FERC Issues Order to Mountain Wind Power, LLC Mountain Wind Power II 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:

Mountain Wind Power, LLC Docket No. EC13-4-000

Mountain Wind Power II LLC

ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES On October 4, 2012, 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) (A) of the Federal Power Act (FPA) requesting Commission authorization for the disposition of jurisdictional facilities in connection with the transfer of a 10 percent or greater indirect non-managing membership interest in Applicants to AMP Capital Investors Limited (AMP Capital) solely in its capacity as trustee of the REST Infrastructure Trust (Transaction). The jurisdictional facilities affected by the Transaction consist of Applicants' market-based rate tariffs, related contracts, agreements, books and records, and Applicants' limited interconnection facilities. Mountain Wind I is an indirect, wholly-owned subsidiary of Capistrano Wind Partners, LLC (Capistrano Wind). Mountain Wind owns and operates an approximately 60 megawatt (MW) wind-powered generating facility located in Uinta County, Wyoming. The facility consists of twenty-nine 2.1 MW wind turbines and other equipment necessary to interconnect the facility to the transmission grid. The facility is interconnected with the transmission system owned and operated by PacifiCorp and is located in the PacifiCorp-East (PACE) balancing authority area. All of the electrical output of the facility is sold to PacifiCorp pursuant to a long-term power purchase agreement. Mountain Wind I operates as a qualifying facility (QF) under the Public Utility Regulatory Policies Act of 1978, as amended (PURPA). It is authorized to sell energy, capacity, and ancillary services at market-based rates.

Mountain Wind II is an indirect, wholly-owned subsidiary of Capistrano Wind. Mountain Wind II owns and operates a 79.8 MW wind-powered generating facility located in <location value="LU/us.wy.uinta" idsrc="xmltag.org">Uinta County, Wyoming. The facility consists of thirty-eight 2.1 MW wind turbines and other equipment necessary to interconnect the facility to the transmission grid. The facility is interconnected with the transmission system owned and operated by PacifiCorp and is located in the PACE balancing authority area. All of the output of the facility is sold to PacifiCorp pursuant to a long-term power purchase agreement. Mountain Wind II operates as a QF under PURPA. It is authorized to sell energy, capacity, and ancillary services at market-based rates.

Capistrano Wind is a Delaware limited liability company with its principal place of business in Santa Ana, California. The Class A managing membership interests in Capistrano Wind are wholly-owned by Edison Mission Group, Inc. (Edison Mission Group) acting through one or more of its direct or indirect subsidiaries. Capistrano Wind transferred 100 percent of its Class B non-managing membership interest to two institutional investors, Teachers Insurance and Annuity Association of America (Teachers Insurance) (which currently holds 87 percent of the Class B interests through a wholly-owned subsidiary) and Cook Inlet Region, Inc. (Cook Inlet) (which currently holds the remaining 13 percent of the Class B interests through a wholly-owned subsidiary).

Edison Mission Group is wholly-owned by Edison International, which is the ultimate parent company of Southern California Edison Company (SoCal Edison), a public utility with a franchised service territory in southern California. Applicants state that Edison Mission Group is affiliated with several power marketers, none of which owns or controls any generation in the PACE balancing authority area, the relevant market for the Transaction.

Edison Mission Group also is affiliated with certain existing generation facilities in the United States. In the PACE balancing authority area, Edison Mission Group is affiliated with Spanish Fork Wind Park 2, LLC (Spanish Fork), the owner and operator of an approximately 18.9 MW wind-powered generating facility located in Spanish Fork City, Utah. The facility is interconnected with the transmission system owned and operated by Rocky Mountain Power. All of the electrical output of the facility is sold to PacifiCorp pursuant to a long-term power purchase agreement.

Spanish Fork operates as a QF and is an exempt wholesale generator.

Applicants state that with the exception of SoCal Edison, neither Edison Mission Group nor any of its affiliates currently owns, operates, or controls any transmission facilities in the United States, other than the limited equipment necessary to connect individual generating facilities to the transmission grid. SoCal Edison owns transmission facilities in California and has an Open Access Transmission Tariff (OATT) on file with the Commission. SoCal Edison conveyed operational control over its transmission system to the California Independent System Operator Corporation (CAISO), which has an OATT on file with the Commission.

