ArcLight seeks FERC approval for sale of Bayonne plant to Macquarie

Bayonne Energy Center LLC (BEC) and Zone J Tolling Co. LLC filed a Feb. 12 request with the Federal Energy Regulatory Commission for authorization related to the transfer of 100% of the indirect equity ownership interests in the applicants from PER Development Holdings LLC, a wholly-owned subsidiary of ArcLight Energy Partners Fund III LP, to Ragfy Holdings LLC.

As a result of the proposed transaction, the applicants will be wholly-owned indirect subsidiaries of Ragfy, which is a wholly-owned indirect subsidiary of Macquarie Infrastructure Co. LLC (MIC LLC). A similar application was filed Feb. 10 at the New York State Public Service Commission because BEC’s power plant in New Jersey is directly tied into the New York power market.

BEC owns and operates the Bayonne Energy Center, a 512 MW natural gas-fired plant located in Bayonne, New Jersey. While the facility is physically located within the footprint of PJM Interconnection, it is not interconnected to the PJM grid. The facility is solely interconnected to the transmission system owned by Consolidated Edison Co. of New York and operated by the New York Independent System Operator (NYISO) via a 6.75-mile, 345-kV submarine cable.

FERC has authorized BEC to sell energy, capacity, and ancillary services at market-based rates in the New York City submarket of the NYISO balancing authority area (BAA). The entire output of the facility currently is sold pursuant to long-term tolling agreements. Direct Energy Business Marketing LLC, an unaffiliated third party, is the counterparty to two long-term tolling agreements that convey control over 320 MW from the facility to Direct Energy. The remaining capacity of the facility is sold pursuant to two long-term tolling agreements with Zone J Tolling, a power marketer. FERC has authorized Zone J Tolling to sell energy, capacity, and ancillary services at market-based rates solely within the NYISO BAA, including the New York City submarket.

Other than through the tolling agreements with BEC, Zone J Tolling does not own or control any generation capacity. BEC and Zone J Tolling are wholly-owned indirect subsidiaries of AL Bayonne Holdings LLC, which currently is a wholly-owned direct subsidiary of PER Development. PER Development is a wholly-owned subsidiary of ArcLight Fund III. ArcLight Fund III is a private equity investment fund with a focus on the independent power sector. ArcLight Fund III is managed by ArcLight Capital Partners LLC.

The buyer, Ragfy, is an indirect wholly-owned subsidiary of MIC LLC. MIC LLC is a public company listed on the NYSE (NYSE: MIC). MIC is externally managed by a wholly-owned indirect subsidiary of Macquarie Group Ltd. (MGL). MGL is a global provider of banking, financial, advisory, investment, and funds management services. MGL is affiliated with entities that own or control electric generation facilities within the United States, none of which is located in applicants’ relevant market, the NYISO BAA. MGL indirectly owns 100% of Macquarie Energy LLC, which operates as a power marketer in various markets in the United States.

A buyer contact is: Michael Kernan, General Counsel, Macquarie Infrastructure Co. LLC, 125 West 55th Street, New York, NY 10019, Tel (212) 231-1849, michael.kernan@macquarie.com.

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.