The Federal Energy Regulatory Commission on April 22 approved the sale by NRG Energy (NYSE: NRG) of stakes in several power plants now co-owned by affiliates of oil producer Chevron (NYSE: CVX).
On March 21, Sunrise Power Co. LLC requested commission authorization for the disposition of jurisdictional facilities. NRG Energy Holdings will acquire from Chevron an indirect 50% voting interest in Sunrise Power; and in turn, Chevron Power Holdings will acquire from NRG Holdings an indirect 50% voting interest in six companies that each own and operate a qualifying cogeneration facility (the Cogen QFs).
Sunrise Power, an exempt wholesale generator with market-based rate authority, owns and operates an approximately 586-MW natural gas-fired facility located in Fellows, Calif., and interconnected with the transmission grid controlled by the California Independent System Operator (CAISO). Sunrise Power is currently owned 50% indirectly by NRG Holdings and 50% indirectly by Chevron.
The Cogen QFs, each authorized with market-based rate authority, are:
- Coalinga Cogeneration, owner and operator of an approximately 37 MW facility located in Fresno County, Calif.;
- Kern River Cogeneration, owner and operator of an approximately 283 MW facility located in Bakersfield, Calif.;
- Mid-Set Cogeneration, owner and operator of an approximately 33 MW facility located in Kern County, Calif.;
- Salinas River Cogeneration, owner and operator of an approximately 34 MW facility located in Monterey County, Calif.;
- Sargent Canyon Cogen, owner and operator of an approximately 34 MW facility located in Monterey County, Calif.; and
- Sycamore Cogeneration, owner and operator of an approximately 295 MW facility located in Kern County, Calif.
The Cogen QFs are each owned 50% directly or indirectly by NRG Holdings and 50% indirectly by Chevron.
NRG Holdings was formed to effect this proposed transaction. NRG Holdings is indirectly wholly-owned by NRG Energy. NRG Energy got these power plant stakes in its recent buy of Edison Mission Energy. Chevron had been at the bankruptcy court for Edison Mission Energy trying to force Edison Mission Energy out of its 50% shares in certain co-owned plants.
The proposed transaction involves a purchase and sale agreement between Chevron Power, which is an indirect subsidiary of Chevron, and NRG Holdings. Under the agreement, NRG Holdings will acquire a 50% indirect interest in Sunrise Power from Chevron. Thus, NRG Holdings will indirectly own a 100% interest in Sunrise Power. In turn, Chevron Power will acquire from NRG Holdings a 50% indirect interest in each of the Cogen QFs. Thus, Chevron will indirectly own a 100% interest in the Cogen QFs.