FERC okays ArcLight buys of hydro assets in New England

The Federal Energy Regulatory Commission on Jan. 10 approved a November 2016 application from TransCanada Hydro Northeast Inc. (TC Hydro) and Great River Hydro NE LLC (Great River) for authorization for the disposition of jurisdictional facilities resulting from certain transactions.

Under these deals: Great River will acquire 100% of TC Hydro from TransCanada PipeLine USA Ltd. (TC Pipeline USA); and one or more limited partners of ArcLight Fund VI will acquire a non-managing interest of between 10% and 49.9% in TC Hydro from Great River.

FERC noted in the Jan. 10 approval: “Applicants state that the Proposed Acquisition may not require Commission approval under section 203(a)(1); however, out of an abundance of caution, they nevertheless ask the Commission to authorize the Proposed Acquisition. This order authorizes the Proposed Acquisition without making any determination of jurisdiction.”

TC Hydro is an exempt wholesale generator which the commission has granted authority to make wholesale sales at market-based rates. TC Hydro owns and operates hydro assets in the ISO New England (ISO-NE) market, with a total capacity of approximately 571 MW (collectively called the Hydro Assets).

TC PipeLine USA is a direct, wholly owned subsidiary of TransCanada PipeLines Ltd. (TC PipeLines Limited), which is, in turn, a wholly owned subsidiary of TransCanada Corp. TransCanada Corp. is an energy company formed under the laws of Canada, doing business in the United States and Canada.

Great River is a wholly owned subsidiary of Great River Hydro Holdings LLC, which is a wholly owned subsidiary of ArcLight Fund VI. ArcLight Capital Partners LLC ultimately manages and controls ArcLight Fund VI.

According to the applicants, neither ArcLight Capital nor any of its affiliates are affiliated with any entity that owns or controls generation located in the ISO-NE market. Applicants added that none of ArcLight Capital or any of its affiliates own or control any inputs to electricity products or electric power production in the ISO-NE market.

Following this planned acquisition, ArcLight Fund VI may permit certain of its limited partners (Investors) to acquire indirect, non-managing membership interests in TC Hydro in addition to the passive interests they will hold through their ArcLight Fund VI limited partnership interests. Applicants do not yet know which, if any, limited partners in ArcLight Fund VI may become an Investor.

Under a Purchase and Sale Agreement, dated Nov. 1, 2016, Great River will acquire from TC PipeLine USA all of the equity interests in TC Hydro. Following closing of the acquisition, Great River will directly own 100% of the membership interests in TC Hydro, and Great River will have an indirect 100% ownership interest in all the jurisdictional facilities owned by TC Hydro. When this deal closes, TC Hydro’s existing power purchase agreement with TC PipeLines Limited will be terminated and TC Hydro will sell the output of the Hydro Assets on a merchant basis into the ISO-NE market pursuant to its market-based rate authority.

This deal covers five hydroelectric facilities located on the Connecticut and Deerfield Rivers in New Hampshire, Massachusetts and Vermont. The five are Bellows Falls, Wilder, Vernon, Fifteen Mile Falls and Deerfield River.

ArcLight Capital had announced on Nov. 1, 2016, that affiliate Great River Hydro had signed an agreement to acquire TransCanada’s New England hydroelectric portfolio. The transaction is expected to close in mid 2017, subject to customary regulatory and other approvals.

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.