Sagebrush Partner Sixteen, which is a wholly-owned direct subsidiary of Victory Garden. The transaction is part of a larger transaction in which the buyer also will acquire two qualifying facilities (QFs): Mojave 16/17/18 LLC and TPC Windfarms LLC.
As the commission has exempted QFs from jurisdiction under Federal Power Act section 203, the applicants do not seek commission authorization for the sale to buyer of either Mojave or TPC Windfarms. However, Mojave indirectly owns interests in Sagebrush through its wholly-owned subsidiaries Alpha Joshua, Alpha Joshua (Prime), Beta Willow (Prime), Beta Willow, and Beta Joshua, each of which will become indirect subsidiaries of buyer as a result of the transaction.
Victory Garden owns and operates a wind facility with a nameplate capacity rating of approximately 22 MW. It is located near Tehachapi, Calif. Victory Garden has the right as a tenant-in-common under a Co-Tenancy Agreement originally executed in 1990 to deliver the output of its facility over the Wilderness Line – a 9-mile long, 230 kV generator radial tie-line that connects the Tehachapi Substation to the Wilderness Substation, which is located in Kern County, Calif. From the Wilderness Line, the output of the facility is transmitted over the Sagebrush Line to the Vincent Substation owned by Southern California Edison (SCE), which is located in the California Independent System Operator (CAISO) balancing authority area (BAA). All of the output from the facility is sold to SCE pursuant to a long-term power purchase agreement.
Victory Garden is ultimately controlled by NextEra Energy Resources LLC, which is a unit of NextEra Energy (NYSE: NEE).
Sagebrush is a partnership formed originally by the owners of a number of QFs (collectively, the “Sagebrush Projects”) to hold their respective ownership interests in the Sagebrush Line. The Sagebrush Line is a 46-mile, 230 kV transmission line, for which the Sagebrush partners have the right to use 420 MW. The Sagebrush Line is used to deliver power generated by the Sagebrush Projects located in the Tehachapi region of California to the Vincent Substation owned by SCE. The Sagebrush Projects are interconnected with and receive transmission service on the Sagebrush Line through the rights granted to the partners in Sagebrush under the Second Amended and Restated Sagebrush General Co-Ownership Agreement.
In addition to the Sagebrush Projects, through a series of orders issued pursuant to sections 210 and 211 of the FPA, the commission has directed Sagebrush to allow Windstar Energy LLC (f/k/a Aero Energy LLC) to transmit power from its 120 MW generation facility over the Sagebrush Line pursuant to a transmission service agreement on file with the commission.
Companies to be sold hold interests in common transmission line
Six Sagebrush partners will be sold to the buyer under the proposed transaction:
- First, Sagebrush Partner Sixteen is a direct, wholly-owned subsidiary of Victory Garden, which in turn is an indirect, wholly-owned subsidiary of NextEra Energy. Sagebrush Partner Sixteen has a 5.78% undivided share (24.276 MW) of the total 420 MW allocated in the Sagebrush Line to the Sagebrush partners.
- Second, Alpha Joshua, Alpha Joshua (Prime), Beta Willow (Prime), Beta Willow, and Beta Joshua each are direct, wholly-owned subsidiaries of Mojave. Fifty percent of the membership interest in Mojave Seller is owned by Eurus Mojave 89 LLC, which in turn is indirectly owned by Eurus Energy Holdings, a Japanese corporation that is owned 60% by Toyota Tsusho and 40% by Tokyo Electric Power (TEPCO). TEPCO is more than 50% owned by the Nuclear Damage Liability Foundation, which is owned 50% by the Japanese government and 50% by Japanese nuclear operators. The other 50% membership interest in Mojave is owned by ESI Mojave LLC, which is ultimately controlled by NextEra Energy.
Alpha Joshua has a 4.09% undivided share (17.178 MW) of the total 420 MW allocated in the Sagebrush Line to the Sagebrush partners. Alpha Joshua (Prime) has a 3.77% undivided share (15.834 MW) of the Sagebrush Line to the Sagebrush partners. Beta Willow (Prime) has a 3.77% undivided share (15.834 MW) of the Sagebrush Line to the Sagebrush partners. Beta Willow has a 4.09% undivided share (17.178 MW) in the Sagebrush Line. Beta Joshua has a 6.55% undivided share (27.51 MW) in the Sagebrush Line. Collectively, these subsidiaries of Mojave hold the rights necessary for the wind generation facility owned by Mojave to transmit its output to the CAISO BAA.
In addition to Victory Garden and the Sagebrush interests held by the Legacy Sagebrush Partners, the proposed transaction includes the sale to the buyer of two QFs: Mojave 16/17/18 LLC, which currently is owned by Mojave; and TPC Windfarms.
- Mojave 16/17/18 is the owner of a wind facility with the capacity to produce up to about 85 MW. The Mojave 16/17/18 facility is a QF and all of its output is committed under a long-term contract to SCE. The facility is located in Kern County, Calif.
- TPC Windfarms is the owner of a wind facility with the capacity to produce up to approximately 29 MW. The TPC Windfarms facility is a QF, and all of its output is committed under a long-term contract to SCE.
The buyer of those assets, TGP Mojave Wind, is a wholly-owned direct subsidiary of Terra-Gen Power LLC, which is a subsidiary of Terra-Gen Power Holdings LLC (TG Holdings). TG Holdings is owned by ArcLight Energy Partners Fund III LP and ArcLight Energy Partners Fund IV LP (together, holding a 58.2% membership interest), and GIP-A Holding (TG) LP, GIP-B Holding (TG) LP, and GIP-C Holding I (TG) LP (holding a 38.8% membership interest). Global Infrastructure Management LLC is the manager of these GIP funds.