1,400-MW St. Joseph project in Indiana to be under split ownership

St. Joseph Energy Center LLC (SJEC) and St. Joseph Phase II LLC (SJEC II) on Feb. 5 asked that the Indiana Utility Regulatory Commission allow split ownership for two phases of a gas-fired power project.

They asked the commission to enter an order:

  • approving the transfer of a portion of SJEC’s franchise, works or system (i.e., the authority to construct and operate the St. Joseph Energy Center Project that SJEC received in February 2013) to SJEC II;
  • determining that SJEC II meets the criteria for succeeding to and succeeds to SJEC’s declination of jurisdiction with respect to Phase II of the project; and
  • approving, to the extent necessary, a Shared Facilities Agreement.

SJEC is a subsidiary of investment funds managed by Ares EIF Management LLC (EIF). EIF was originally founded in 1987 as one of the first investment managers dedicated exclusively to the independent power and electric utility industry. SJEC II is also a subsidiary of investment funds managed by EIF.

The St. Joseph Energy Center Project consists of two approximately 700 MW combined cycle gas turbines (CCGT) power blocks, each of which will consist of two gas turbines, two heat recovery steam generators and a steam turbine. The project will exclusively serve the wholesale power market, and all sales of electricity generated will be sold into the wholesale market and not at retail.

In the prior declination order, the commission determined that SJEC was a “public utility” and an “energy utility,” but determined that it was in the public interest to decline to exercise its jurisdiction over SJEC, with the exception of a few limited provisions that are detailed in the Declination Order.

One power block at the project will be interconnected to the Midcontinent Independent System Operator (MISO) regional transmission system (the “MISO Block”) and the other power block will be interconnected to the PJM Interconnection regional transmission organization (the “PJM Block”). In order to facilitate financing, development and construction, it  was determined that the project would be developed in phases. The PJM Block will be constructed and operated through SJEC as Phase I of the Project. SJEC II was formed to  construct and operate the MISO Block as Phase II of the Project. It is expected that construction of the MISO Block will commence in the next 12-18 months. SJEC will retain the operating and construction authority and all other rights and obligations under the declination order for the PJM Block being constructed as Phase I.

As part of the phased development of the project, St. Joseph Shared Assets LLC (SJSA) was formed to own the project site and to own and operate certain shared facilities for SJEC and SJEC II. SJSA is owned 50% by SJEC and 50%  by SJEC II. The Shared Facilities Agreement between SJSA, SJEC and SJEC II provides for the ownership, operation and maintenance of certain shared facilities necessary for the project, as well as the sharing of certain permits necessary for construction and operation of the project.

Phase I is in construction and due to be completed by March 2018

Willard Ladd, a Principal at Development Partners Group LLC, oversees the St. Joseph project and provided supporting testimony. Development Partners was formed in 2008 to develop power plants across the United States. To provide the necessary investment capital required to develop, construct and operate these power plants, Development Partners partnered with Ares EIF Management. Funds managed by EIF currently own and operate approximately 5,100 net MW of capacity in facilities that are currently operating or under construction and an additional 3,900 net MW in facilities that are in various stages of development. Development Partners is currently developing over 2,700 MW of natural gas fired power plants across the U.S., including over 2,000 MW of combined cycle gas turbine power plants in Indiana.

SJEC was formed in 2011 for the purpose of owning and operating the St. Joseph Energy Center, a combined cycle gas turbine power plant in St. Joseph County at a site about 2 miles east of the Town of New Carlisle, Indiana. SJEC is registered to do business in the State of Indiana.

Ladd noted that financing for Phase I was completed in November 2015. Construction of Phase I has begun and is expected to be completed by March 2018, with commercial operations anticipated to begin in June 2018. It is expected that construction of the MISO Power Block will commence in the next 12-18 months.

He pointed out that separating each phase facilitates the financing of a given phase on the most favorable terms available at the time it is built. The transfer of Phase II will facilitate project financing for Phase II and permit the construction of Phase I to continue on schedule.

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.