FERC Issues Order to Mountain Wind Power, LLC Mountain Wind Power II, LLC on Order Authorizing Disposition of Jurisdictional Facilities

WASHINGTON, Dec. 27 -- The U.S. Department of Energy'sFederal Energy Regulatory Commission issued the text of the following delegated order:

Mountain Wind Power, LLC Docket No. EC12-42-000

Mountain Wind Power II, LLC

Order Authorizing Disposition Of Jurisdictional Facilities

On November 23, 2011, Mountain Wind Power, LLC (Mountain Wind I) and Mountain Wind Power II, LLC (Mountain Wind II) (collectively, Applicants) filed an application pursuant to section 203(a)(1) of the Federal Power Act (FPA) requesting Commission authorization for the disposition of jurisdictional facilities in connection with the transfer of certain indirect non-managing equity interests in Applicants to a newly formed, wholly-owned affiliate of Teachers Insurance and Annuity Associate of America (Teachers Insurance) and a wholly-owned subsidiary of Cook Inlet Region, Inc. (Cook) (the Transaction). The jurisdictional facilities affected by the Transaction consist of Applicants' market-based rate tariffs and related contracts, agreements, books and records, and Applicants' limited interconnection facilities.

Mountain Wind I owns and operates an approximately 60 megawatt (MW) wind-powered generating facility located in Wyoming. Applicants state that the facility consists of twenty-nine 2.1 MW wind turbines and other equipment necessary to interconnect the facility to the transmission grid.

Applicants add that the facility is interconnected with the transmission system owned and operated by PacifiCorp and is located in the PacifiCorp-East (PACE) balancing authority area (BAA).

Mountain Wind I operates as a qualifying facility (QF) under the Public Utility Regulatory Policies Act of 1978, as amended (PURPA), Applicants state that the Commission has authorized Mountain Wind I to sell energy, capacity, and ancillary services at market-based rates. Applicants add that Mountain Wind I is an indirect, wholly-owned subsidiary of Edison Mission Group.

Mountain Wind II operates as a QF under PURPA. Applicants state that the Commission has authorized Mountain Wind II to sell energy, capacity, and ancillary services at market-based rates. Applicants add that all of the electrical output of the facility is sold to PacifiCorp pursuant to a long-term power purchase agreement. Applicants state that Mountain Wind II is 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), a public utility with a franchised service territory in southern California.

Applicants state that Edison Mission Group is also affiliated with several power marketers, none of which owns or controls any generation in the PACE BAA, the relevant market for the transaction.

Applicants state that Edison Mission Group is affiliated with certain existing generation facilities in the United States. In the PACE BAA, Edison Mission Group is affiliated with Spanish Fork Wind Park 2, LLC (Spanish Fork), the owner and operator of an approximately 18.9 MW (net) wind-powered generating facility located in Utah (Spanish Fork Facility).

Applicants state that the Spanish Fork Facility is interconnected with the transmission system owned and operated by Rocky Mountain Power. Spanish Fork is an exempt wholesale generator under PUHCA 2005 that operates as a QF. Applicants add that all of the electrical output of the Spanish Fork Facility is sold to PacifiCorp pursuant to a long-term power purchase agreement.

Capistrano Wind is a Delaware limited liability company with its principal place of business in Santa Ana, California. Applicants state that Capistrano Wind is owned by Edison Mission Group, acting through one or more of its direct or indirect subsidiaries.

Cook is an Alaska Native corporation and one of 12 Alaska-based regional corporations established by the Alaska Native Claims Settlement Act of 1971and benefits Alaska Natives who had ties to the Cook Inlet region.

Applicants state that Cook is based in Anchorage and is owned by more than 7,400 Alaska Native shareholders. Applicants add that neither Cook 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.

