The Federal Energy Regulatory Commission on Jan. 7 approved various aspects of a deal, announced last September, where Energy Transfer Equity LP (NYSE: ETE) and The Williams Companies Inc. (NYSE: WMB) will engage in a business combination transaction valued at approximately $37.7 billion, including the assumption of debt and other liabilities.
The business combination between ETE and WMB was approved by the Boards of Directors of both entities. The combination will create the third largest energy franchise in North America and one of the five largest global energy companies.
On Nov. 25, 2015, Williams, on behalf of itself and its subsidiaries that are holding companies filed for FERC approval of this deal as it relates to holdings like power plants.
Williams, headquartered in Tulsa, Oklahoma, is an energy company that through its subsidiaries engages in natural gas gathering, processing and transportation as well as the marketing of natural gas and natural gas liquids. Subsidiary Williams Flexible Generation LLC owns a qualifying cogeneration facility, the Milagro Cogeneration Facility, and markets and sells the electric output from the Milagro QF Facility at wholesale at market-based rates.
The Milagro QF Facility is a topping-cycle facility associated with a natural gas processing facility (Milagro Gas Processing Plant). The maximum net electric power production capacity generated by the Milagro QF Facility is approximately 62 MW. Approximately 1.5 MW of electric power generated by the Milagro QF Facility is used by the Milagro Gas Processing Plant, and 30 MW of electric power generated by the Milagro QF Facility is committed to a single purchaser pursuant to a long-term contract. If available, the remaining approximately 30.5 MW of uncommitted electric power generated by the Milagro QF Facility is sold to third parties at wholesale. The Milagro QF Facility is located in Bloomfield, New Mexico, in the Western Area Power Administration–Lower Colorado (WALC) Balancing Authority Area (BAA), within the Western Electricity Coordinating Council footprint.
Also, Williams Four Corners LLC owns an approximately 5.6 MW qualifying facility in La Plata County, Colorado (Ignacio QF Facility).
An indirect, wholly owned subsidiary of Energy Transfer Partners LP owns and operates an approximately 30 MW generation facility with a 2015/2016 unforced capacity (UCAP) of 24.4 MW located in Archbald, Pennsylvania, in the PJM Interconnection market (PEI I Facility) and within the Mid-Atlantic Area Council local delivery area. PEI is an exempt wholesale generator (EWG), with market-based rate authority granted by the commission. It also holds 49.9% of the ownership interest in PEI II. PEI II owns and operates an approximately 43.7 MW facility with a 2015/2016 UCAP of 40.2 MW located in Archbald, Pennsylvania (PEI II Facility), adjacent to the PEI I Facility. PEI II is an EWG with market-based rate authority granted by the commission. La Grange Acquisition LP, a wholly owned subsidiary of Energy Partners, directly owns the remaining 50.1% interest in PEI II. Through its wholly owned subsidiaries, Energy Partners indirectly holds 100 percent of the interest in PEI and PEI II.
Energy Transfer Equity is a master limited partnership which among other things owns the general partner and 100% of the incentive distribution rights (IDRs) of Energy Transfer Partners L.P. (NYSE: ETP) and Sunoco LP (NYSE: SUN). On a consolidated basis, its family of companies owns and operates about 71,000 miles of natural gas, natural gas liquids, refined products, and crude oil pipelines.