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TMCNet:  FERC Issues Order Authorizing Acquisition and Disposition of Jurisdictional Facilities re TPF II USPG Holdings, LLC et al Under EC13-154

[December 03, 2013]

FERC Issues Order Authorizing Acquisition and Disposition of Jurisdictional Facilities re TPF II USPG Holdings, LLC et al Under EC13-154

(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, Dec. 3 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order: TPF II USPG Holdings, LLC Docket No. EC13-154-000 TPF II USPG Merger Sub, Inc.


US Power Generating Company Astoria Generating Company, L.P.

ORDER AUTHORIZING ACQUISITION AND DISPOSITION OF JURISDICTIONAL FACILITIES (Issued December 3, 2013) On September 25, 2013, TPF II USPG Holdings, LLC (TPF Holdings), TPF II USPG Merger Sub, Inc. (TPF Merger Sub), US Power Generating Company (US Power), and Astoria Generating Company, L.P. (Astoria Generating) (collectively, the Applicants) filed an application pursuant to section 203(a)(1)(A) of the Federal Power Act (FPA) requesting Commission authorization for all approvals deemed to be required in connection with a transaction under which TPF Merger Sub will be merged with and into US Power, and US Power and its public utility subsidiary, Astoria Generating, will become wholly owned by TPF Holdings (Proposed Transaction). The jurisdictional facilities involved in the Proposed Transaction are the generator interconnection facilities associated with Astoria Generating's facilities, market-based rate tariff, and contracts and books and records under its market based-rate tariff.

The Applicants state that all the interests in Astoria Generating are currently indirectly owned by US Power. US Power is a corporation originally formed to acquire merchant generating facilities and other competitive power assets. Astoria Generating is the only subsidiary of US Power that owns or controls operational electric generating facilities, electric transmission facilities, or other inputs to electric power production. Astoria Generating owns and operates 2,172 megawatts (MW) of generation capacity in the New York City submarket (Zone J) of the New York Independent System Operator, Inc. (NYISO). Astoria Generating is an exempt wholesale generator with market-based rates. Madison Dearborn Partners IV (Madison Dearborn) owns more than 10 percent of the voting (Class B) shares in US Power, and Madison Dearborn indirectly owns an interest in First Wind Holdings, LLC (First Wind). The Applicants state that First Wind owns and operates electric generating facilities in the NYISO market The Applicants state that TPF Holdings and TPF Merger Sub were both formed for the purpose of the Proposed Transaction. All of the interests in TPF Merger Sub are owned by TPF Holdings. The voting interests of TPF Holdings are directly and indirectly owned by TPF II, L.P., TPF II-A, L.P., and TPF II-B, L.P., (collectively, the TPF Entities). The TPF Entities own interests in various generation facilities in the United States, and their upstream owners include entities and individuals that are affiliated with Tenaska Energy, Inc. (Tenaska Energy) and its subsidiaries. Tenaska Energy is an independent developer and an owner of power production facilities. TPF Holdings and TPF Merger Sub are not currently affiliated with any generation in NYISO. Certain of their affiliates, however, do own or control generating facilities in markets first-tier to the NYISO market. The Applicants state that the subsidiaries of the TPF Entities, Tenaska Energy, TPF Holdings and Merger Sub and other relevant affiliates are treated as affiliates for the purposes of this application.

The Applicants state that in the Proposed Transaction, Merger Sub will be merged with, and into US Power and US Power will be the surviving corporation. As a result of the transaction, US Power will become a wholly owned direct subsidiary of TPF Holdings, and Astoria Generating will become a wholly owned indirect subsidiary of TPF Holdings.

The Applicants state that the Proposed Transaction is consistent with the public interest because it will have no adverse impact on competition, rates, or regulation and will not result in cross-subsidization or the pledge or encumbrance of utility assets for the benefit of an associate company.

With respect to competition, the Applicants state that the Proposed Transaction presents no horizontal market power concerns because the merging entities do not currently conduct business in the same geographic market. The Applicants explain that US Power and its subsidiaries (including Astoria Generating) are located in the NYC sub-market (Zone J), and none of the TPF II Holdings, TPF Merger Sub, or their affiliates currently own or operate generating facilities in Zone J, the relevant market, or the broader NYISO market. The Applicants add that the Proposed Transaction will have a slightly de-concentrating effect on the NYISO market because US Power and Astoria Generating will no longer be affiliated with First Wind, whose subsidiaries own and operate generating facilities in the NYISO market Therefore, according to the Applicants, the Proposed Transaction does not raise any horizontal market power concerns.

The Applicants state that the Proposed Transaction raises no vertical market power concerns, because neither TPF Holdings, Merger Sub, or any subsidiary of US Power owns or controls any operational transmission facilities, other than the limited facilities necessary to interconnect generating facilities to the transmission grid. Additionally, the Applicants state that neither TPF Holdings, Merger Sub, or any of their affiliates own or control inputs to electricity products in the NYISO market. Therefore, the Applicants state that the Proposed Transaction does not raise any vertical market power concerns.

