KMC Thermo LLC and Webb Energy LLC applied July 20 at the Federal Energy Regulatory Commission for approval of the sale of all of the outstanding equity interests in KMC Thermo to Webb.
KMC Thermo owns the Brandywine Power Facility, a 230-MW (summer rating) combined-cycle, natural gas-fired facility located in Prince George’s County, Maryland, within the PJM Interconnection Balancing Authority Area. KMC Thermo is an exempt wholesale generator (EWG) that has been authorized by the commission to sell energy, capacity, and ancillary services at market-based rates. KMC Thermo also sells reactive power generated by the Brandywine Facility at cost-based rates under a reactive power tariff on file with the commission.
KMC Thermo is an indirect, wholly owned subsidiary of J.P. Morgan Ventures Energy Corp. (JPMVEC), which in turn is a direct, wholly owned subsidiary of JPMorgan Chase & Co. (JPMC). JPMC is a financial holding company that is not primarily engaged in energy-related business activities. Through direct or indirect wholly owned and partially owned subsidiaries, JPMC has a number of energy affiliates, including JPMVEC, that engage in wholesale sales of electricity in the United States and that own interests in electric generating facilities. JPMVEC does not directly own any generation currently, but has the right to dispatch and purchase the output of certain generating facilities through tolling agreements. Affiliates of JPMVEC own or control electric generating facilities or otherwise engage in sales of electricity at market-based rates, in certain markets within the United States.
Webb Energy was formed for the purpose of acquiring all of the equity interests in KMC Thermo. Webb is controlled by Arroyo Energy Investors Fund II LP (Arroyo II), which holds a majority of the membership interests in Webb. The remaining membership interests are held by Arroyo Brandywine Direct Investment I LP (Arroyo Brandywine). Arroyo II and Arroyo Brandywine (collectively called the “Arroyo Fund Vehicles”) are investment fund vehicles sponsored and managed by Arroyo Energy Investors Fund II GP LLC (Arroyo GP) or its affiliates. Arroyo GP is the general partner of each of Arroyo Energy Investors Fund II GP LP (Arroyo II GP) and Arroyo Brandywine Direct Investment I GP LP (Arroyo Brandywine GP). Arroyo II GP, in turn, is the general partner of Arroyo II, and Arroyo Brandywine GP is the general partner of Arroyo Brandywine.
Neither Webb nor any of its affiliates currently owns, directly or indirectly, any electricity generation, transmission, or distribution facilities. Arroyo GP is controlled by the two individuals that are its members, none of which own or control interests of 10% or more in in any (1) electric generation, transmission or distribution facilities, (2) intrastate natural gas transportation, intrastate natural gas storage or distribution facilities, sites for generation capacity development, or entity that owns or controls physical coal supply sources or who may access transportation of coal supplies, or (3) franchised public utility.
On April 9, Arroyo Energy Investment Partners LLC (Arroyo Partners) and KN Cogeneration LLC (KN Cogeneration) executed a Purchase and Sale Agreement (PSA), which provides the terms and conditions governing the proposed transaction. On July 20, Arroyo Partners assigned its rights and obligations under the PSA to Webb pursuant to an Assignment and Assumption Agreement. At closing, Webb will own all of the equity interests in KMC Thermo.
A buyer contact is: Tony Hopkins, Arroyo Energy Investment Partners LLC, 3 Waterway Square Place, Suite 475, The Woodlands, TX 77380, Tel: (281) 825-5495, firstname.lastname@example.org.
Due to a change of power plant ownership, Panda-Brandywine LP filed in May 2014 with FERC a notice of cancellation of its market-based rate tariff. Panda-Brandywine had leased this generating facility. On June 1, 2014, though, the lease under which Panda-Brandywine leases and operates the generating facility was to be terminated, and ownership of the facility transferred to KMC Thermo. The tolling agreement under which Panda-Brandywine sold capacity and energy to its sole customer, JPMVEC, was to terminate as of June 1, 2014.