Applicants state that in the initial stage of the Transaction, Capistrano Wind will admit Teachers Insurance (87 percent) and Cook (13 percent) (the Institutional Investors) as members that will jointly own 100 percent of the Class B non-managing membership interests in Capistrano Wind, with Edison Mission Group continuing to own 100 percent of the Class A managing membership interests. Applicants continue that Edison Mission Group, acting through one or more of its direct or indirect subsidiaries, will continue to own 100 percent of the Class A managing membership interests. Applicants state that immediately after the initial stage of the Transaction, 100 percent of the indirect, upstream equity interests in Mountain Wind I and Mountain Wind II will be transferred to Capistrano Wind in an internal corporate reorganization of Edison Mission Group. Applicants state that upon completion of the Transaction, Applicants will become direct, wholly-owned subsidiaries of Capistrano Wind and will continue to be affiliates of Edison Mission Group. Applicants state that the Transaction is consistent with the public interest and will not adversely affect competition, rates or regulation. With respect to competition, Applicants state that Applicants are currently affiliated with Edison Mission Group. Applicants thus submit that Applicants' acquisition by Capistrano Wind will not change the market share of generating capacity that Edison Mission Group, through its affiliates, holds in the relevant market. Applicants argue that their affiliation with Teachers Insurance and Cook resulting from the Transaction similarly does not raise any horizontal market power concerns, because none of Teachers Insurance, Cook, or any of their respective affiliates owns or controls a 10 percent or greater voting interest in entities that own or control electric generating facilities in PACE, the relevant market for the Transaction.

Applicants add that the entire net output of their facilities is committed under long-term agreements. Applicants submit that the Commission has found no adverse effect on competition when the output of a generating facility is fully committed under long-term agreements.

Applicants state that the Transaction raises no vertical power concerns.

Applicants state that none of Applicants, Capistrano Wind, Edison Mission Group, Teachers Insurance, Cook, or any of their affiliates owns or controls a 10 percent or greater voting interest in entities that own, operate, or control transmission facilities in the United States, other than the limited interconnection facilities necessary to connect individual generating units to the transmission grid. Applicants note that SCE's transmission facilities are located outside of the relevant markets, are subject to an open access transmission tariff, and are under the operational control of the California Independent System Operator Corporation. Applicants add that none of Applicants, Capistrano Wind, Edison Mission Group, Teachers Insurance, Cook, or any of their affiliates owns or controls a 10 percent or greater voting interest in entities that own or control inputs to electric power production in the relevant market. Applicants state that, in any event, the Commission has adopted a rebuttable presumption that ownership or control of such inputs to electric power production does not allow an entity to erect barriers to entry.

Applicants state that the Transaction will have no adverse effect on rates.

Applicants state that they will continue to operate under their market-based rate authorization after consummation of the Transaction. Further, Applicants will continue to sell the full net output of their generating facilities pursuant to existing long-term agreements, the terms of which Applicants state will not be affected by the Transaction. Applicants add that none of the Applicants has any transmission rates or transmission customers. Applicants state that the Transaction will have no adverse effect on regulation. Applicants note that the Transaction will have no effect on the manner or extent to which the Commission, any state, or any other federal agency may regulate the Applicants. Applicants add that upon completion of the Transaction, Applicants will continue to be public utilities with market-based rates subject to the jurisdiction of the Commission. Furthermore, Applicants state that the Transaction will have no impact on state-commission regulation.

Applicants contend that the Transaction will not result in cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company.

Applicants state that none of Applicants or Capistrano Wind is a public utility that has captive ratepayers or that owns or provides transmission service over jurisdictional transmission facilities. Applicants state that while Edison Mission Group is affiliated with SCE, a public utility with a franchised electric service territory in southern California, SCE is not a party to the Transaction. Therefore, Applicants assert, the Transaction is within "safe harbors" created by the Commission and is unlikely to raise any issues with respect to cross-subsidization.

Additionally, Applicants state that based on the facts and circumstances known to them or reasonably foreseeable, the Transaction will not result in, at the time of the Transaction or in the future, cross-subsidization of a non-utility associate company or the pledge or encumbrance of assets for the benefit of an associate company. Applicants state that the Transaction will not result in: (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 services agreements subject to review under sections 205 and 206 of the FPA.

This filing was noticed on November 25, 2011, with comments, protests or interventions due on or before December 14, 2011. None were filed. 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). Any opposed or untimely filed motion to intervene is governed by the provision of Rule 214. 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 appropriate filings under section 205 of the FPA, to implement the Transaction.

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 the 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, NERC or the relevant regional entity may audit compliance with reliability and cybersecurity standards.

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

(1) The 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 determination of cost 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 Transaction results in changes in the status or the upstream ownership of Applicant's affiliated Qualifying Facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R.section 292.207 (2009) shall be made;

(6) Applicants shall make appropriate filings under section 205 of the FPA, as necessary, to implement the Transaction;

(7) Applicants must inform the Commission of any change in circumstances that would reflect a departure from the facts the Commission relied upon in authorizing the Transaction; and

(8) 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. 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.

Steve P. Rodgers

Director, Division of Electric

Power Regulation - West

TNS CT21CT-111228-3729338 61ChengTacorda