FERC Order to Stony Creek Energy LLC Regarding Authorizing Disposition of Jurisdictional Facilities

WASHINGTON, Sept. 30 -- The U.S. Department of Energy'sFederal Energy Regulatory Commission issued the text of the following delegated order:

Stony Creek Energy LLC

Docket No. EC13-138-000 ORDER AUTHORIZING DISPOSITION OF JURISDICTIONAL FACILITIES (Issued September 30, 2013) On August 22, 2013, Stony Creek Energy LLC (Stony Creek or Applicant) 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 resulting from a change in Stony Creek's upstream ownership; (i) Firstar Development, LLC (Firstar) will acquire all of the passive, non-controlling Class A membership interests in Orangeville Holdings LLC (Orangeville Holdings), which is the direct parent company of Stony Creek, and (ii) the exchange or conversion of the membership interests Orangeville Class B Holdings LLC (Class B Holdings) owns in Orangeville Holdings to Class B membership interests (Proposed Transaction). The jurisdictional facilities associated with the Proposed Transaction consist of Stony Creek's market-based rate tariff, wholesale power sales agreements, interconnection facilities, and related books and records. Stony Creek is an indirect wholly-owned subsidiary of Invenergy Wind LLC (Invenergy Wind). Stony Creek is developing and plans to construct, own and operate wind-powered electric generation facilities of up to 94.4 megawatts (MWs) that will be located in Wyoming County, New York (Stony Creek Facility). The Stony Creek Facility will be interconnected with the transmission system owned by New York State Electric & Gas Corporation (NYSEG), and controlled by the New York Independent System Operator, Inc. (NYISO). Stony Creek intends to use the interconnection facilities that it will own to deliver the power from its facility to the interconnection point with the NYISO system. Stony Creek is an exempt wholesale generator (EWG) and is authorized to sell electric energy, capacity and ancillary services at market-based rates. Stony Creek states that it will sell electric energy, capacity and ancillary services produced from the Stony Creek Facility exclusively at wholesale. Stony Creek is a direct, wholly-owned subsidiary of Orangeville Holdings. Orangeville HoldingsClass B Holdings. Invenergy Wind indirectly holds 100 percent of the ownership interests in Class B Holdings. Invenergy Wind is an indirect, partially owned subsidiary of Invenergy Investment Company LLC (Invenergy Investment). Invenergy Investment indirectly owns the controlling membership interests in Invenergy Wind. Through subsidiaries, Invenergy Investment and/or Invenergy Wind are in the business of acquiring or developing, and owning and operating, electric generation facilities and associated interconnection transmission facilities in the United States and abroad that are, or will qualify to be, EWGs, foreign utility companies under PUHCA, or qualifying facilities (QFs) under the Public Utility Regulatory Policies Act. Invenergy Investment is a wholly-owned subsidiary of Polsky Energy Investments LLC (Polsky Energy). Invenergy Investment indirectly owns the controlling interests (i.e., managing member interests) in Sheldon Energy LLC (Sheldon), which is a public utility under 201 of the FPA and that owns generation facilities and associated generator tie-line facilities located in the NYISO geographic market. Sheldon owns and operates an up to 112.5 MW wind-powered generation facility (Sheldon Facility) located in Wyoming County, New York, together with limited interconnection facilities that connect its generation facility to the transmission system owned by NYSEG and such transmission system is under the control of the NYISO. Sheldon uses the interconnection facilities it owns to deliver the power from its facility to the interconnection point with the NYISO system. Sheldon sells energy, capacity, ancillary services produced by the Sheldon Facility exclusively at wholesale. Sheldon is an EWG and is authorized to sell power at market-based rates. Applicant states that, other than interests in Stony Creek and Sheldon, none of Invenergy Investment, Polsky Energy or their respective subsidiaries or affiliates (i) currently own or control operating generation or transmission facilities located in the NYISO region, nor (ii) are they franchised utilities with captive customers. Applicant states that none of Stony Creek, Sheldon, nor Polsky Energy, Invenergy Investment and their respective subsidiaries or affiliates own or control any facilities for the transportation or distribution of natural gas. Applicant states that on July 1, 2013, Liberty Structured Holdings, LLC's (Liberty Structured Holdings) acquired an indirect minority, passive, non-controlling ownership interest in Invenergy Wind. Liberty Mutual Holdings Company, Inc. (Liberty Mutual Holdings) is the indirect parent holding company of Liberty Structured Holdings. Through subsidiaries, Liberty Mutual Holdings is primarily engaged in the insurance business. Liberty Structured Holdings does not directly own or control, and its affiliates do not own or control, generation, electric transmission or distribution facilities, or other relevant inputs to generation, located in the NYISO geographic market. Firstar is an indirect, wholly-owned subsidiary of U.S. Bancorp (NYSE: USB) (U.S. Bancorp). U.S. Bancorp is the sole shareholder of Firstar Capital Corporation, which is the sole member of Firstar. Firstar, which owns passive, non-voting interests in QFs, EWGs and power marketers throughout the United States, primarily serves as U.S. Bancorp's tax equity investment arm for its renewable energy portfolio. Applicant states that to the extent that U.S. Bank serves as owner trustee in certain sale/leaseback transactions for certain electric generating facilities throughout the United States, U.S. Bank does not own, operate or control any of those electric generating facilities. Applicant states that other than the interests discussed above, U.S. Bancorp does not (a) directly or indirectly own or control any generation or transmission facilities in the United States; (b) engage in wholesale sales of electric energy, or any other Commission jurisdictional transactions in the United States; (c) hold electric transmission rights and natural gas transportation rights in the United States; or (d) directly or indirectly own or control a franchised utility. Under the Proposed Transaction, (i) Firstar will make a cash payment to acquire 100 percent of the passive, non-controlling Class A membership interests in Orangeville Holdings, and (ii) Class B Holdings will exchange or convert its existing membership units in Orangeville Holdings for 100 percent of the Class B managing membership interests in Orangeville Holdings. The Class A membership interests will provide Firstar with veto and/or consent rights over certain major decisions necessary for Firstar to protect its economic investment interests. Firstar will not be the managing member of Orangeville Holdings or Stony Creek as a result of acquiring the Class A interests. The Class A membership interests will not entitle Firstar to exercise day-to-day management, control or similar rights over Orangeville Holdings, Stony Creek or Stony Creek's jurisdictional facilities. When the Proposed Transaction closes, Firstar will acquire indirect, passive, non-controlling interests in Stony Creek. Class B Holdings, which will be the owner of the Class B managing membership interests once the Transaction is consummated, will be the managing member of Orangeville Holdings. After the Proposed Transaction is consummated, Class B Holdings will directly (and Invenergy Investment indirectly) will continue to own the controlling interests in Orangeville Holdings, and indirectly in Stony Creek.

