Greenleaf Power to acquire effective control over California power units

Greenleaf Power Management LLC (GPM) on May 4 asked the Federal Energy Regulatory Commission for various approvals, including acceptance of GPM’s Market-Based Rate Tariff and the granting of authorization for GPM to sell electric energy and capacity at wholesale and make sales of ancillary services at market-based rates.

GPM is being formed to act as the management designee with respect to the operation of an existing generating facility and the sale of electricity from that facility. GPM will assume operational control over the jurisdictional facilities pursuant to a Management Designation Agreement (MDA) between GPM and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company of California, National Association), not in its individual capacity but solely as owner trustee under in 1998 Trust Agreement between the Owner Trustee and the beneficiary of the trust agreement, the owner participant, Bankers Commercial Corp. (BCC).

GPM will be a wholly-owned direct or indirect subsidiary of FTI Consulting Inc., which is publicly traded on the New York Stock Exchange. Neither FTI nor any affiliate of FTI has any ownership interests in any electric generating facilities anywhere in the United States. The acquisition of operational and management control over commission-jurisdictional facilities under the MDA will be the first acquisition by any FTI affiliate of control or any other interest with respect to any electric generating or other energy facilities in the United States.

On April 21, 2015, Calpine Greenleaf Inc. filed an application with the commission for authorization with respect to a change in control of jurisdictional assets relating to the expiration of a lease agreement under which Calpine Greenleaf has been leasing and operating two natural gas-fired facilities located in Yuba City, California (collectively called the “Greenleaf Projects”). The Greenleaf Projects consist of: Unit One, which has a capacity of approximately 49.2 MW (summer rating); and Unit Two, which has a capacity of approximately 49.5 MW (summer rating). Both Unit One and Unit Two sell their full electric output to Pacific Gas & Electric (PG&E) under two long-term power purchase agreements (PPAs). Both Unit One and Unit Two are interconnected with the transmission system under control of the California Independent System Operator.

Unit 2 of the Greenleaf Projects is a cogeneration facility that provides useful thermal energy to Sunsweet Growers Inc. under a long-term steam agreement and has been found to be a “qualifying cogeneration facility” under commission rules. Both Unit One and Unit Two of the Greenleaf Projects include interconnection facilities that are necessary for the electric output of the units to be delivered into the CAISO grid, but do not provide transmission services for other parties or comprise an integrated transmission system.

Under the MDA, the parties intend that GPM will be vested with all of the day-to-day management control over the Greenleaf Projects. The assets comprising the Greenleaf Projects and all contracts relating to the Greenleaf Projects, including the PPAs, will remain under the nominal ownership of the Owner Trustee.

A company contact is: Glenn Tobias, Senior Managing Director
, FTI Consulting Inc., 
FTI Capital Advisors LLC, 
3 Times Square, 9th Floor
, New York, NY 10036, 
Tel: 646-453-1217
, Glenn.Tobias@fticonsulting.com.

Calpine Greenleaf, a wholly owned subsidiary of Calpine Corp. (NYSE: CPN), said in its April 21 FERC application: “Lessor and Bankers Commercial have not yet finalized the precise structure for owning and operating the Facilities following the expiration of the Lease and were not, therefore, prepared to submit a joint application for [Federal Power Act] Section 203 approval at this time. With the Lease expiring on June 30, 2015, Calpine Greenleaf was concerned about ensuring that it is in a position to satisfy its obligation under the Lease to transfer possession and control to Lessor or its designee upon expiration of the Lease. Accordingly, Calpine Greenleaf is filing this Application unilaterally. While unusual, the unilateral submission of this Application should not alter the Commission’s analysis of the Transaction.”

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.