FERC Issues Order to Broken Bow Wind, LLC Crofton Bluffs Wind, LLC on Order Authorizing Disposition of Jurisdictional Facilities

WASHINGTON, Nov. 6 -- The U.S. Department of Energy'sFederal Energy Regulatory Commission issued the text of the following delegated order:

Broken Bow Wind, LLC Docket No. EC13-6-000

Crofton Bluffs Wind, LLC

ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES

On October 4, 2012, Broken Bow Wind, LLC (Broken Bow) and Crofton Bluffs Wind, LLC (Crofton Bluffs) (together, Applicants) filed an application under section 203(a)(1)(A) of the Federal Power Act (FPA) requesting Commission authorization for the disposition of jurisdictional facilities that will result from the transfer of certain indirect, equity interests in Applicants to Capistrano Wind Partners, LLC (Capistrano Wind) (Proposed Transaction). The affected jurisdictional facilities consist of market-based rate tariffs, limited interconnection facilities, and related contracts, agreements, books, and records.

Capistrano Wind is a Delaware limited liability company, whose Class A managing interests are owned by Edison Mission Group, acting through one or more of its direct or indirect subsidiaries. As part of a transaction authorized by the Commission on December 27,2011, Capistrano Wind transferred 100 percent of its Class B non-managing membership interests to two institutional investors, Teachers Insurance Annuity Association of America (Teachers Insurance Annuity Association), which currently holds 87 percent, and Cook Inlet Region, Inc. (Cook Inlet Region), which currently holds the remaining 13 percent. In a separate application filed on October 4, 2012 in Docket No. EC13-4-000, Capistrano, through its indirect, wholly-owned subsidiary Mountain Wind Power II, LLC, filed a request for authorization for a transfer of more than 10 percent of the Class B non-managing membership interests in Capistrano Wind from the two institutional investors to AMP Capital Investors Limited (AMP Capital Investors) solely in AMP Capital Investors' capacity as trustee of the REST Infrastructure Trust (collectively, the Institutional Investors).

Broken Bow owns, is constructing, and will operate an approximately 80 megawatt (MW) wind-powered generating facility located in Custer County, Nebraska. The facility will be interconnected with the transmission system owned by the Nebraska Public Power District (NPPD), a member of the Southwest Power Pool, Inc. Broken Bow is an exempt wholesale generator authorized by the Commission to sell power at market-based rates. All of the electrical output of Broken Bow's generating facility will be sold to NPPD pursuant to a long-term power purchase agreement. Broken Bow is currently wholly-owned by Mission Wind Broken Bow, Inc., which in turn is a wholly-owned subsidiary of Edison Mission Wind, Inc. (Edison Mission Wind).

Edison Mission Wind is an indirect wholly-owned subsidiary of Edison Mission Group, Inc. (Edison Mission Group).

Crofton Bluffs owns, is constructing, and will operate an approximately 40 MW wind-powered generating facility located in Knox County, Nebraska. The facility will be interconnected with the transmission system owned by the NPPD. Crofton Bluffs is an exempt wholesale generator authorized by the Commission to sell power at market-based rates. All of the electrical output of Crofton Bluffs' generating facility will be sold to NPPD pursuant to a long-term power purchase agreement. Crofton Bluffs is wholly-owned by Mission Wind Crofton Bluffs, Inc., which in turn is a wholly-owned subsidiary of Edison Mission Wind (an indirect wholly-owned subsidiary of Edison Mission Group).

Edison Mission Group is wholly-owned by Edison International, which also is the ultimate parent company of Southern California Edison Company (SCE).

Edison Mission Group also is affiliated with several power marketers, none of which owns or controls any generation in the NPPD balancing authority area (BAA), the relevant market for the Proposed Transaction. Within the NPPD BAA, Edison Mission Group is affiliated with two entities with market-based rate authority: Elkhorn Ridge Wind, LLC, (Elkhorn Ridge) owns and operates an approximately 80 MW wind-powered electric generation facility located in Boone County, Nebraska; and Laredo Ridge Wind, LLC, (Laredo Ridge) owns and operates an approximately 80 MW wind-powered generating facility also located in Boone County, Nebraska. Elkhorn Ridge and Laredo Ridge sell all of the output from their facilities to NPPD at market-based rates pursuant to long-term purchase agreements. Teachers Insurance Annuity Association is a legal reserve life insurance company with investments in the energy sector that include an indirect, approximately 49 percent interest in Otay Landfill Gas LLC, which owns certain electric generation facilities located in southern California with a combined capacity of 7.5 megawatt (MW). Teachers Insurance Annuity Association also owns an approximately 24.9 percent interest in Electric Infrastructure Alliance of America, L.L.C. (EIAA), a real estate investment trust formed to invest in the energy infrastructure sector in the United States. Applicants state that neither Teachers Insurance Annuity Association nor its affiliates owns or controls a 10 percent or greater voting interest in entities that have market-based rate authority, own or control electric generation, transmission, or distribution facilities, or own or control other inputs to electric power production in the United States.

