Non-approval sought in New York for sale of former Kodak power facilities

RED-Rochester LLC, RED Investment LLC, RED Parent LLC, Ironclad Energy Partners LLC, Ironclad Energy Ventures LLC and Stonepeak Infrastructure Fund II LP on June 17 filed with the New York State Public Service Commission for a declaratory ruling that the proposed upstream transfer of ownership interests in RED-Rochester is entitled to an exemption of approval requirements.

RED-Rochester controls a “tri-generation” operation at an industrial park founded by Eastman Kodak in downtown Rochester, N.Y.

Ironclad Energy Partners LLC is a joint venture between Stonepeak Infrastructure and lronclad Energy Ventures. Ironclad was formed for the purpose of acquiring, developing, owning and making additional capital investments in middle market generation facilities similar to RED-Rochester. However, at this time, Ironclad has no other ownership in New York generation, transmission or distribution assets.

Stonepeak will be providing the majority of the equity in Ironclad. As the majority equity partner, Stonepeak is expected to have governance rights over all major decisions of Ironclad and will own 98% or more of the business. The principals of Ironclad are John Prunkl (CEO) and Christopher Fanella (President and CFO), who will serve as the management team for Ironclad and will handle all day-to-day aspects of the business. 

Stonepeak Infrastructure Fund II LP is a North America-focused private equity fund with headquarters in New York. Stonepeak invests in businesses comprised of hard assets with leading market positions. Stonepeak has experience developing, owning and investing in energy generation assets, and more specifically applicable to RED-Rochester’s operations, principals at Stonepeak have experience developing, constructing, owning and operating multiple cogeneration facilities in North America.

Ironclad Energy Ventures LLC currently has a single member, John Prunkl. Within 30 days, however, Christopher Panella will also be a member of the company.

The Ironclad principals, John Prunkl and Christopher Panella, have expenence developing, acquiring, financing, building, owning, operating, maintaining, upgrading and managing various utility plants throughout the United States (including New York State) and internationally. Their experience specifically includes providing service to industrial customers. They have developed/ acquired, owned and operated projects totaling more than 11,000 MW of energy service capacity over the course of their careers.

Kodak sold these assets in 2013 to RED-Rochester

RED-Rochester is a wholly-owned subsidiary of RED Investment, which is a wholly-owned subsidiary of RED Parent. The principals of RED-Rochester, Thomas R. Casten and Sean T. Casten, founded Recycled Energy Development LLC in December 2006, now a wholly-owned subsidiary of RED Parent.

RED-Rochester is the only entity presently owned by RED Parent and RED Investment providing regulated utility services in New York State. Several other RED Investment subsidiaries operate combined heat and power (CHP) facilities in other states. These include: RED-Burlington LLC, which has a CHP facility co-located on the premises of a New Jersey wallboard manufacturer; RED-CO I LLC, which has a CHP facility co-located on the premises of a California milk producer; and RED-Franklin LLC, which has a CHP facility co-located on the premises of a Massachusetts milk producer. These facilities have a combined nameplate generating capacity of 7.5 MW.

The host for the RED facilities, the Eastman Business Park, is an industrial park owned by Eastman Kodak, which also includes significant portions of property that are no longer owned by Kodak but still dependent on utility operations at the park. The park is comprised of real estate and fixtures that cover an area that is roughly four miles long by one mile wide. Kodak, over time, developed, operated and maintained extensive generation and utility distribution systems, including interconnected natural gas, interconnected electric, steam, chilled water, compressed air, sewer and water utility distribution facilities. From inception until 2013, Kodak operated its utilities business through a separate division. In 2013, these facilities were purchased by and are currently operated by RED-Rochester.

The key asset of RED-Rochester is a “tri-generation” power plant that simultaneously generates electricity, steam and refrigeration for use at the industrial park. The Power Plant consists of four coal-fired boilers, plus four oil-fired backup boilers. The RED-Rochester facilities also include assets used to distribute the products of the Power Plant, and to generate, collect, treat and/ or distribute, as applicable, compressed air, demineralized water, natural gas, high-purity water, nitrogen, 9° calcium chloride brine, chilled water, industrial water, potable water, fire water and industrial wastewater treatment.

RED-Rochester currently supplies utility services to Kodak as well as twelve independent businesses that are RED-Rochester’s direct utility customers. These customers are projected to consume approximately 40% of RED-Rochester’s utility services in 2016. The remainder of RED-Rochester’s 2016 sales are to Kodak, also as a direct RED-Rochester customer. Kodak’s utility usage includes utilities used by its approximately 57 tenants. 

The RED-Rochester utility assets include: 1400 psig coal-fired steam boilers (one pulverized coal boiler and two operable cyclone coal boilers); 260 psig oil-fired steam boilers and all associated equipment; steam turbine generators; switchgear; metering; control and excitation system; steam distribution headers; electrical power distribution; water intake/treatment plant and auxiliary equipment; emission control equipment; fuel handling equipment; ash handling system; condensate recovery systems; steam-driven chillers; steam-driven air compressors; a waste water treatment facility; interconnected natural gas, electric, steam and water utility distribution facilities; and other facilities for the operation of regulated and non-regulated utility services. The electric generating facilities have a nameplate capacity of 114 MW, with a net export/import capacity of 53 MW at the point where the generating facilities interconnect to the electricity transmission grid.

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.