FERC Issues Order to Post Rock Wind Power Project, LLC on Order Authorizing Disposition of Jurisdictional Facilities

WASHINGTON, Oct. 25 -- The U.S. Department of Energy'sFederal Energy Regulatory Commission issued the text of the following delegated order:

Post Rock Wind Power Project, LLC

Docket No. EC12-147-000

ORDER AUTHORIZING DISPOSITION

OF JURISDICTIONAL FACILITIES

(Issued October 25, 2012)

On September 26, 2012, Post Rock Wind Power Project, LLC (Post Rock or Applicant) filed an application pursuant to section 203(a)(1)(A) of the Federal Power Act (FPA) requesting authorization for a transaction in which certain membership interests in Post Rock will be issued to three investors, EFS Post Wind, LLC (EFS Post Wind), MetLife Capital Credit L.P. (MCCLP) and Union Bank of California Leasing, Inc. (UBCL) (collectively, Equity Investors or Equity Investor), in exchange for equity contributions made by each investor to Applicant (Transaction). As a result of the Transaction, the Equity Investors will together hold all of the passive Class A Units in Post Rock. Further, Post Rock seeks authorization for disposition of 100 percent of the managing Class B Units in Post Rock to Lincoln County Wind Project Holdco, LLC (Holdco) in exchange for all of the limited liability membership interests in Post Rock, which are currently held by Holdco. The jurisdictional facilities consist of Post Rock's market-based rate tariffs, related agreements, limited interconnection facilities, and associated books, records, and accounts.

Although Applicant states that the Transaction may not require Commission approval under FPA section 203(a)(1), it nevertheless asks the Commission to approve the application. This order approves the Transaction without making any determination of jurisdiction.

Post Rock, a Delaware limited liability company, is an exempt wholesale generator (EWG) with market-based rate authority. Post Rock is developing an approximately 201 megawatt (MW) wind-powered electric generation facility in Ellsworth, Lincoln, and Rice Counties, Kansas (Post Rock Facility), located within the Westar Energy Inc. (Westar) balancing authority area (BAA). Applicant states that the output of the Post Rock Facility is committed to Westar under a long-term contract.

Post Rock is a wholly owned subsidiary of Holdco, which is a wholly owned subsidiary of Lincoln County Wind Project Finco, LLC (LCWPF). LCWPF is a wholly owned subsidiary of Lincoln County Wind Project Holdings, which, in turn, is a wholly owned subsidiary of Wind Capital Group, LLC (Wind Capital Group), which is a wholly owned subsidiary of Wind Capital Ventures, LLC. Wind Capital Ventures, LLC is owned 93.63 percent by NTR US Wind, Inc., which is a wholly owned subsidiary of NTR plc (NTR). NTR, a public limited company headquartered in Ireland, is an investor in renewable energy in the United States. Applicant states that NTR does not own or control 10 percent or more of the voting equity interests in any electric generation or transmission facility, or any essential resource or input to power production, in the United States, other than in generation facilities indirectly owned by Wind Capital Group.

Applicant Affiliates

Lost Creek Wind, LLC (Lost Creek), a Delaware limited liability company, is an EWG with market-based rate authority. Lost Creek is a wholly owned subsidiary of Lost Creek Wind Holdco, LLC (Lost Creek Holdco). Lost Creek Wind Finco, LLC (Lost Creek Finco) holds all of the Class B membership interests in Lost Creek Holdco and controls Lost Creek Holdco. Lost Creek owns and operates a 150 MW wind-powered electric generating facility in Missouri (Lost Creek Facility), within the Associated Electric Cooperative, Inc. (AECI) BAA. Lost Creek sells 100 percent of its output to

Osage Wind, LLC (Osage), a Delaware limited liability company, is an EWG with market-based rate authority. Osage is a wholly owned subsidiary of Osage Wind Holdco, LLC, which is a direct, wholly owned subsidiary of Osage Wind Finco, LLC (Osage Wind Finco). Osage Wind Finco, in turn, is a wholly owned subsidiary of Osage County Wind Project Holdings, LLC. Osage is developing a 150 MW wind-powered electric generation facility (Osage Facility) and associated interconnection facilities in Oklahoma, located within the AECI BAA.

