Affiliates of Competitive Power Ventures and other companies on March 26 applied with the New York State Public Service Commission for a non-aproval or an approval for a complex series of change-in-control transactions.
One set of applicants is Competitive Power Ventures Holdings LLC (CPV Holdings), CPV Power Development Inc. (CPV PDF), CPV NewCo LLC, CPV NewCo LP, CPV Valley Holdings LLC and CPV Valley LLC (collectively called the “CPV Petitioners”). Another is Global Infrastructure Management LLC (GIM), GIP II CPV Holdings Partnership LP (GIP II CPV Holdings), GIP II CPV Holdings Partnership 2 LP, GIP II CPV Holdings Partnership 3 LP and GIP II CPV Holdings Partnership 4 LP (collectively called the “GIP Petitioners”). Another is Diamond Generating Corp. and DGC Valley LLC (collectively called the “DGC Petitioners”).
They are seeking from the New York commission a declaratory ruling that Section 70 of the Public Service Law (PSL) does not apply to a series of proposed transactions which will result in the GIP Petitioners acquiring certain entities owned by CPV Holdings, including CPV Valley LLC, an electric corporation lightly regulated by the commission, and the DGC Petitioners acquiring 50% of the membership interests in CPV Valley Holdings LLC, the direct parent of CPV Valley LLC. The petitioners said these proposed transactions should not be reviewed because each of them involves a transfer of upstream ownership interests in lightly regulated wholesale merchant generating facilities and qualifies for the “Wallkill presumption.” Alternatively, they requested that the commission approve the proposed transactions pursuant to Section 70. Petitioners also request that the commission confirm that lightened regulation will continue in the newly created entities following the proposed transactions.
CPV Holdings is 95.2% owned by Warburg Pincus Private Equity IX LP and Warburg Pincus Equity Partners Liquidating Trust, with the remaining 4.8% owned by individuals directly or through partnerships, trusts or limited liability companies.
CPV PDI is wholly owned by CPV Holdings. CPV Valley Holdings is a wholly owned subsidiary of CPV PDI. CPV Valley is a wholly owned subsidiary of CPV Valley Holdings.
CPV Valley is developing the Valley Energy Center project, a natural gas, combined-cycle facility with a nominal rating of 630 MW. The commission granted CPV Valley a Certificate of Public Convenience and Necessity pursuant to Section 68 of the Public Service Law for the Valley Energy Center project, and determined that CPV Valley would be subject to lightened regulation as an electric corporation.
CPV NewCo LLC and CPV NewCo LP are to-be-formed Delaware entities, as subsidiaries of CPV PDI, in order to facilitate these transactions.
Through CPV Holdings’ subsidiary, Competitive Power Ventures Inc. (CPV), CPV is a leading North American electric power generation development and asset management company. Since its inception in 1999, CPV has been dedicated to increasing America’s electrical sustainability; both economically and environmentally. CPV Holdings currently has nearly 6,000 MW of conventional natural gas generation projects in various stages of development, 7,550 MW of natural gas and wind generation operating and under management in the company’s asset management division, and another 165 MW of wind projects in various stages of development across the country.
As relevant in this New York proceeding, in addition to the Valley Energy Center project, CPV Holdings subsidiaries have approximately 1,450 MW (nameplate) facilities under construction in the PJM Interconnection balancing area authority: the 725 MW (nameplate) Woodbridge Energy Center in New Jersey; and the 725 MW (nameplate) St. Charles Energy Center in Maryland. CPV Holdings does not currently have any generating capacity within the ISO New England (ISO-NE) balancing area authority.
GIP II CPV Holdings, GIP II CPV Holdings Partnership 2, GIP II CPV Holdings Partnership 3 and GIP II Holdings Partnership 4 were formed to acquire interests in the entities owned by CPV Holdings. These limited partnerships will be wholly-owned indirectly by Global Infrastructure Partners II-B Feeder Fund LP, Global Infrastructure Partners II-A LP, Global Infrastructure Partners II-C LP, GIP II-C Eagle AIV LP, Global Infrastructure Partners II-D1 LP and GIP II Friends & Family Fund LP (collectively, the “‘GIP II Funds”). The GIP II Funds are independent funds that invest in infrastructure assets worldwide.
GIM is the manager of the GIP II Funds. Global Infrastructure Management Participation LLC is the sole member of GIM. None of the GIP Petitioners or their affiliates own or control any generating facilities within New York, ISO-NE, or PJM, nor do they hold any ownership or control interest of any transmission facilities or fuel inputs within those markets.
DGC Valley LLC is a to-be-formed Delaware limited liability company, to be wholly owned by Diamond Generating Corp. (DGC). DGC specializes in power development and generation, including greenfield development, acquisition, financing, construction, operations and maintenance, and asset management of gas-fired and renewable generation facilities in the United States. DGC is 100% owned by Mitsubishi Corporation Americas, which is 100% owned by Mitsubishi Corp., a public company listed on the Tokyo Stock Exchange. Neither DGC or any of its affiliates own any generating facilities in New York, ISO-NE, or PJM, nor do they hold any ownership or control interest of any transmission facilities or fuel transportation facilities within those markets.
These petitioners propose a series of transactions whereby: first, there will be an internal reorganization of CPV PDI; then, the GIP Petitioners will become a 100% indirect owner of CPV Valley; and finally, the DGC Petitioners will acquire 50% of the ownership interest in CPV Valley Holdings LLC, the direct parent of CPV Valley.
Following these proposed transactions, the Valley Energy Center project, as well as CPV Holdings’ other generating facilities, will continue to be operated in much the same way as they are now and by the same CPV personnel. Since the transactions will not result in changes in the day-to-day operations of the Valley Energy Center, the lightened regulation of CPV Valley as previously granted by the commission remains appropriate, the application said.
These petitioners will also seek approval of other transactions from the Federal Energy Regulatory Commission under Section 203(a) of the Federal Power Act, as the CPV PDI Reorganization and the GIP Transaction relate to other companies that are FERC-jurisdictional “public utilities” currently owned or controlled by the CPV Petitioners. As CPV Valley has not made a tariff filing with FERC to request market-based rates, it is not yet subject to FERC jurisdiction.