FERC okays ownership change related to legal deal for Springerville Unit 1

The Federal Energy Regulatory Commission on Sept. 12 approved a March 29 application from Tucson Electric Power for approval to acquire, through a series of related transactions, the 50.495% fee interest that it does not already own in the coal-fired Springerville Generating Station Unit 1, as well as certain associated interests in non-jurisdictional common facilities of the Springerville plant. 

Tucson Electric owns approximately 2,763 MW of capacity including, as is relevant here, approximately 210 MW as a result of its 49.505% fee interests in Springerville 1.

Tucson Electric states that the interests in Springerville 1 and its common facilities are held in trust by Wilmington Trust Co. (Wilmington) and William J. Wade (Wade) for the benefit of Alterna Springerville LLC (Alterna) and LDVF1 TEP LLC (LDVF1). Tucson Electric said that Alterna holds, through a passive grantor trust, a 43.0693% undivided interest in Springerville 1 and 21.53465% undivided interest in certain non-jurisdictional common facilities at the Springerville station. Tucson Electric states that LVDF1 holds, through a passive grantor trust, a 7.4257% undivided interest in Springerville 1 and 3.72635% undivided interest in certain non-jurisdictional common facilities at Springerville.

Tucson Electric also states that Alterna and LDVF1 are both exempt wholesale generators and have market-based rate tariffs on file with the commission

Springerville 1 is a 424.8-MW unit that forms part of the approximately 1,755 MW Springerville Generating Station, which is located near Springerville, Arizona. Tucson Electric said that prior to Dec. 30, 2014, it held an approximately 14.14% fee interest in Springerville 1 and leased the balance of the unit under the terms of several lease agreements with Wilmington and Wade.

Tucson Electric acquired an additional 35.35% of the fee interest in Springerville 1 on Dec. 30, 2014, and Jan. 1, 2015, and the remaining leases expired on Jan. 1, 2015.

In November 2014, Alterna, LDVF1, Wilmington, and Wade filed a complaint with the commission in anticipation of the expiration of the leases. The commission denied the complaint and follow-on rehearing request, and the complainants subsequently filed a petition for review with the U.S. Court of Appeals for the Ninth Circuit. The appeal has been stayed at the request of the complainants so they could pursue settlement, which has resulted in this now-approved transaction.

Under this deal, Tucson Electric intends to acquire the interests in Springerville 1 and its common facilities. Specifically, Tucson Electric states that under the terms of the Purchase and Sale Agreement it will: purchase all interests in the trust holding Alterna’s 43.0693% fee interest in Springerville 1 and Alterna’s 21.53465% interest in certain non-jurisdictional common plant of the Springerville station; and purchase all interests in the trust holding LDVF1’s 7.4257% fee interest in Springerville 1 and LDVF1’s 3.72635% interest in the Springerville Common Plant.

Following the transfer of these interests, Tucson Electric will dissolve the trusts and directly hold all of the fee interests in Springerville 1, and an undivided 50% interest in the Springerville Common Plant. Following consummation of the transaction, the parties will seek dismissal of their various adversarial proceedings, including the appeal before the Ninth Circuit.

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.