The Federal Energy Regulatory Commission on Feb. 9 approved a Dec. 23 application from Goal Line LP, KES Kingsburg LP and Colton Power LP over the transfer of direct and/or indirect ownership interests in these companies to indirect, wholly owned subsidiaries of Southwest Generation Operating Co. LLC.
These sales would be under three separate Purchase and Sale Agreements (PSAs). The applicants stated that the some of the ownership interests to be sold may not require commission approval under Federal Power Act section 203(a)(1); however, out of abundance of caution, they nonetheless request the commission to authorize this deal. “This order authorizes the Proposed Transaction without making any determination of jurisdiction,” said the Feb. 9 FERC approval.
- Goal Line owns a 49.9-MW natural gas-fired cogeneration power plant located in Escondido, California. The Goal Line Facility is interconnected with the transmission system owned by San Diego Gas & Electric (SDG&E) within the California Independent System Operator (CAISO) market. Goal Line sells electricity generated by the Goal Line Facility to SDG&E pursuant to a long-term power purchase agreement. Goal Line’s sole general partner is Arroyo Energy LP. Arroyo has a 99% general partner interest in Goal Line and is the managing general partner. DB Goal Line LLC has a 1% limited partnership interest in Goal Line and a 99% limited partnership interest in Arroyo. DB Goal Line is a wholly owned subsidiary of investment funds managed by affiliates of FIG LLC (Fortress), an investment adviser registered with the U.S. Securities and Exchange Commission. General Electric Capital Corp. is also a lender to Goal Line.
- Kingsburg is the lessee and operator of a 34.5-MW natural gas-fired facility located in Kingsburg, California. The Kingsburg Facility is interconnected to the transmission system owned by Pacific Gas and Electric (PG&E) within the CAISO market. Kingsburg sells the output of its facility to PG&E under the terms of a long-term power purchase agreement that gives PG&E exclusive buyer and scheduling rights over the Kingsburg Facility. PE-Kingsburg LLC owns a 99% general partner interest in Kingsburg, and Kingsburg Energy LLC owns a 1% limited partner interest in Kingsburg. PurEnergy holds, indirectly, a 97% limited partner interest in PE-Kingsburg. Kingsburg operates the Kingsburg Facility under a long-term lease (the Kingsburg Lease Agreement) with the passive owner of the Kingsburg Facility, DBD Kingsburg LLC, which is a wholly owned subsidiary of an investment fund managed by affiliates of Fortress.
- Colton owns and operates two approximately 40-MW natural gas-fired facilities located in the City of Colton, California. Colton has entered into a Resource Adequacy contract with Shell Energy North America (US) LP, pursuant to which it bids to sell the electrical output of the Colton Facilities into CAISO on a daily basis. DB CP LLC, which is a wholly owned subsidiary of an investment fund managed by affiliates of Fortress, owns a 95% limited partnership interest in Colton, and Walters Power International LLC owns a 5% limited partnership interest in Colton. Colton’s general partner, PE-Colton LLC, which has active control of Colton, is a wholly owned indirect subsidiary of PurEnergy.
SWG California Holdings LLC is a direct, wholly owned subsidiary of Southwest Generation, the buyer. Southwest Generation is a wholly owned subsidiary of Southwest Generation Holding Co. II LLC.
The applicants told FERC that prior to this transaction, Goal Line, Kingsburg, Colton, and their affiliates own or control approximately 164.4 MW of generation within the CAISO market. An affiliate of the buyer owns or controls approximately 102 MW of generation within the CAISO market. Following this transaction, applicants stated that Goal Line, Kingsburg, Colton, and their affiliates will own or control approximately 266.4 MW of generation in CAISO, which represents approximately 0.41% of approximately 64,736 MW of installed generating capacity in the CAISO market.
Incidentally, Goal Line LP on Dec. 23 notified FERC of changes for its plant, including imminent loss of QF status, and of self-recertification of its Exempt Wholesale Generator status. Its 49.9-MW natural gas-fired cogeneration plant since commencing operations in 1995 has been a qualifying cogeneration facility (QF) under the Public Utility Regulatory Policies Act of 1978. Goal Line sells electricity generated by this facility to SDG&E under a long-term power purchase agreement originally executed in December 1990, and amended and restated in July 2013.
Under the amended PPA, which was entered into by Goal Line and SDG&E pursuant to the terms of the California Public Utility Commission’s (CPUC) CHP Settlement, the baseload operation of the Goal Line cogen has been converted into a dispatchable “Utility Prescheduled Facility” as that term is defined in the CHP Settlement. The amended PPA will remain in effect until Feb. 14, 2025 (i.e., the same term as Goal Line’s original power purchase agreement with SDG&E), and on Feb. 1, 2015, SDG&E assumed dispatch control of the cogen. Due to SDG&E’s new dispatch profile, however, Goal Line anticipates that as of Dec. 31, 2015, it will no longer be able to meet the efficiency standards necessary to maintain QF status.