The Applicants state that the Proposed Transaction will have no adverse effect on rates because wholesale sales of electric energy, capacity, and ancillary services by Astoria Generating and public utility affiliates of TPF Holdings and TPF Merger Sub will continue to be made at market-based rates. The Applicants state that neither the Applicants nor any of their affiliates is a traditional utility with captive retail or wholesale customers or provides unbundled transmission service. The Applicants state that the only cost-based sales made by any of the US Power subsidiaries are Astoria Generating's sales of black start and restoration service to the NYISO pursuant to Rate Schedule 5 and the only cost-based sales by public utility affiliates of TPF II Holdings and Merger Sub are sales of reactive power and black start service in other markets pursuant to various tariffs and rate schedules on file with the Commission The Applicants continue that nothing in Rate Schedule 5 or any of the rate schedules and tariffs under which public utility affiliates of the Applicants provide power would allow for the pass through of costs associated with the Proposed Transaction. Therefore, the Applicants state that the Proposed Transaction will have no adverse effect on rates.

The Applicants state that the Proposed Transaction will not have an adverse effect on the effectiveness of federal or state regulation, because the Applicants' regulatory status will remain unchanged and no gaps in regulation will be created. The Applicants also state that the Proposed Transaction will not affect the extent to which any state authority can regulate retail rates. Therefore, The Applicants states that the Proposed Transaction will not impair the effectiveness of regulation.

The Applicants state that, based on facts and circumstances known to it or that are reasonably foreseeable, the Proposed Transaction will not result in, at the time of the Proposed Transaction or in the future, cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets of a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional facilities for the benefit of an associate company, including: (1) any transfer of facilities between a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, and an associate company; (2) any new issuance of securities by a traditional public utility associate company that has captive customers or that owns, or provides transmission service over, jurisdictional transmission facilities, for the benefit of an associate company; (3) any new pledge or encumbrance of assets of a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, for the benefit of an associate company; or (4) any new affiliate contracts between a non-utility associate company and a traditional public utility associate company that has captive customers or that owns or provides transmission service over jurisdictional transmission facilities, other than non-power goods and service agreements subject to review under sections 205 and 206 of the FPA.

The filing was noticed on September 25, 2013, with comments, protests or interventions due on or before October 16, 2013. None was filed. Notices of intervention and unopposed timely filed motions to intervene are granted pursuant to the operation of Rule 214 of the Commission's Rules of Practice and Procedure (18 C.F.R. section 385.214). Any opposed or untimely filed motion to intervene is governed by the provision of Rule 214.

Order No. 652 requires that sellers with market-based rate authority timely report to the Commission any change in status that would reflect a departure from the characteristics the Commission relied upon in granting market-based rate authority. The foregoing authorization may result in a change in status. Accordingly, the Applicants are advised that it must comply with the requirements of Order No. 652. In addition, the Applicants shall make appropriate filings under section 205 of the FPA, to implement the Proposed Transaction.

Information and/or systems connected to the bulk system involved in this transaction may be subject to reliability and cybersecurity standards approved by the Commission pursuant to FPA section 215. Compliance with these standards is mandatory and enforceable regardless of the physical location of the affiliates or investors, information database, and operating systems. If affiliates, personnel or investors are not authorized for access to such information and/or systems connected to the bulk power system, a public utility is obligated to take the appropriate measures to deny access to the information and/or the equipment/software connected to the bulk power system. The mechanisms that deny access to information, procedures, software, equipment, etc. must comply with all applicable reliability and cybersecurity standards. The Commission, NERC or the relevant regional entity may audit compliance with reliability and cybersecurity standards.

After consideration, it is concluded that the Proposed Transaction is consistent with the public interest and is hereby authorized, subject to the following conditions: (1) The Proposed Transaction is authorized upon the terms and conditions described in this Order and for the purposes set forth in the application; (2) The foregoing authorization is without prejudice to the authority of the Commission or any other regulatory body with respect to rates, service, accounts, valuation, estimates or determination of cost or any other matter whatsoever now pending or which may come before the Commission; (3) Nothing in this order shall be construed to imply acquiescence in any estimate or determination of cost or any valuation of property claimed or asserted; (4) The Commission retains authority under sections 203(b) and 309 of the FPA, to issue supplemental orders as appropriate; (5) If the Proposed Transaction results in changes in the status or the upstream ownership of Applicants' affiliated Qualifying Facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R. section 292.207 (2012) shall be made; (6) Applicants shall make appropriate filings under section 205 of the FPA, as necessary, to implement the Proposed Transaction; (7) Applicants must inform the Commission of any change in circumstances that would reflect a departure from the facts the Commission relied upon in authorizing the Proposed Transaction; and (8) Applicants shall notify the Commission within 10 days of the date that the Proposed Transaction has been consummated.

This action is taken pursuant to the authority delegated to the Director, Division of Electric Power Regulation - West under 18 C.F.R. section 375.307. This order constitutes final agency action. Requests for rehearing by the Commission may be filed within 30 days of the date of issuance of this order pursuant to 18 C.F.R. section 385.713.

Steve P. Rodgers Director, Division of Electric Power Regulation - West TNS 30FurigayJane-131204-4566523 30FurigayJane (c) 2013 Targeted News Service

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