Cook Inlet Region is an Alaska Native corporation established to benefit Alaska Natives who had ties to the Cook Inlet Region. Cook Inlet Region is south-central Alaska's largest private landowner and has 1.3 million acres of subsurface estate available for responsible gas, oil, mineral, and alternative development. Applicants state that neither Cook Inlet Region nor its affiliates own or control a 10 percent or greater voting interest in entities that have market-based authority, own or control electric generation, transmission, or distribution facilities, or own or control other inputs to electric power production in the United States.

The REST Infrastructure Trust is a special purpose investment trust, the sole beneficiary of which is the Retail Employees Superannuation Trust (REST), an Australian fund. AMP Capital Investors is the trustee and investment manager of the REST Infrastructure Trust and exercises discretion on the management of the assets including REST Infrastructure Trust's interests in Capistrano Wind, subject to fiduciary obligations including to act in the best interest of REST. AMP Capital Investors is a privately owned Australian investment manager that provides services to private investors, institutions, advisors, and its managed funds. Applicants state that neither AMP Capital Investors in its capacity as trustee of the REST Infrastructure Trust nor the REST Infrastructure Trust owns or controls a 10 percent or greater voting interest in entities that have market-based rate authority, own or control electric generation, transmission, or distribution facilities, or own or control other inputs to electric power production in the United States.

The Proposed Transaction consists of the transfer of 100 percent of the upstream ownership interests in Applicants from subsidiaries of Edison Mission Group to Capistrano Wind, which is managed by subsidiaries of Edison Mission Group. Upon completion of the Proposed Transaction, Applicants will become indirect, wholly-owned subsidiaries of Capistrano Wind and will, according to Applicants, continue to be affiliates of Edison Mission Group.

Applicants state that the Proposed Transaction is consistent with the public interest and will have no adverse effect on competition, rates, or regulation, nor will it result in any cross-subsidization or the pledge or encumbrance of utility assets to any associated company. With respect to horizontal market power, Applicants state that the Proposed Transaction raises no concerns. Applicants state that since they are currently affiliated with Edison Mission Group, their acquisition by Capistrano Wind will not change the market share of generating capacity that Edison Mission Group indirectly holds in the NPPD BAA. Applicant's further state that the entire net output of their facilities is committed under long-term power purchase agreements.

With regard to vertical market power, Applicants state that the Proposed Transaction raises no concerns. Applicants assert that except for SCE, or as otherwise disclosed in the application, neither of Applicants, Capistrano Wind, Edison Mission Group, Teachers Insurance Annuity Association, Cook Inlet Region, AMP Capital Investors in its capacity as trustee of the REST Infrastructure Trust, or any of their affiliates, own or control entities that own, operate, or control transmission facilities in the United States, other than limited interconnection facilities necessary to connect individual generating units to the transmission grid or entities that own or control inputs to electric power production in the NPPD BAA.

With regard to rates, Applicants state that the Proposed Transaction will not have an adverse effect because their power will continue to be sold at market-based rates and pursuant to existing long-term agreements. The application states that neither of the Applicants have any transmission rates or transmission customers. With regard to regulation, Applicants state that the Proposed Transaction will not affect the manner or extent to which the Commission, any state, or any other federal agency may regulate them. Upon completion of the Proposed Transaction, Applicants will continue to be public utilities with market-based rates subject to the jurisdiction of the Commission.

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 closing or in the future, cross-subsidization of a non-utility associate company or the pledge or encumbrance of assets of a traditional public utility that has captive customers or that owns or provides transmission service over jurisdictional facilities for the benefit of an associate company. Specifically, Applicants state that neither of them or Capistrano is a public utility that has captive ratepayers, and that the Proposed Transaction will not result in, at the time of the Proposed Transaction or in the future: (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 contract 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 October 5, 2012, with comments, protests, or interventions due on or before October 25, 2012. None were received.

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) (2012). Any opposed or untimely filed motion to intervene is governed by the provisions of Rule 214.

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 this 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, North America Electric Reliability Corporation or the relevant regional entity may audit compliance with reliability and cybersecurity standards.

When a controlling interest in a public utility is acquired by another company, whether a domestic company or a foreign company, the Commission's ability to adequately protect public utility customers against inappropriate cross-subsidization may be impaired absent access to the parent company's books and records. Section 301 (c) of the FPA gives the Commission authority to examine the books and records of any person who controls, directly or indirectly, a jurisdictional public utility insofar as the books and records relate to transactions with or the business of such public utility. The approval of this transaction is based on such examination ability.

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, Applicants are advised that it must comply with the requirements of Order No. 652. In addition, Applicants shall make any necessary filings under section 205 of the FPA to implement the Proposed Transaction.

After consideration, it is concluded that the Proposed Transaction is consistent with the public interest and is authorized, subject to the following conditions:

(1) The Proposed Transaction is authorized upon the terms and conditions 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 determinations of costs, 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 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; and

(7) Applicants shall notify the Commission within 10 days of the date that the disposition of jurisdictional facilities 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 (2012). 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 (2012).

Steve P. Rodgers

Director, Division of Electric

Power Regulation - West

TNS CT21CT-121107-4097676 61ChengTacorda