NRG cogen in need of major revamp approved for sale by FERC

The Federal Energy Regulatory Commission on Jan. 7 approved the sale of NRG Energy’s (NYSE: NRG) Kendall cogeneration plant in Massachusetts to a joint venture including Veolia Environment.

On Nov. 22, 2013, NRG North America LLC and subsidiary NRG Kendall LLC applied for commission authorization for the disposition of facilities resulting from NRG North America’s sale of 100% of its common equity ownership in NRG Kendall to Kendall Green Energy Holdings LLC.

NRG North America is a holding company within the holding company system owned by NRG Energy. The applicants stated that following consummation of the proposed transaction, neither NRG Energy nor any of its affiliates or subsidiaries will have any ownership or control over the buyer or NRG Kendall.

NRG Kendall is engaged solely in the ownership and operations of the Kendall Plant and the sale of the plant’s electric steam output. The plant is located in Cambridge, Mass., and has a total capacity of 256 MW. The plant will undergo an extensive reconfiguration, in order to comply with environmental requirements, and may lose as much as 35 MW of generating capacity, FERC noted. The applicants stated that following the proposed transaction, NRG Kendall will continue its corporate existence under ownership of the buyer, however, its name will be changed to Kendall Green Energy LLC.

The owning members of the buyer are ISQ Thermal Kendall LLC and Veolia Energy North America Holdings.

Veolia is an indirect wholly-owned subsidiary of Veolia Environment S.A., which is a French company specializing in the areas of water cycle management, waste management, and energy services. Veolia and its affiliates in the United States own 10% of an 84-MW electric generation facility in the relevant market, ISO New England (ISO-NE), and an additional 230 MW of generation elsewhere in the United States.

ISQ Thermal is an indirect wholly-owned subsidiary of ISQ Global Infrastructure Fund LP, which is a private equity firm that specializes in infrastructure related investments. ISQ Global does not directly or indirectly have an ownership share of 10% or more of any company that owns public utility assets.

The Kendall plant, originally built in 1949 as a cogen, has been modified several times since its original in-service date. It now has a total capacity of 256 MW consisting of a steam plant, a combustion turbine generator, steam turbine generators, and a jet. The plant produces electricity which is sold at wholesale and cogenerated steam for steam sales. The plant also has facilities that are dedicated to steam sales and not involved in electric generation.

Due to a reconfiguration needed under U.S. Environmental Protection Agency and Massachusetts water quality requirements, the plant will undergo major changes, including the installation of a new back pressure steam turbine (BPST), the coupling of an existing generator to the BPST, the retirement of three steam turbines and the retirement of the two boilers from electric generation. As a result, the plant may lose as much as about 35 MW of its capacity. Post-reconfiguration, the plant’s electric output will only be sold at wholesale, and the plant will continue to produce cogenerated and directly-manufactured steam for sale to steam customers.

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.