The members of the Federal Energy Regulatory Commission in an Oct. 15 order rejected a rehearing request dating back to its 2010 approval involving a power plant change-of-control transaction.
In January 2011, NSTAR Electric Co. (NSTAR) filed a request for rehearing of the commission’s December 2010 order in this case. In August 2010, Fore River Development LLC, Mystic I LLC, Mystic Development LLC, Boston Generating LLC (collectively referred to as the Boston Companies) and Constellation Mystic Power LLC had filed an application requesting commission authorization for the Boston Companies to transfer to Constellation Holdings Inc. or its designee, Mystic Power, five generating facilities, including associated electric interconnection facilities, and certain other assets.
The Oct. 15 order doesn’t say why this rehearing request is being acted on now, over four years later.
The assets transferred included, among others, two 690.9-MW (summer) natural gas facilities owned by Mystic Development located in Everett, Massachusetts, within the ISO-New England market (the Mystic Facilities).
NSTAR had protested the application, arguing that both the Boston Companies and Constellation have a significant presence in the New England market, are rival sellers of power, and that the transaction’s elimination of one of the rivals could cause significant harm. It also alleged that Constellation avoided showing long-term contractual rights it had to ISO-NE capacity due to a technicality in the relationship between ISO-NE market structure and the commission’s market power analyses, the latter of which require capacity information under long-term contracts defined as a year or more in duration.
NSTAR also argued that because indirect retail load responsibilities through contracts with local distribution utilities are typically six months in duration in New England, Constellation would be able to satisfy its retail load responsibilities through back-to-back contracts defined as short-term for purposes of the Commission’s market power analysis. According to NSTAR, Constellation could thus exercise control over a substantial share of the generating capacity in ISO-NE through direct ownership and contractual rights.
In its Oct. 15 rejection of the NSTAR rehearing request, the commissioners wrote in part: “Regarding NSTAR’s contention that the Commission erroneously relied on evidence ‘related to the ISO-NE market as a whole as opposed to NEMA/Boston,’ NSTAR appears to be arguing that the Commission should have considered NEMA/Boston the relevant geographic market for the Applicants to use in their DPT analysis. However, NSTAR did not propose the use of NEMA/Boston as the relevant geographic market in its protest or in response to Applicants’ DPT analysis. The Commission looks with disfavor on parties raising issues for the first time on rehearing because other parties are not permitted to respond to a request for rehearing. In any event, there is nothing in the record to support using anything other than the ISO-NE market.”
The commissioners wrote on another point: “In addition, we disagree with NSTAR that the Commission erred in finding that NSTAR failed to provide evidence for its allegation concerning Constellation’s short-term contracts. NSTAR is correct that Applicants, who are the proponents of their application under section 203(a)(1), must demonstrate that the Transaction is consistent with the public interest, in accordance with the Merger Policy Statement and the Commission’s regulations. However, as NSTAR acknowledges, the Commission’s regulations do not require the inclusion of short-term contracts in an applicant’s analysis, which is what NSTAR argued for in its protest.”