FERC approves sale of Kansas wind project to NextEra Energy

Wind project is in development and would sell power to TVA

Barry Cassell | Oct 30, 2012

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The Federal Energy Regulatory Commission on Oct. 26 approved the sale of a Kansas wind power project to affiliates of NextEra Energy (NYSE: NEE).

On Sept. 18, CPV Cimarron Renewable Energy Co. LLC, Cimarron Wind Energy Holdings LLC (NextEra Cimarron Holdings) and Cimarron Wind Energy Holdings II LLC (NextEra Cimarron Holdings II and, together with NextEra Cimarron Holdings, the NextEra Entities), filed an application with FERC under the Federal Power Act (FPA).

They requested authorization for the upstream change in ownership in CPV Cimarron that will occur as the result of the sale by CPV Renewable Energy Co. (CPV Renewable Energy) and CPV Cimarron Holding Co. LLC (CPV Holding) of all of their membership interests in CPV Cimarron to the NextEra Entities. The affected jurisdictional facilities are a market-based rate tariff, wholesale power sale agreements, associated books, records, accounts, related agreements, and limited interconnection facilities.

CPV Cimarron is developing and constructing a 165.6-MW wind-powered project (the Cimarron Project) that it will own and operate. The Cimarron Project is located in Gray County, Kansas, and will be interconnected with the transmission system owned by Sunflower Electric Power Corp. and will be within Sunflower’s balancing authority area. CPV Cimarron has a 20-year power purchase agreement with the Tennessee Valley Authority under which TVA will purchase all of the power available from the Cimarron Project once it reaches commercial operation. Prior to the Cimarron Project reaching commercial operation, CPV Cimarron will sell test power into the Southwest Power Pool (SPP) market.

CPV Cimarron is an exempt wholesale generator (EWG) and has received commission authorization to sell electric energy at market-based rates.

CPV Renewable Energy owns 99% of the membership interests in CPV Cimarron, and CPV Holding owns the remaining 1% of the membership interests in CPV Cimarron. CPV Renewable Energy develops renewable energy projects in the United States. CPV Holding is a direct, wholly-owned subsidiary of CPV Renewable Energy. CPV Holding’s only business is owning its interest in CPV Cimarron. CPV Renewable Energy and CPV Holding are indirect, wholly owned subsidiaries of Competitive Power Ventures Holdings LLC, which is engaged in electric power development and asset management throughout the United States.

NextEra Cimarron Holdings II is a wholly owned subsidiary of NextEra Cimarron Holdings.

NextEra Cimarron Holdings in turn is a wholly-owned, direct subsidiary of ESI Energy LLC. ESI Energy is a wholly-owned direct subsidiary of NextEra Energy Resources LLC (NextEra Resources), which in turn is a wholly-owned indirect subsidiary of NextEra Energy (NextEra).

NextEra Resources’ subsidiaries currently own and operate merchant generating facilities located in 22 states and Canada with a combined net capacity of over 16,000 MW. According to the applicants, within the Sunflower balancing authority area, the only generation currently owned or controlled by NextEra, NextEra Resources or any of their affiliates is a 112-MW wind generation project (the Gray County Project) owned by Gray County Wind Energy LLC.

The applicants told FERC that the entire output of the Gray County Project is fully committed to Kansas City Power & Light Co. (KCP&L) under a long-term contract. In addition, an indirect subsidiary of NextEra Resources, Ensign Wind LLC, is constructing a 98.9-MW wind facility (the Ensign Project) within the Sunflower balancing authority area which is expected to enter operation later this year. Applicants stated that the entire output of the Ensign Project is fully committed to KCP&L under a long-term contract.

Applicants stated that at the closing of the proposed transaction, CPV Renewable Energy and CPV Holding will sell and transfer all of their ownership interest in CPV Cimarron to the NextEra Entities. Applicants stated that NextEra Cimarron Holdings will acquire 99% of the membership interest in CPV Cimarron and NextEra Cimarron Holdings II will acquire the remaining 1%. The applicants told the commission that while consummation of the proposed transaction will result in an upstream change in the ownership of CPV Cimarron, CPV Cimarron will continue to own its assets including its FPA-jurisdictional contracts and facilities.

Steve Rodgers, Director of FERC’s Division of Electric Power Regulation–West, acting on behalf of the commission, approved this deal, agreeing that it doesn’t have any market power issues.

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