The Federal Energy Regulatory Commission on Sept. 29 approved a July 29 application from FPL Energy Marcus Hook LP, FPL Energy MH50 LP and NatGas Holdings 2 LLC for authorization of a change in upstream ownership of Marcus Hook and MH50.
Upon consummation of this now-approved transaction, NatGas will indirectly, wholly own Marcus Hook and MH50.
FERC noted: “Applicants state that the Proposed Transaction may not require Commission approval under FPA section 203(a)(2); however out of an abundance of caution, they nevertheless ask the Commission to authorize the Proposed Transaction. This order authorizes the Proposed Transaction without making any determination of jurisdiction.”
- Marcus Hook owns a 786-MW natural gas-fired facility located in Marcus Hook, Pennsylvania, and in New Castle County, Delaware. The Marcus Hook Project is interconnected with the PJM Interconnection transmission system, within the PJM East submarket. Marcus Hook is an exempt wholesale generator (EWG) and is authorized to sell energy, capacity, and ancillary services at market-based rates. Marcus Hook has entered into a long-term contract to sell 685 MW of capacity from the facility to the Long Island Power Authority.
- MH50 owns a 48-MW natural gas-fired cogen located in Marcus Hook, Pennsylvania, within the PJM East submarket and is interconnected with the PJM system. MH50 is an EWG and is authorized to sell energy, capacity, and ancillary services at market-based rates.
Marcus Hook and MH50 are wholly owned, indirect subsidiaries of ESI Energy, which is wholly-owned by NextEra Energy Resources LLC, which in turn is a wholly owned, indirect subsidiary of NextEra Energy (NYSE: NEE).
NatGas is a newly-formed, wholly-owned subsidiary of NatGas Fund Holdings LLC (NatGas Fund), which in turn is wholly owned by SEIF II U.S. Partnership Holdings II LLC (SEIF II). At the time this transaction closes, NatGas will be approximately 33.3% owned by NatGas Fund and approximately 66.7% owned by NatGas Co-Invest Holdings 3 LP (NatGas Co-Invest), with the limited partners of NatGas CoInvest holding passive interest in NatGas with no voting rights.
The general partner of NatGas Co-Invest is indirectly managed and controlled by Starwood Energy Group Global LLC (Starwood Energy). Cornerstone Gas LLC (Cornerstone Gas), a newly-formed company, is a wholly owned subsidiary of Cornerstone Gas Holdings LLC (Cornerstone Holdings), which in turn is wholly owned by NatGas. SEIF II is an indirect subsidiary of funds managed and controlled by Starwood Energy. Through certain entities it controls, Starwood Energy is the sole manager of certain private equity funds that invest in power generation and transmission projects (collectively called the “Starwood Funds”). Starwood Energy is a private equity fund, focusing on energy infrastructure investments, including acquiring and holding interests in power generation and transmission projects. Starwood Energy is privately owned and controlled by a group of natural persons (or trusts or similar vehicles for the benefit of one or more individual persons), none of whom directly or indirectly controls or is affiliated with any electric generator or “public utility” other than through the Starwood Funds.
In the PJM market, NatGas is affiliated with Hazleton Generation LLC, which owns and operates a 146-MW natural gas and oil-fired facility located in Hazle Township, Luzerne County, Pennsylvania, within the 5004/5005 submarket of PJM. Outside of the PJM market, NatGas is affiliated with generation located in the New York Independent System Operator, Electric Reliability Council of Texas (ERCOT) and California Independent System Operator markets, and the Gainesville balancing authority area.
Upon consummation of this transaction, NatGas will indirectly own 100% of the partnership interests in Marcus Hook and MH50. ESI Energy will no longer hold any interests in Marcus Hook and MH50.
NextEra Energy announced this deal on July 29. The total consideration to be paid is $760m, including estimated working capital at closing. Upon closing, NextEra Energy Resources expects the sale to result in net proceeds of approximately $255m after repayment of the existing project related financing. The transaction is expected to close in the fourth quarter of 2016, pending the receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.