Equity Investors

EFS Post Wind is a wholly owned subsidiary of General Electric Capital Corporation (GECC), which is a wholly owned subsidiary of General Electric Company (GE). Applicant states that GE, through its subsidiaries, is a passive owner in a number of generating facilities in the United States. According to Applicant, GE holds four types of passive ownership interests in generating facilities: (a) lease interests, where a GE affiliate acts as a passive lessor in a sale/leaseback arrangement; (b) tax equity interests with limited consent rights to remove the general partner/managing member; (c) limited partnership or non-managing limited liability interests, where a GE affiliate holds majority interests in the investment, but has limited removal consent rights; and (d) limited partnership or non-managing limited liability company interests, where a GE affiliate has a minority investment. Applicant states that in each case, the lessee or owner-manager, and not a GE affiliate, has complete control over the management, operation, and maintenance of the generating facility. In addition, according to Post Rock, several affiliates of GE have non-passive interests in generating facilities in the United States; however, none of these generating facilities is located in the Westar or AECI BAAs.

MCCLP is an affiliate of Metropolitan Life Insurance Company (MetLife), a wholly owned subsidiary of MetLife, Inc. According to Applicant, MetLife and its affiliates are not public utilities and do not own equity interests in generating or transmission facilities located in the Westar or AECI BAAs. Applicant states that MetLife and its affiliates do not collectively own or control five percent or more of the voting securities of any company that owns or controls facilities used for the generation, sale, transmission or distribution of power, or for the production, gathering, storage, sale, transmission or distribution of natural gas and other inputs to electric generation. Applicant states that, through insurance companies owned by MetLife, which own interests in special-purpose trusts, limited partnerships or limited liability companies, MetLife and its affiliates hold indirect, passive investments in non-traditional public utilities. According to Applicant, MetLife and its affiliates do not manage, operate, or control such public utilities; the owner-manager of each such public utility has control over its management and operations, and none of these public utilities own or operate facilities in the Westar or AECI BAAs. Applicant states that, through its subsidiaries, MetLife owns debt securities and loans issued by energy entities, and that it also owns passive limited partnership interests, but the ownership of such debt securities, loans, and passive limited partnership interests does not provide MetLife or its affiliates with ownership or control over any underlying energy facilities. Finally, Applicant states that MetLife and its subsidiaries own passive owner-lessor interests in sale-leaseback transactions, but the owner-lessors interests are passive.

Applicant states that UBCL, a Delaware corporation, is a wholly owned subsidiary of Union Bank, N.A. (UB). UB is a commercial bank and a wholly owned subsidiary of UnionBanCal Corporation (UNBC), a bank holding company. UB provides financial services in California, Oregon and Washington. According to Applicant, the Bank of Tokyo-Mitsubishi UFJ, Ltd., a wholly owned subsidiary of Mitsubishi UFJ Financial Group, Inc., owns 100 percent of UNBC's outstanding common stock. Applicant states that UBCL's function is to invest in physical assets in the United States, and while UBCL or its affiliates hold passive, non-voting tax equity interests in energy-related companies, neither UBCL nor its affiliates have voting equity interests or otherwise control any energy-related companies.

Applicant states that pursuant to the Equity Capital Contribution Agreement (ECCA) and the Third Amended and Restated Operating Agreement (LLC Agreement), each Equity Investor will make a capital contribution to Applicant and, in exchange, the Equity Investors will together receive and hold 100 percent of the passive Class A Units in Applicant. Holdco, which currently holds all of the limited liability company membership interests in Applicant, will redeem its existing interests in exchange for all of the managing Class B Units in Applicant.

According to Applicant, the Class A Units will be passive and will provide the Equity Investors with limited rights such as veto and/or consent rights necessary for the Equity Investors to protect their investment interest in Applicant. The Equity Investors holding Class A Units will not have the ability to engage in day-to-day management, or have control over Applicant or Applicant's jurisdictional facilities. Applicant states that subject to the provisions of the LLC Agreement, the Class A membership interests will entitle each Equity Investor to receive certain tax benefits and a percentage of profit allocations. As the holder of the managing, Class B Units, Holdco will be the manager of Applicant and will control Applicant pursuant to the terms of the LLC Agreement.

