The staff at the Virginia State Corporation Commission on Dec. 20 recommended approval of an Oct. 6 application from Appalachian Power Co. (APCo) and Eagle Creek Reusens Hydro LLC for the sale by APCo and acquisition by Eagle Creek of the 12.5-MW Reusens hydroelectric plant and real estate located near Lynchburg, Virginia.
Eagle Creek has also requested that the commission issue a certificate of public convenience and necessity (CPCN) authorizing Eagle Creek to operate the hydro facility.
APCo, a unit of American Electric Power (NYSE: AEP). has owned the facility since 1926. Eagle Creek is a wholly-owned subsidiary of Eagle Creek Development Holdings LLC, which is a wholly-owned subsidiary of Eagle Creek Renewable Energy LLC, which is owned by a group of private equity funds. In response to Staffs inquiry regarding Eagle Creek’s managerial, financial, and technical resources, the petitioners represented that Eagle Creek is “part of a corporate family that currently owns and operates over 59 hydroelectric facilities in Illinois, Wisconsin, Michigan, Massachusetts, Minnesota, New York, New Jersey, New Hampshire, Vermont, and Maine.”
The petitioners stated that parts of the hydro facility have been removed from regulated utility service over the last several years due to equipment failures. APCo elected not to repair the affected units because less expensive options were available to provide replacement electric energy. Once Eagle Creek acquires the facility, it plans to refurbish and operate it in order to dispatch electric power into the PJM Interconnection wholesale energy markets.
APCo employed a competitive auction process to conduct the sale of the facility. Multiple bidders submitted bids, and APCo accepted Eagle Creek’s bid.
Said the Dec. 20 staff recommendation: “Based on the Petitioners’ representations regarding the financial, managerial, and technical resources of Eagle Creek, the sufficiency of electric service for APCo’s customers from other assets in APCo’s generation portfolio, and the reduction in APCo’s rate base from the net proceeds of the Transfer, it appears that adequate service to the public at just and reasonable rates would not be impaired or jeopardized by the proposed Transfer. Therefore, Staff recommends that the Commission grant Utility Transfers Act approval of the Transfer subject to certain requirements outlined in the attached Appendix.”
Staff added: “Based on the Petitioners’ representations, it appears that the proposed Transfer: (1) will have no material adverse effect upon the rates paid by customers of any regulated public utility in the Commonwealth; (2) will have no material adverse effect upon reliability of electric service provided by any such regulated public utility; and (3) is not otherwise contrary to the public interest. Therefore, Staff recommends approval of the issuance of a CPCN to Eagle Creek….”
Notable is that APCo applied on Oct. 7 at the West Virginia Public Service Commission for approval of this same transaction.