The Federal Energy Regulatory Commission on Sept. 30 approved an Aug. 8 application from Broad River Energy LLC for authorization related to a change of control of Broad River Energy resulting from the sale of 100% of the membership interests in Broad River Power Holdings LLC (BRP Holdings) to Noonan Acquisition Co. LLC.
Broad River Energy is a direct, wholly owned subsidiary of Broad River Power LLC (BRP). It is an exempt wholesale generator (EWG) and is authorized to sell energy, capacity, and ancillary services at market-based rates. Broad River Energy operates an approximately 850.5-MW dual-fired, simple-cycle facility (Broad River Facility) located in Cherokee County, South Carolina, within the Duke Energy Carolinas LLC balancing authority area (BAA).
Broad River OL-1 LLC, Broad River OL-2 LLC, Broad River OL-3 LLC and Broad River OL-4 LLC (collectively, the “Owner Lessors”) lease the Broad River Facility from Cherokee County under a standard fee-in-lieu of taxes lease (FILOT). Owner Lessors may acquire ownership of the Broad River Facility at any time during the term of the FILOT lease upon payment to the county of nominal consideration. The ownership interests of the Owner Lessors are passive. The Owner Lessors are directly, wholly owned by BRP and have obtained exempt wholesale generator status.
Applicant subleases the Broad River Facility from each of the Owner Lessors, and Applicant has a 100% leasehold interest in, and full control over, the Broad River Facility pursuant to a long-term sublease with the Owner Lessors with the term expiring on Dec. 31, 2025.
The output of the Broad River Facility is fully committed to Duke Energy Progress LLC through two long-term power purchase agreements. The first long-term power purchase agreement for Units 1, 2 and 3 of the Broad River Facility is set to expire in 2021, and the second long-term agreement for the remaining Units 4 and 5 is set to expire in 2022.
BRP is a direct, wholly owned subsidiary of BRP Holdings, which is directly held by four affiliated investment funds: Energy Capital Partners II-A LP (ECP II-A); Energy Capital Partners II LP (ECP II LP); Energy Capital Partners II-B (Broad River IP LP (ECP II-B); and Energy Capital Partners II-C (Broad River IP) LP (ECP II-C). In addition to these so-called “ECP Sellers,” Broad River Management LLC owns an approximate 1.775% net profits interest in BRP Holdings.
The ECP Sellers are directly or indirectly and wholly owned by: Energy Capital Partners GP II LP (ECP GP II) as general partner; and various passive limited partner investors. ECP GP II, in turn, is directly and wholly owned by: Energy Capital Partners II LLC as general partner; and various passive limited partner investors.
ECP II is focused on the development and acquisition of, and investment in, energy infrastructure assets, and the related ownership, operation and management of these assets, including electric generation and inputs to electric generation in North America.
The buyer, Noonan, was formed for the purpose of acquiring all of the equity interests in BRP Holdings, which indirectly and wholly owns Broad River Energy. Noonan is 100% owned by Noonan Holdings LLC (Noonan Holdings), which is currently 100% owned by Arroyo Energy Investors Fund II LP (Arroyo II). At closing, Noonan Holdings will be owned by a combination of Arroyo II, Arroyo Energy Investors II Blocker LLC, Arroyo Broad River Direct Investment I LP (Arroyo Broad River) and Arroyo Broad River Direct Investment I Blocker LLC.
Arroyo II is directly and wholly owned by: Arroyo Energy Investors Fund II GP LP (Arroyo II GP); and various passive limited partner investors. Arroyo Broad River is directly and wholly owned by: Arroyo Broad River Direct Investment I GP LP (Arroyo Broad River GP); and various passive limited partner investors.
Arroyo Energy Investors Fund II GP LLC (Arroyo GP) is the general partner of Arroyo II GP and Arroyo Broad River GP. Arroyo II GP, in turn, is the general partner of Arroyo II, and Arroyo Broad River GP is the general partner of Arroyo Broad River.
Arroyo GP is controlled by the two individuals that are its members.
Applicant stated that, other than an interest in KMC Thermo LLC, which owns a 230-MW combined-cycle, natural gas-fired facility (Brandywine Facility) located in Prince George’s County, Maryland, within the PJM Interconnection BAA, neither Noonan nor any of its affiliates currently owns, directly or indirectly, any electricity generation, transmission or distribution facilities.
Applicant stated that, pursuant to the terms of a Purchase and Sale Agreement, Noonan will purchase, and ECP Sellers and Broad River Management will sell, 100% of the ownership interests in BRP Holdings. As a result, Broad River Energy and the Owner Lessors will become indirect wholly owned subsidiaries of Noonan and will cease to be affiliated with ECP II and their affiliates.