The Federal Energy Regulatory Commission on Jan. 16 approved the purchase by the DTE Electric subsidiary of DTE Energy (NYSE: DTE) of a 660-MW, gas-fired power plant in Michigan.
On Nov. 12, 2014, DTE Electric and Renaissance Power LLC requested commission approval for the disposition of jurisdictional facilities resulting from a DTE Electric buy from Renaissance Power of an approximately 660-MW facility. Renaissance Power is an exempt wholesale generator (EWG) that owns and operates this natural gas-fired peaker. The facility is interconnected to the Michigan Electric Transmission Co. (METC) system in the Midcontinent Independent System Operator (MISO) market. Renaissance Power has been granted market-based rate authority by the commission.
All of Renaissance Power’s membership interests are held by Port River LLC, which is an indirect wholly controlled subsidiary of LS Power Development LLC. LS Power Development develops, owns, and operates independent power projects in the United States, and is, among other things, developing merchant transmission projects in parts of the United States. Through LS Power Development, Renaissance is currently affiliated with the entities that own or control 649 MW of generation in the MISO market.
“Applicants state the Proposed Transaction is a result of DTE Electric’s request for proposals seeking additional natural gas-fired generating capacity for purposes of meeting DTE Electric’s resource adequacy requirements in MISO starting in the 2015-2016 MISO Planning Year,” FERC noted. “DTE Electric and Renaissance Power executed the asset purchase agreement on October 29, 2014, to effectuate the sale of the Facility and associated interconnection facilities, real property, agreements and documents to DTE Electric.”
Besides this capacity, DTE Electric also plans to issue in the first quarter of 2015 a request for proposals (RFP) for additional new gas-fired generating capacity. DTE Electric signed the definitive agreement with LS Power on Oct. 29, 2014, for the existing Renaissance Power Plant and expects to financially close that transaction, or officially take ownership, in the first quarter of 2015, wrote Irene Dimitry, Vice President of Business Planning & Development at DTE Energy Corporate Services LLC. Dimitry’s testimony was filed by DTE Electric on Dec. 19, 2014, at the Michigan Public Service Commission as part of a rate case application.
Asked if DTE Electric will be able to utilize the Renaissance plant’s capacity for MISO’s 2015-2016 Planning Year, Dimitry said: “Yes, DTE Electric expects to financially close the transaction prior to MISO’s deadline for registering resources for the upcoming 2015-2016 Planning Year (PY). MISO’s 2015-2016 PY spans from June 1, 2015 to May 31, 2016. In conjunction with the agreement to acquire the Plant, DTE Electric has also entered into an agreement with Renaissance Power to secure the Plant’s MISO PY 2015-2016 Zonal Resource Credits through a Bi-lateral Capacity Purchase Agreement in the event the transaction does not close prior to March 20, 2015.”
DTE Electric intends in the first quarter of 2015 to solicit bids to acquire approximately 300 MW of Michigan-based simple cycle gas fired generation at an estimated cost of approximately $100m. This purchase, along with Renaissance, is expected to address the 900 MW shortfall in DTE Electric’s planning resource requirements for the 2015-2016 planning year and beyond. That $100m estimate for the next capacity buy is based on the Renaissance purchase price.
The Renaissance plant is a 732 MW (nameplate) natural gas-fired, simple-cycle power plant located in Carson City, Michigan, approximately 50 miles north of Lansing, in MISO Zone 7. The facility is equipped with four Siemens-Westinghouse 501FD combustion turbines, which achieved commercial operation between 2002 and 2003.