Following a prior approval from the Florida Public Service Commission, the Federal Energy Regulatory Commission on Oct. 13 approved a Florida Power & Light buy of the 330-MW, coal-fired Indiantown plant.
On July 13, Florida Power & Light appiied at FERC for approval of a transaction in which Florida Power & Light would purchase all of the upstream ownership interests in Palm Power LLC and Toyan Enterprises LLC currently held by Calypso Energy Holdings LLC, the upstream owner of a 330-MW qualifying cogeneration facility located in Indiantown, Florida.
Florida Power & Light stated that the seller is a subsidiary of Ares EIF Management LLC, which has exclusive management interests in several private equity investment funds that own power projects in the United States.
Florida Power & Light explained that the Indiantown Facility is interconnected with the Florida Power & Light transmission system at the adjacent Warfield Substation pursuant to an Interconnection and Transmission Service Agreement originally executed in February 1992. U.S. Operating Services LLC, a wholly owned subsidiary of the seller, manages the Indiantown Facility’s operations pursuant to an operation and maintenance agreement.
Florida Power & Light stated that it and Indiantown Cogen are parties to an existing Power Purchase Agreement under which Florida Power & Light purchases all of the firm capacity and electric power produced by the Indiantown Facility while the steam is sold to a nearby citrus processing facility. Florida Power & Light noted that the Power Purchase Agreement was originally executed in 1990, has since been amended several times, and is scheduled to terminate in 2025. It calls for above-market payments for this power.
Florida Power & Light stated that it will purchase the plant for $451 million (including existing debt), making Florida Power & Light the sole owner of the Indiantown Facility. Florida Power & Light explains that because the existing bonds financing the project are not callable or defeasible before 2020, the debt must remain in place following consummation of this transaction until that time. Florida Power & Light explained further that the Power Purchase Agreement must also be maintained due to bond covenants.
The utility will acquire the existing Power Purchase Agreement as the Indiantown Facility owner and the Power Purchase Agreement counterparty. U.S. Operating Services will continue to operate the Indiantown Facility under Florida Power & Light’s direction. Florida Power & Light plans to maintain the Qualifying Facility status of the Indiantown Facility, and, as owner, would continue to be entitled to economically dispatch the facility as needed to meet its system needs. Florida Power & Light anticipates that the Indiantown Facility will be economically dispatched no more than 5% of the time, and that it will operate the facility through the end of 2018 to meet its capacity needs. The Indiantown Facility will be available to operate through the life of the bonds, but Florida Power & Light does not expect to need the capacity after 2018, and does not anticipate the facility operating after 2018.
The Florida Public Service Commission on Oct. 3 approved Florida Power & Light’s purchase and eventual retirement of this plant. The transaction is expected to save FPL customers $100 million to $151 million over the next nine years. State commissioners agreed that FPL’s $451 million purchase is more cost effective for customers than continuing above-market payments under an existing power purchase contract with the plant through 2025.