FERC okays sale of California power plants by ArcLight to First Reserve

Deal covers several cogens in California

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The Federal Energy Regulatory Commission on Jan. 14 approved the sale by an affiliate of equity investor ArcLight Capital Partners to an affiliate of equity investor First Reserve of certain power plant interests in California.

On Dec. 12, 2014, Badger Creek Ltd., Double C Generation LP, High Sierra Ltd. and Kern Front Ltd. filed an application requesting commission authorization for the disposition of jurisdictional facilities. Specifically, FREIF Redwood Holdings will acquire from AL Redwood Holdings LLC 100% of the indirect membership interests in the applicants.

The applicants, exempt wholesale generators with market-based rate authority, each own a cogeneration facility that have a combined capacity of 195.4 MW. The facilities are located within Bakersfield, California, and the California Independent System Operator balancing authority area (CAISO BAA).

The entire output of the Double C, High Sierra, and Kern Front facilities is sold under long-term contracts. The entire output of the Badger Creek facility is sold under a power purchase agreement that ends June 2015. Applicants are indirect wholly owned subsidiaries of Redwood III LLC, which in turn is a direct wholly-owned subsidiary of AL Redwood. AL Redwood is direct wholly-ownedsubsidiary of ArcLight Energy Partners Fund II LP, a private equity investment fund with a focus on the independent power sector.

FREIF Redwood Holdings is an indirect wholly-owned subsidiary of FREI Bravo AIV LP (FREI). FREI is controlled directly and indirectly by senior officers of First Reserve, a global private equity firm focused on the energy industry. Within the CAISO BAA, FREI indirectly wholly owns Crockett Cogeneration, owner of a 247-MW generating facility. Other than the Crockett facility, AL Redwood currently is not affiliated with any other generation capacity in the CAISO BAA.

Under the approved transaction, FREIF Redwood Holdings will acquire from AL Redwood 100% of its membership interests in Redwood III. As part of the same transaction, but not subject to this FERC authority, FREIF Redwood Holdings will also acquire from AL Redwood its indirect interests in certain QF Project Companies. Applicants will be indirect wholly-owned subsidiaries of FREIF Redwood Holdings. The QF Project Companies will also be indirect, wholly-owned and partially-owned, subsidiaries of FREIF Redwood Holdings.

The QF Project Companies are Bear Mountain Ltd., Chalk Cliff Ltd., Corona Energy Partners Ltd., Live Oak Ltd. and McKittrick Ltd. Each of the QF Project Companies owns a natural gas-fired cogeneration facility located in California.

Power from the to-be-sold plants is supplied to mostly Pacific Gas & Electric

More details of the four facilities covered under the FERC approval are:

  • Badger Creek owns and operates a 46 MW (nameplate) cogeneration facility located in Bakersfield that is interconnected to the transmission system owned by Pacific Gas & Electric (PG&E) and operated by the California ISO. The entire capacity of the Badger Creek Facility is sold to PG&E pursuant to a power purchase agreement that is effective through June 30, 2015, on the condition that the Badger Creek Facility maintains QF status.
  • Double C owns and operates a 49.8 MW (nameplate) cogeneration facility located in Bakersfield that is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Double C Facility is committed to PG&E under a long-term contract.
  • High Sierra owns and operates a 49.8 MW (nameplate) cogeneration facility located in Bakersfield that is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the High Sierra Facility is committed to PG&E under long-term contract.
  • Kern Front owns and operates a 49.8 MW (nameplate) cogeneration facility located in Bakersfield that is interconnected to the transmission system owned by PG&E and operated by CAISO. The entire capacity of the Kern Front Facilityis committed to PG&E under long-term contract.

As for the QF Project Companies:

  • Bear Mountain, the owner of a 46 MW QF;
  • Chalk Cliff, the owner of a 46 MW QF;
  • Corona Energy Partners, the owner of a 47 MW QF;
  • Live Oak, the owner of a 46 MW QF; and
  • McKittrick, the owner of a 46 MW QF.

The entire output of the QFs owned by the QF Project Companies is committed under long-term power purchase agreements. Bear Mountain, Chalk Cliff, Live Oak, and McKittrick sell the full output of their facilities to PG&E under long-term contracts. Corona sells the full output of its facility to Southern California Edison under a long-term contract.

Barry Cassell
About the Author

Barry Cassell

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 26 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.

Barry can be reached at barryc@pennwell.com.

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