The Class A membership interests will entitle Firstar, and the Class B membership interest will entitle Class B Holdings, to receive certain tax benefits and a fixed percentage of profit allocations. Applicant states that Stony Creek will continue to own its assets including its jurisdictional contracts and facilities. Applicant states that the Proposed Transaction is consistent with the public interest and will not adversely affect competition, rates or regulations. Applicant states that Stony Creek plans to own up to 94.4 MW of wind-powered generation located in the NYISO market, the relevant market. The amount of generation that Stony Creek plans to own represents approximately 0.24 percent of the approximately 38,902 MW that NYISO has stated as capacity in the NYISO market. Applicant notes that Firstar's ownership interests in Stony Creek will have no effect on the generation market shares of Stony Creek because Firstar does not directly own or control and its respective affiliates do not own or control generation located in the relevant market. Therefore, Applicant states that the Proposed Transaction raises no horizontal market power concerns.

Applicant states that the Proposed Transaction does not raise any vertical market power concerns because it will not result in any new combination of transmission or gas assets. Applicant notes that other than limited electric interconnection facilities that Stony Creek will own to effectuate its wholesale power sales ( and the limited electric interconnection facilities owned by Sheldon), none of Stony Creek, Invenergy Wind, Class B Holdings, Orangeville Holdings , Invenergy Investment, or its affiliates own or control any transmission facilities or transmission companies in the relevant market nor do they own or control any companies that control natural gas transmission or distribution operations in such market. In addition, Firstar and its affiliates do not own or control any electric transmission facilities in the relevant market nor do they own or control any companies that control natural gas transmission or distribution operations in such market. Applicant states that the Proposed Transaction will have no adverse effect on rates. Stony Creek will sell power to its customers pursuant to negotiated rates under power sale arrangements entered into under its market-based rate tariff. Applicant states that the Proposed Transaction will not affect the rates that Stony Creek will be authorized to charge under its market-based rate tariff. Applicant states that the Proposed Transaction will have no adverse effect on federal regulation. Stony Creek status as a public utility will not change as a result of the Proposed Transaction. Applicant states that the Proposed Transaction will not affect the extent to which the Commission may regulate Stony Creek. Applicant states that the Proposed 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. Applicant asserts that the Proposed Transaction falls within one of the "safe harbors" adopted by the Commission for which detailed explanation and evidentiary support to demonstrate a lack of cross-subsidization is not required. Applicant more specifically states that the Proposed Transaction does not involve a franchised public utility with captive customers.

Additionally, Applicant verifies that based on the facts and circumstances known to them or that are reasonably foreseeable, 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 services agreements subject to review under Sections 205 and 206 of the FPA. This filing was noticed on August 22, 2013, with comments, protests or interventions due on or before September 12, 2013. 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 Proposed 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 Proposed 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 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 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 Proposed 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 shall be made;

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

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

(8) Applicant 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

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