FERC Issues Order to Twin Cities Power, LLC Twin Cities Energy, LLC TC Energy Trading, LLC on Order Authorizing Disposition of Jurisdictional Facilities
WASHINGTON, Dec. 20 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order:
Twin Cities Power, LLC Docket No. EC12-32-000
Twin Cities Energy, LLC
TC Energy Trading, LLC
Order Authorizing Disposition Of Jurisdictional Facilities On November 16, 2011, Twin Cities Power, LLC (Twin Cities Power), Twin Cities Energy, LLC (Twin Cities Energy), and TC Energy Trading, LLC (TC Energy) (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 changes in the upstream ownership of Twin Cities Power, Twin Cities Energy and TC Energy (Proposed Transaction). The jurisdictional facilities consist of Applicants' market-based rate tariffs, agreements, and related books and records.
Twin Cities Power and Twin Cities Energy are Minnesota limited liability companies owned by the following individuals and limited liability companies: HTS Capital, LLC (HTS) (38 percent), Timothy Krieger (24.46 percent), Michael Tufte (14.7 percent), John Beatty (13.02 percent), DBJ 2001 Holdings, LLC (DBJ) (5.0 percent), and Tom Beatty (4.82 percent).
Twin Cities Power and Twin Cities Energy are wholesale power marketers authorized to sell power at market-based rates. They do not own, operate or control any generation or transmission facilities. Twin Cities Energy -Canada, ULC is a wholly-owned subsidiary of Twin Cities Energy, engaged in energy marketing and trading transactions that do not result in physical deliveries within the United States.
TC Energy is a Minnesota limited liability company and a wholly-owned subsidiary of Twin Cities Power. TC Energy is a wholesale power marketer authorized to sell power at market-based rates. TC Energy does not own, operate or control any generation or transmission facilities.
Pursuant to a Settlement Agreement, Twin Cities Power and Twin Cities Energy will redeem their membership interests held by HTS. Pursuant to an Assignment Agreement, Mr. Krieger will purchase the membership interests held by Messrs. John and Tom Beatty. After these membership interest purchases, the ownership of Applicants will be as follows: Mr. Krieger (68.23 percent), Mr. Tufte (23.69 percent) and DBJ (8.08 percent). Mr. Krieger, Mr. Tufte and DBJ will then transfer their membership interests in Twin Cities Power, Twin Cities Energy and another affiliate, Cygnus Partners, LLC, to Twin Cities Power Holdings, LLC (Twin Cities Power Holdings), a recently formed upstream company. Mr. Krieger's, Mr. Tufte's and DBJ's percentage interest in Twin Cities Power Holdings will be 68.23 percent, 23.69 percent, and 8.08 percent respectively.
Applicants state that the Proposed Transaction is consistent with the public interest and will not adversely affect competition, rates or regulations.
With respect to competition, Applicants state that the Proposed Transaction does not involve a horizontal or vertical combination of assets with any unaffiliated party, nor does it result in any meaningful increase in the concentration of control over generation facilities, transmission facilities or inputs to generation that could be used as a barrier to entry.
Applicants state that the Proposed Transaction does not result in any consolidation of jurisdictional facilities, and will have no effect on the market share or competitive position of Applicants. Applicants contend that it will have no impact on the competitive situation in any geographic or product market.
Applicants state that the Proposed Transaction raises no vertical market power concerns. Applicants note that they and their affiliates do not presently own or control any facilities for the transmission of electric energy. Applicants also state that they currently do not own or will acquire any natural gas production, transportation or storage facilities or other essential facilities for electric power production as a result of the Proposed Transaction, and do not control any facilities through which they could exercise vertical market power.
With respect to rates, Applicants state that the Proposed Transaction will have no adverse effect on rates. Applicants are power marketers that sell energy, capacity and ancillary services at market-based rates. Applicants state that the Proposed Transaction will not affect the terms and conditions of service under their market-based rate tariffs. Applicants conclude that the Proposed Transaction will have no adverse effect on rates charged for any jurisdictional services.
With respect to regulation, Applicants state that they commit to abide by the Commission's policies with respect to intra-company and affiliate transactions to the extent applicable. In addition, Applicants state that the Proposed Transaction will not affect the Commission's ability to regulate Twin Cities Power, Twin Cities Energy, TC Energy or their jurisdictional facilities. Applicants are not subject to rate regulation by any state and no state regulatory commission has jurisdiction over the Proposed Transaction.
Applicants state 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.
Applicants assert that the Proposed Transaction falls within one of the "safe harbors" adopted by the Commission. Specifically that none of the Applicants or their public utility subsidiaries is a franchised public utility with captive customers. In addition, Applicants state with respect to themselves and each of their affiliates that, based on the facts and circumstances known to them or that are reasonably foreseeable, that the Proposed 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 Federal Power Act.
This filing was noticed on November 17, 2011, with comments, protests or interventions due on or before December 7, 2011. 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. section385.214). 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, North American Electric Reliability Corporation 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 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 Applicants' affiliated Qualifying Facilities, if any, an appropriate filing for recertification pursuant to 18 C.F.R. section292.207 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 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) 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. section385.713.
Steve P. Rodgers
Division of Electric Power Regulation - West
TNS CT21CT-111221-3723648 61ChengTacorda