FERC okays First Reserve sale of gas-fired power plants to Harbert-led group

The Federal Energy Regulatory Commission on Oct. 31 okayed a Sept. 19 application from WG Partners Acquisition LLC (as the buyer), plus various project companies, for approval of the sale of interests in those project companies.

The project companies are Lea Power Partners LLC, Waterside Power LLC, Badger Creek Ltd., Chalk Cliff Ltd., Double C Generation LP, High Sierra Ltd., Kern Front Ltd., McKittrick Ltd., Bear Mountain Ltd. and Live Oak Ltd. WG Partners Acquisition plans to purchase from FREIF NAP I Holdings II LLC 100 percent of this seller’s ownership interests in FREIF NAP I Holdings III LLC.

This includes certain jurisdictional assets located within the California Independent System Operator (CAISO), Southwest Power Pool (SPP) and ISO New England (ISO-NE) markets. 

WG Partners Acquisition is an indirect joint venture holding company formed by Harbert Power Fund V LLC (HPF V), UBS Asset Management Funds Ltd. (UBSI), on behalf of UBS International Infrastructure Fund II (UBS IIF II), and The Northwestern Mutual Life Insurance Co. (NML). The ownership interests in WG Partners Acquisition are: HPF V has approximately 49%, UBS IIF II has about 33%, and NML has about 18%. WG Partners Acquisition was formed for the purpose of acquiring these ownership interests in the project companies and does not own or control any jurisdictional assets.

  • HPF V is organized as an investment fund and is managed by Harbert Power MM V LLC (Harbert Power MM V). HPF V was formed to invest in exempt wholesale generators (EWGs), qualifying facilities (QFs), and related power assets. Certain institutional investors, including pension funds, insurance companies, foundations and affiliates’ partners, have committed capital to HPF V in exchange for passive membership interests. Harbert Power MM V is a wholly owned subsidiary of Harbert Management Corp. (HMC), an institutional investment manager, which business activities are limited to the management of HPF V.
  • UBS IIF II is an investment vehicle with an objective to invest in core infrastructure assets in diversified sectors including energy infrastructure, utilities, telecommunications, transport infrastructure and social infrastructure. The general partner of UBS IIF II has appointed UBSI to manage investment activities of the partnership by utilizing the services of the Infrastructure and Private Equity (I&PE) team. The I&PE team manages direct investments across the sectors of gas transmission, electricity generation, telecommunications, waste management, water utility, and wind.
  • NML is a mutual insurance company, and NML and its subsidiaries offer a range of life insurance, disability insurance, annuities, long-term care insurance, investment products and advisory and trust services. NML has invested equity in a range of energy and power assets and holds, directly or indirectly, equity interests in electric generation and transmission assets.

The project companies are:

  • Badger Creek is an EWG with market-based rate authority. Badger Creek owns and operates a 46-MW natural gas-fired facility located in Bakersfield, California. The Badger Creek Facility is interconnected to the transmission system owned by Pacific Gas and Electric (PG&E) and operated by CAISO. The entire capacity of the Badger Creek Facility is committed to PG&E pursuant to a seven-year tolling agreement that expires on April 30, 2021.
  • Chalk Cliff is an EWG with market-based rate authority. Chalk Cliff owns and operates a 46-MW natural gas-fired facility located in Bakersfield, California. The Chalk Cliff Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Chalk Cliff Facility is committed to PG&E pursuant to a seven-year tolling agreement that expires on April 30, 2021.
  • Double C is an EWG with market-based rate authority. Double C owns and operates a 49.8-MW natural gas-fired facility located in Bakersfield, California. The Double C Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Double C Facility is committed to PG&E pursuant to a nine-year tolling agreement that expires on December 1, 2020.
  • High Sierra is an EWG with market-based rate authority. High Sierra owns and operates a 49.8 MW natural gas-fired facility located in Bakersfield, California. The High Sierra Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the High Sierra Facility is committed to PG&E pursuant to a nine-year tolling agreement that expires on November 30, 2020.
  • Kern Front is an EWG with market-based rate authority. Kern Front owns and operates a 49.8 MW natural gas-fired facility located in Bakersfield, California. The Kern Front Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Kern Front Facility is committed to PG&E pursuant to a nine-year tolling agreement that expires on November 30, 2020.
  • McKittrick is an EWG with market-based rate authority. McKittrick owns and operates a 46 MW natural gas-fired facility located in Bakersfield, California. The McKittrick Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the McKittrick Facility is committed to PG&E pursuant to a nine-year tolling agreement that expires on April 30, 2021.
  • Bear Mountain is an EWG with market-based rate authority. It owns and operates a 46 MW natural gas-fired facility located in Bakersfield, California. The Bear Mountain Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Bear Mountain Facility is committed to PG&E pursuant to a seven-year tolling agreement that expires on April 30, 2021.
  • Live Oak is an EWG with market-based rate authority. Live Oak owns and operates a 46-MW natural gas-fired facility located in Bakersfield, California. The Live Oak Facility is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Live Oak Facility is committed to PG&E pursuant to a seven-year tolling agreement that expires on April 30, 2021.
  • Lea Power is an EWG with market-based rate authority. It owns and operates a 674-MW natural gas-fired facility located in Lea County, New Mexico. The Hobbs Generating Station is interconnected to the transmission system owned by Southwestern Public Service (SPS) and operated by SPP. The entire capacity of the Hobbs Generating Station is committed to SPS pursuant to a power purchase agreement that is in effect until 2033.
  • Waterside Power is an EWG with market-based rate authority. It owns and operates a 69.6-MW liquid fuel-fired facility located in Stamford, Connecticut. The Waterside Facility is interconnected to the transmission system owned by Connecticut Light and Power (CL&P) and operated by ISO-NE. All of the output of the Waterside Facility is currently sold in the wholesale markets administered by ISO-NE under a contract for differences with CL&P that extends through May 31, 2024. 

Borger Energy Associates LP (Borger) and Corona Energy Partners LTD (Corona), whose indirect ownership interests are being transferred to WG Partners Acquisition, own electric generating facilities that are QFs, but Borger and Corona are neither applicants nor do they have market-based rate authority.

  • Borger owns and operates a 230-MW natural gas-fired cogeneration facility located near Borger, Texas. The Borger Facility is interconnected to the transmission system owned by SPS and operated by SPP. Borger sells all of the electric output from the Borger Facility to SPS under a long-term contract in effect through 2024.
  • Corona owns and operates a 47-MW natural gas-fired cogeneration facility located in Corona, California. The Corona Facility is interconnected to the transmission system owned by Southern California Edison (SCE) and operated by CAISO. Corona sells all of the electric output from the Corona Facility to SCE under a long-term contract.

The seller in this transaction is a wholly owned, direct subsidiary of FREI Bravo AIV LP (FREI). FREI is managed and controlled by its general partner, First Reserve Energy Infrastructure GP LP, which is managed and controlled by its general partner, First Reserve Energy Infrastructure GP Ltd. FREI GP Ltd. is owned by its shareholders. 

Under this now-approved transaction, the seller will sell to WG Partners Acquisition 100% of its ownership interests of FREIF NAP I Holdings III that includes the transfer of 100% of the indirect ownership interests in the project companies. Upon closing of the this transaction, the project companies will be indirectly owned subsidiaries of WG Partners Acquisition.

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.