Florida Power & Light (FPL), on behalf of Cedar Bay Generating Co. LP, FPL’s to-be acquired wholly-owned subsidiary, filed on Aug. 19 with the Federal Energy Regulatory Commission an unexecuted rate schedule titled “Power Purchase Agreement (Tolling) between Cedar Bay as Seller and FPL as Buyer.”
The application noted: “This is a somewhat unorthodox filing, as FPL already controls the output of the Facility and will retain such control under the stock purchase Transaction as the indirect owner of the Facility. But, due to the legal dictates of section 205 of the [Federal Power Act], upon consummation of the Transaction, Cedar Bay, the wholly-owned subsidiary that owns the Facility, needs authorization from the Commission to sell wholesale power to FPL. The need for this Agreement among affiliates, therefore, arises not out of a desire for self-dealing or preferential treatment, but out of a practical legal obligation.
“The purpose of the Agreement is to replace the Old [power purchase agreement] following the closing of the Transaction. But closing of the Transaction cannot take place until regulatory approvals are obtained from FERC and the Florida Public Service Commission (‘Florida PSC’). As noted, FERC authorized the Transaction on July 2, 2015. FPL’s petition for approval of the Transaction from the Florida PSC (the ‘Florida Petition’) is still pending, but, as explained herein, the parties to the Transaction may be in a position to close as soon as mid-September 2015, perhaps as early as 30 days from today’s filing.
“Cedar Bay is a subsidiary of a series of upstream entities, including CBAS Power Holdings, LLC, the selling entity that entered into the Purchase and Sale Agreement with FPL, dated as of December 10, 2014, pursuant to which the Transaction approved by the Commission in Docket No. EC15-102-000 will occur.
“Cedar Bay owns the Facility, a coal-fired topping cycle cogeneration facility with a net electrical output of approximately 250 MW. The Facility is a Qualifying Facility and was initially put in service in 1994. The Facility is located in Duval County, Florida, and interconnects with the transmission system of JEA, pursuant to an Interconnection and Transmission Service Agreement originally executed in January 1990, and since amended. The Facility includes interconnection facilities necessary to interconnect to the grid.”
FPL earlier this year announced plans to buy the Cedar Bay plant, briefly operate it, and then retire it, which would lead to major savings for the utility as opposed to continuing with the existing PPA.