The four companies that will control power plants to be bought from American Electric Power – Gavin Power LLC, Darby Power LLC, Lawrenceburg Power LLC and Waterford Power LLC – applied Oct. 31 at the Federal Energy Regulatory Commission for authorization to make sales of energy, capacity and ancillary services at market-based rates.
These companies are wholly-owned subsidiaries of Lightstone Generation LLC. Lightstone Generation is a special purpose entity formed by ArcLight Energy Partners Fund VI LP (ArcLight Fund VI), Blackstone Energy Partners II NQ LP (BEP II) and Blackstone Capital Partners VII NQ LP (BCP VII). The Blackstone companies are both subsidiaries of The Blackstone Group LP. Lightstone is buying four power plants from AEP Generation Resources Inc. and AEP Generating Co.
On Sept. 13, 2016, Burgundy Power LLC, as the predecessor company to Lightstone Generation, entered into an agreement with AEP for the purchase of:
- Gavin, a two-unit coal-fired station located in Cheshire, Ohio, with a summer net capacity rating of 2,665 MW that began commercial operation in 1974;
- Lawrenceburg, a two-unit, natural gas-fired combined-cycle station located in the City of Lawrenceburg, Indiana, with a summer net capacity rating of 1,120 MW that began commercial operation in 2004;
- Darby, a six-unit natural gas-fired simple-cycle station located near Mount Sterling, Ohio, with a summer capacity rating of 471 MW that began commercial operation in 2001; and
- Waterford, a natural-gas fired combined cycle station located in Waterford Township, Washington County, Ohio, with a summer net capacity rating of 866 MW that began commercial operation in August of 2003.
Wholesale sales of energy, capacity and ancillary services made by three of the facilities—Gavin, Darby and Waterford—are subject to the commission’s jurisdiction and are currently made pursuant to market-based rate authorization granted to AEP Generation Resources. For the fourth facility—Lawrenceburg—AEP Generating is party to a cost-based unit power sale agreement under which it makes capacity and energy sales to AEP Generation Resources. This unit-power sale agreement will be terminated by the parties to the agreement effective contemporaneous with consummation of the purchase transaction, consistent with the terms of the agreement.
Said the Oct. 31 application: “The Lightstone Generation Companies are filing the instant application in order to secure market-based rate authority necessary to make wholesale sales of power from each of the four Assets upon consummation of the Transaction. Following the closing of the Transaction, Lightstone Generation, and therefore each of the Lightstone Generation Companies, will be owned by ArcLight Fund VI (50% share of ownership) and certain Blackstone subsidiaries and affiliates (50% share of ownership). ArcLight Fund VI will hold its interest in Lightstone Generation directly through ArcLight Burgundy Holdings, LLC, a wholly-owned, direct subsidiary of ArcLight Fund VI. With respect to Blackstone’s ownership interest, BCP VII will own approximately 19% of the Lightstone Generation Companies and BEP II will own approximately 26% of Lightstone Generation Companies. Certain other investment funds affiliated with Blackstone will own the remaining interest in the Lightstone Generation Companies, which interests will not individually exceed 2% share of ownership and approximately 5% ownership in aggregate of Lightstone Generation and the Lightstone Generation Companies.
“Prior to the closing of the Transaction, Lightstone Generation and the Lightstone Generation Companies will not own any generation capacity or participate in any electric market in any fashion. After consummation of the Transaction, the only electric transmission facilities that will be owned or controlled by the Lightstone Generation Companies will be those limited and discrete interconnection facilities necessary to connect the Assets to the grid.”
Within the PJM Interconnection balancing authority area (BAA), the ArcLight Funds currently are affiliated with various companies that own or control generation capacity, including:
- Allegheny Ridge Wind Farm LLC, the owner of an 80-MW (summer rating) wind facility located in Cambria and Blair counties, Pennsylvania;
- Chief Conemaugh Power LLC, the owner of a 35.11% undivided ownership interest in the 1,711 MW (summer/winter) Conemaugh Electric Generating Station located in New Florence, Pennsylvania. Chief Conemaugh has rights to approximately 601 MW of energy and capacity from the coal-fired facility.
- Chief Keystone Power LLC, the owner of a 44.45% undivided ownership interest in the 1,711 MW (summer/winter) Keystone Electric Generating Station located in Shelocta, Pennsylvania. Chief Keystone has rights to approximately 761 MW of energy and capacity from the coal-fired facility.
- Crescent Ridge LLC, the owner of a 53-MW (summer rating) wind facility located in Bureau County, Illinois;
- GSG LLC, the owner of an approximately 80 MW (summer rating) wind facility located in Lee and La Salle counties, Illinois;
- Crete Energy Venture LLC, the owner of an approximately 300-MW (summer rating) natural gas-fired facility located in Crete, Illinois;
- Jersey-Atlantic Wind LLC, the owner of an approximately 7.5 MW (summer rating) wind qualifying small power production facility located in Atlantic City, New Jersey.
American Electric Power (NYSE: AEP) had announced on Sept. 14 that it had signed an agreement to sell these four competitive power plants totaling approximately 5,200 MW for about $2.17 billion to a newly-formed joint venture of Blackstone (NYSE: BX) and ArcLight Capital Partners LLC.
“AEP’s long-term strategy has been to become a fully regulated, premium energy company focused on investment in infrastructure and the energy innovations that our customers want and need. This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets,” said Nicholas K. Akins, AEP chairman, president and chief executive officer, in that Sept. 14 announcement.