Teachers Insurance is a legal reserve life insurance company established under the insurance laws of the state of New York. Teachers Insurance's investments in the energy sector include an indirect, approximately 49 percent ownership interest in Otay Landfill Gas LLC (Otay). Otay is the owner of certain electric generation facilities located in southern California with a combined electric generation capacity of 7.5 MW.

Applicants state that these facilities are QFs. In addition, Teachers Insurance holds an approximately 24.9 percent ownership interest in Electric Infrastructure Alliance of America, L.L.C., a real estate investment trust established to invest in the energy infrastructure sector in the United States. Applicants state that except as noted above, neither Teachers Insurance 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 is an Alaska Native corporation based in Anchorage. It has a diversified investment portfolio. Cook Inlet 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 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.

Retail Employees Superannuation Trust (REST) is an Australian complying superannuation fund governed by the Superannuation Industry Act of 1993.

The REST Infrastructure Trust is a special purpose investment trust, the sole beneficiary of which is the REST. AMP Capital 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 interests of REST.

AMP Capital is a privately owned investment manager headquartered in Sydney, Australia that primarily provides services to private investors, institutions, advisers, and its managed funds. Applicants state that neither AMP Capital 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.

According to the application, the Transaction consists of the admission of AMP Capital, solely in its capacity as trustee of the REST Infrastructure Trust, as a Class B non-managing member of Capistrano Wind. Applicants state that currently, Teachers Insurance and Cook Inlet own 100 percent of the Class B non-managing membership interest in Capistrano Wind. AMP Capital in its capacity as trustee of the REST Infrastructure Trust will acquire 10 percent or greater Class B non-managing membership interest in Capistrano Wind. Upon completion of the Transaction, Teachers Insurance, Cook Inlet, and AMP Capital will in the aggregate own 100 percent of the Class B non-managing membership interest in Capistrano Wind.

Applicants state that the Transaction is consistent with the public interest and will not adversely affect competition, rates or regulations. With respect to competition, Applicants state that its' affiliation with AMP Capital as trustee of the REST Infrastructure Trust resulting from the Transaction does not raise any horizontal market power concerns. Applicants state that the entire net output of its' facilities is committed under long-term power purchase 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 market power concerns. Applicants note that the SoCal Edison's transmission facilities are located outside of the relevant markets, are subject to an OATT, and are under the operational control of CAISO.

With respect to rates, 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 will not be affected by the Transaction.

Applicants add that none of the Applicants has any transmission rates or transmission customers.

With respect to regulation, Applicants state that the Transaction will not affect the manner or extent to which the Commission, any state, or any other federal agency may regulate them. 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.

Applicants state that the Transaction will have no effect on state commission regulation. Applicants state 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, Capistrano Wind, or AMP Capital 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 SoCal Edison, a public utility with a franchised electric service territory in southern California, SoCal Edison is not a party to the Transaction. Applicants state that because none of the parties to the Transaction is a traditional public utility associate company that has captive customers in the United States, the Transaction is within the scope of the "safe harbors" adopted by the Commission and does not raise any issue with respect to cross-subsidization.

Additionally, Applicants verify that based on the facts and circumstances known to them or that are reasonably foreseeable, the Transaction will not result in, at the time of the 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 services agreements subject to review under Sections 205 and 206 of the FPA.

This filing was noticed on October 4, 2012, with comments, protests or interventions due on or before October 25, 2012. 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.

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 the transaction is based on such examination ability.

Information and/or systems connected to the bulk power 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 databases, 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, NERC or the relevant regional entity may audit compliance with reliability and cybersecurity standards.

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.

After consideration, it is concluded that the proposed 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 Applicants' affiliated Qualifying Facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R. section 292.207 shall be made;

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

(7) Applicants must inform the Commission of any changes 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-121107-4097685 61ChengTacorda