ArcLight seeks approval to sell New Jersey power plant to Macquarie

ArcLight would under this deal completely exit a 512-MW plant

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Bayonne Energy Center LLC, PER Development Holdings LLC and Ragfy Holdings LLC applied Feb. 10 at the New York State Public Service Commission for an approval related to an upstream change of ownership for Bayonne Energy Center.

They asked for a declaratory ruling that the New York Public Service Commission need not review under Public Service Law (PSL) Section 70 the proposed corporate transaction that would result in changes in BEC’s upstream ownership. In the alternative, they requested that the commission grant approval for the proposed transaction pursuant to Section 70. Petitioners also requested that the commission confirm that lightened regulation will continue to be applied to Bayonne Energy Center as provided in a 2014 order.

Bayonne Energy Center constructed and now operates the Bayonne Energy Center Project, which includes: a 512-MW multi-unit, simple-cycle natural gas-fired plant located in Bayonne, New Jersey; and a 345-kV (ac) submarine electric transmission system routed from Bayonne to the Consolidated Edison Co. of New York (Con Ed) Gowanus Substation in Brooklyn, New York. The submarine cable constitutes a dedicated generator lead for the generating facility to supply electricity into the New York market.

Bayonne Energy Center is indirectly owned 100% by PER Development Holdings, a wholly-owned subsidiary of ArcLight Energy Partners Fund III LP.

Under the proposed transaction, PER Development Holdings would sell 100% of its indirect ownership interests in Bayonne Energy Center to Ragfy, an indirect wholly-owned subsidiary of Macquarie Infrastructure Co. LLC (MIC LLC). MIC LLC is a publicly-listed company that is externally managed by a wholly-owned indirect subsidiary of Macquarie Group Ltd. (MGL). MGL is a global provider of banking, financial, advisory, investment, and funds management services.

MGL is affiliated with entities that own or control electric generation and electric transmission facilities within the U.S. None of those facilities is located in the New York Independent System Operator (NYISO) Balancing Authority Area. MGL indirectly owns 100% of Macquarie Energy LLC, which operates as a power marketer in various markets in the United States and is authorized by FERC to sell energy, capacity, and ancillary services at market-based rates to wholesale purchasers. Macquarie Energy also operates as a natural gas trading and marketing company and trades oil and coal. Macquarie Energy does not own or control any electric generation, transmission, or distribution facilities.

After the transaction, Ragfy would become the indirect owner of 100% of the interests in Bayonne Energy Center, and neither ArcLight Fund III nor any of its affiliates would retain any direct or indirect ownership interest in Bayonne Energy Center. Bayonne Energy center would remain the owner of its power plant.

The application noted: "Neither Ragfy, MGL, nor any affiliate of either owns or controls any generation, electric transmission, or electric distribution facilities in the NYISO Zone J market or New York State. With respect to markets that are first tier to New York, MGL indirectly owns 10% or more of the outstanding voting interests in Duquesne Light Company ('DLC') in Pennsylvania. DLC purchases, transmits, and distributes electric energy to customers in southwestern Pennsylvania. DLC divested all of its generation in the year 2000. Affiliates of DLC acquired less than 10% interests in the 850 MW Keystone and the 1700 MW Conemaugh units in Pennsylvania in 2006. DLC’s transmission facilities are currently integrated into the market administered by PJM Interconnection, L.L.C. ('PJM'). DLC does not provide transmission service and does not have captive customers. Service on DLC’s transmission facilities is provided under PJM’s open access transmission tariff (OATT).

"In the ISO New England, Inc. Balancing Authority Area ('ISO-NE'), affiliates of MGL own two landfill gas facilities in Rhode Island with a total net capacity of less than 40 MW, the output of which is sold to National Grid in New England. MGL and its affiliates do not own or control any other generation, electric transmission or distribution facilities in PJM or New England." 

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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