Applicant states that the Transaction is consistent with the public interest because it will not have an adverse effect on competition, rates, or regulation, and will not raise any issue with respect to cross-subsidization. With respect to horizontal competition, Applicant states that, as a result of the Transaction, the Equity Investors will not acquire any day-to-day control over Applicant, and the Transaction will not establish any new affiliation between Applicant and the Equity Investors. Applicant asserts that even assuming the Transaction did result in affiliation between Applicant and the Equity Investors, none of the Equity Investors owns or controls interests in generation facilities in the markets relevant to Applicant and its affiliates. Thus, according to Applicant, the Transaction has no effect on horizontal market power concentration in any geographic market.

With respect to vertical market power issues, Applicant states that neither Applicant, its affiliates, nor any of the Equity Investors and their respective affiliates own or control any transmission facilities in any market other than those limited and discrete facilities necessary to interconnect the electric generating facilities to the transmission grid. In addition, none of the Equity Investors or their affiliates have any ownership interest in or control of fuel supplies, fuel delivery systems, other inputs to electricity markets or any new sites for electric generation that could raise barriers to entry in the Applicant's and its affiliates' relevant markets. Thus, according to Applicant, the Transaction has no effect on vertical market power.

With respect to rates, Applicant states that the Transaction does not have any adverse effect on rates because all sales of electric power, capacity and ancillary services made by Applicant will be made at market-based rates, and Applicant does not have any transmission customers whose rates could be affected by the Transaction. Thus, according to Applicant, the Transaction has no adverse effect on wholesale ratepayers or transmission customers.

With respect to regulation, Applicant states that the Transaction does not diminish the Commission's regulatory authority or create a regulatory gap or shift regulatory authority between the Commission and any state commission. Applicant asserts that Applicant's status as a jurisdictional public utility has not changed as a result of the Transaction, and the Transaction does not result in any facilities being removed from the Commission's jurisdiction. According to Applicant, the Transaction does not impair the Commission jurisdiction.

Applicant states that the Transaction will not result in cross-subsidization or the pledge or encumbrance of utility assets for the benefit of an associate company. Applicant states that the Transaction does not involve any franchised public utility with captive customers lessening any instance for cross-subsidization. Additionally, Post Rock provides assurance and verifies that, based on known or reasonably foreseeable information, 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 contracts 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.

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, Applicant is advised that it must comply with the requirements of Order No. 652. In addition, Applicant shall make appropriate filings under section 205 of the FPA, as necessary, to implement the Transaction.

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

The filing was noticed on September 27, 2012. Comments, protests or interventions were due on or before October 17, 2012. None was 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 (2009)). Any opposed or untimely filed motion to intervene is governed by the provision of Rule 214.

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

(1) The Transaction, as described in this order, 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 Transaction results in changes in the status or the upstream ownership of Post Rock's affiliated Qualifying Facilities, an appropriate filing for recertification pursuant to 18 C.F.R. section 292.207 shall be made;

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

(7) Post Rock 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 as described in this order; and

(8) Post Rock 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

16 U.S.C. section 824b (2006).

Several options exercisable in the future are described in The Third Amended and Restated Operating Agreement submitted as part of the application. These options are not addressed in, nor is exercising these options authorized by, this order.

See, Ocean State Power, 47 FERC s 61,321 (1989).

Post Rock will own and operate as part of the Post Rock Facility generator interconnection facilities.

Applicant states that Wind Capital Ventures Class C Holding Company, L.P., MW Wind Investments, LLC and COB LLC each hold less than 5 percent of the remaining membership interests in Wind Capital Ventures, LLC.

Lost Creek Finco and Osage County Wind Project Holdings, LLC are direct wholly owned subsidiaries of Wind Capital Group.

Reporting Requirement for Changes in Status for Public Utilities with Market-Based Rate Authority, Order No. 652, 70 Fed. Reg. 8,253 (Feb. 18, 2005), FERC Stats. & Regs. s 31,175, order on reh'g, 111 FERC s 61,413 (2005).

TNS MT93 121026-4083497 61MarlizTagarum