The Federal Energy Regulatory Commission on March 16 approved the purchase by the Tennessee Valley Authority of an existing, gas-fired power plant that has been supplying electricity to TVA under contract.
On Feb. 12, Quantum Choctaw Power LLC had requested approval for the transfer and sale of jurisdictional facilities from Choctaw to the Tennessee Valley Authority, or, at TVA’s election, to, in whole or in part, Seven States Power Corp. or one of Seven States’ subsidiaries or affiliates. The affected jurisdictional facilities consist of interconnection facilities and books and records associated with the 746-MW gas-fired combined cycle facility subject to the proposed transaction.
Choctaw owns the facility, which is located near Ackerman, Mississippi in the TVA balancing authority area (BAA). Choctaw is an exempt wholesale generator (EWG) authorized to make sales of electric energy, capacity, and certain ancillary services at market-based rates. Choctaw states that the facility’s energy is currently sold to TVA under a short-term power purchase agreement that expires on Aug. 31, 2015.
Choctaw is a direct wholly-owned subsidiary of Quantum Holdings, which is a direct wholly-owned subsidiary of Quantum (Choctaw) Utility Investments I LLC. Quantum Choctaw Investments is managed by Quantum Utility Generation LLC (QUG), a company owned by Quantum Energy Partners LLC (QEP) and members of a management team experienced in the power sector (QUG Management). The majority of the capital for Quantum Choctaw Investments is provided by investment funds managed by QEP or its affiliates. The remaining capital for Quantum Choctaw Investments is provided by QUG Management and CPP Investment Board Choctaw Inc., an affiliate of the Canadian Pension Plan Investment Board.
Seven States is a not-for-profit mutual benefit membership corporation formed under Tennessee law and operating under the Tennessee Electric G&T Cooperative Act. Its members are municipalities and rural electric cooperatives that purchase wholesale power from TVA. Seven States has one wholly-owned subsidiary, Seven States Southaven LLC.
Under the proposed transaction, pursuant to a purchase agreement, Choctaw will transfer the power facility to TVA. TVA may assign its rights and obligations under the purchase agreement in whole or in part to Seven States or one of Seven States’ subsidiaries or affiliates, in which case Seven States or its subsidiary or affiliate would own all or a portion of the facility. The facility’s output will be exclusively controlled and operated to serve the needs of TVA’s customers.
Said the March 16 FERC order: “The Proposed Transaction is authorized upon the terms and conditions and for the purposes set forth in the application.”