Fortis affiliates buy power assets in Arizona, expand hydro plant in Canada

FortisUS Energy, Central Hudson Gas & Electric, Tucson Electric Power, UNS Electric and UniSource Energy Development filed an update with the Federal Energy Regulatory Commission on Jan. 23 related to how some recent transactions affect their market power situation.

These companies are all subsidiaries of Fortis Inc., a publicly-traded holding company existing under the laws of the Province of Newfoundland and Labrador, Canada, with regulated holdings in electric utilities in five Canadian provinces, Arizona, New York State and two Caribbean countries, and natural gas utilities in British Columbia, Canada, Arizona, and New York State.

The applicant companies informed the commission of the following events:

  • On Dec. 10, 2014: Tucson Electric acquired a 75% interest in Power Block 3 of the Gila River Power Station, a natural gas-fired generating facility located in Maricopa County, Arizona; UNS Electric acquired a 25% interest in Gila Block 3; and Tucson Electric and UNS Electric jointly acquired a 25% undivided co-ownership interest in common assets of Gila River Power Station, including associated interconnection facilities and certain other assets;
  • On Dec. 30, 2014, Tucson Electric acquired an approximately 10.61% undivided ownership interest in the coal-fired Springerville Generating Station (SGS) Unit 1 and associated common facilities, and on Jan. 2, 2015, Tucson Electric acquired an approximately 24.75% undivided ownership interest in SGS1 and associated common facilities;
  • In June 2014, Tucson Electric completed certain upgrades to the coal-fired SGS Unit 2 resulting in a 16 MW increase in rated generating capability of that unit; and
  • Since the applicants filed their 2012 Triennial Market Power Update, Tucson Electric and UNS Electric have constructed or entered into power purchase agreements (PPAs) pursuant to which they purchase the output of certain solar- and wind-powered facilities located in the Tucson Electric balancing authority area (BAA). Three of those PPAs started in December 2014: Coronal Management LLC, Avalon Solar, 28.3 MW nameplate; Tucson Electric, Fort Huachuca Phase I, 13.6 MW nameplate; and Tucson Electric, SunPower Springerville, 8.5 MW nameplate.

The filing noted about the SGS1 transactions: “Importantly, the SGS1 Transactions do not result in any increase in generating capacity controlled by Applicants or their affiliates. As explained in the application for approval of the SGS1 Transactions pursuant to FPA section 203, prior to the date of these transactions, Tucson Electric held an approximately 14.14 percent interest in SGS1 and leased the balance from an owner-trustee. Prior market power analyses submitted by Tucson Electric thus assumed control of the entirety of SGS1 by Tucson Electric and its affiliates. The SGS1 Transactions reported here merely convert a portion of these leasehold interests to fee (ownership) interests and, thus, do not result in any increase in the generating capacity attributable to Applicants pursuant to the Commission’s market power tests. Applicants thus believe that the SGS1 Transactions may not be a reportable change in status pursuant to 18 C.F.R. Section 35.42 but report them nonetheless out of an abundance of caution.”

Tucson Electric owns approximately 2,763 MW of generating capacity. It also owns certain electric transmission facilities which are used primarily to transmit power generated at the Four Corners, Luna, Navajo, Springerville, and San Juan generating stations to Tucson Electric’s service territory for use by its customers. UNS Electric owns generating facilities with a combined rating of approximately 391 MW (nameplate).

Hydro plant in British Columbia being expanded, while gas-fired plant to be shut

While most of the news in the Jan. 23 filing was based around developments in Arizona, it did mention this about a Fortis company in Canada: “Fortis Generation East LLP is an indirect subsidiary of Fortis that owns and operates six small hydroelectric generating facilities in eastern Ontario with a combined capacity of 8 MW. FortisOntario also indirectly owns a 5 MW natural gas-powered cogeneration plant in Cornwall, Canada. In addition, Fortis has a 51 percent controlling ownership interest in the Waneta Expansion Limited Partnership (with the Columbia Power Corporation and the Columbia Basin Trust holding the remaining 49 percent interest), which is developing a 335 MW expansion to the Waneta hydroelectric generating facility on the Pend d’Oreille River in British Columbia. The Waneta Expansion is expected to come into service in spring 2015.”

The filing also noted: “FortisBC Holdings, a holding company headquartered in Vancouver, British Columbia, owns and operates FortisBC Energy Inc. (‘FortisBC Energy’) which is primarily a natural gas distribution utility in British Columbia, Canada. FortisBC Energy transports natural gas to two electric generation facilities, Burrard Thermal Generating Station, a fifty year old 950 MW gas steam facility that is scheduled to be closed in 2016, and Island Generation, a 275 MW combined cycle station that is fully contracted to BC Hydro, which is not affiliated with Fortis, through March 2022.”

Said the website of the city of Port Moody: “Burrard Generating Station (BGS) located in the North West area of Port Moody is a 900 megawatt conventional natural gas-fired generating station. It is BC Hydro’s only conventional steam-electrical thermal plant. It is powered by natural gas, a clean burning fuel, delivered by a pipeline owned by FortisBC. Burrard Generating Station accounts for approximately 9% of BC Hydro’s total capacity – enough power for about 700,000 homes. In November 2013 the Province announced that BC Hydro will stop generating electricity at Burrard Generating Station (Burrard) by 2016. At that time, the generating capability at Burrard will no longer be required after the addition of two hydro-electric generating units at Mica Dam (north of Revelstoke), completion of the Interior to Lower Mainland (ILM) transmission line and installation of a new transformer at Meridian substation in Coquitlam.”

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.