FERC approves ArcLight sale of Michigan power plant to Rockland

The Federal Energy Regulatory Commission on Dec. 18 approved an Oct. 19 application from Michigan Power LP for authorization of the transfer of 100% of the membership interests in Michigan Power LP LLC from Michigan Power Funding LLC (MPF II) and Michigan Power Funding V LLC (MPF V) to Wolverine Power Holdings LLC.

Michigan Power owns and operates an approximately 128-MW natural gas-fired combined cycle cogeneration facility located in Ludington, Michigan. It is interconnected to Consumers Energy through the transmission system owned by Michigan Electric Transmission Co. and operated by the Midcontinent Independent System Operator (MISO). It is a qualifying facility (QF) pursuant to the Public Utility Regulatory Policies Act of 1978.

Michigan Power sells steam, compressed air, and boiler feedwater generated by the facility to Occidental Chemical Corp. Substantially all of the output of the facility is committed to Consumers Energy pursuant to a long-term power purchase agreement that is in effect until October 2030. The remaining output of the facility is sold on a merchant basis into the wholesale market.

Michigan Power is directly owned by Michigan Power LP, which holds a 98% limited partnership interest, and Michigan Power GP LLC (Michigan Power GP), which holds a 2% general partnership interest. Michigan Power GP is a wholly owned direct subsidiary of Michigan Power LP, which is directly owned by MPF II and MPF V. MPF II is a wholly owned subsidiary of ArcLight Energy Partners Fund II LP (ArcLight Fund II), and MPF V is a wholly owned subsidiary of ArcLight Energy Partners Fund V LP (ArcLight Fund V). ArcLight Fund II and ArcLight Fund V are private equity investment funds with a focus on the independent power sector.    

Wolverine is neither a public utility nor a public utility holding company, but will become a public utility holding company upon consummation of the proposed transaction. It is anticipated that Rockland Power Partners II LP (Rockland Power II), an equity fund with investors will own approximately 76% of the membership interests in Wolverine, with the remaining membership interests held collectively by a group of investors. The day-to-day decision-making responsibility for Wolverine is vested in its manager, Rockland Capital LLC

Wolverine is affiliated with several entities that currently own or control in aggregate 1,002.2 MW of electric generation within the MISO market. These entities are each an indirect, wholly or partially owned, subsidiary of Rockland Power II. In addition, applicant is affiliated with several entities that own or control generation in the PJM Interconnection (1,353.9 MW), in the New York Independent System Operator (20 MW), and in the California Independent System Operator Corporation (965.4 MW) regions.

Notable is that that on Nov. 9, Shelby County Energy Center LLC, an affiliate of Wolverine and Rockland Power II, entered into an asset purchase agreement with NRG Wholesale Generation LP and GenOn Energy to purchase all of the rights, title, and interest in a 352-MW natural gas-fired electric generation facility located in Neoga, Illiniois, in the MISO market. Following the acquisition of the Shelby Facility, applicant will own or control 1,354.2 MW of generation capacity in the MISO market.

ArcLight Capital Partners LLC on Oct. 21 officially announced the deal to sell the Michigan Power facility. It said the sale is expected to close by year end following receipt of customary approvals, including this FERC nod.

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.