FERC on Wednesday approved the purchase of the Mankato natural gas plant in Minnesota by a specially created subsidiary of Southwest Generation, despite concerns about the company’s links to a JPMorgan Chase investment fund (EC20-54).
Denver-based Southwest Generation Operating Co. formed subsidiary SWG Minnesota Holdings for the sole purpose of acquiring the 760-MW Mankato Energy Center for $680 million.
Through a series of parent company arrangements, JPMorgan’s Infrastructure Investment Fund (IIF) holds 100% of the voting securities of Southwest Generation Operating Co.’s parent company. IIF is controlled by three private owners using a slightly different company name. Those owners also own about 29 MW worth of small generating facilities in MISO.
Consumer interest group Public Citizen had questioned JPMorgan’s involvement with the sale, asking the commission to require the company to more clearly explain its involvement with its subsidiary investment fund.
“Determining IIF’s affiliation with JPMorgan Chase and Co. in the Mankato transaction is vital for establishing whether the Mankato transaction is in the public interest, as failing to address affiliation threatens harm to competition, rates and regulation,” Public Citizen said.
But FERC said the new owners are affiliated with just 0.4% of the generation capacity in MISO, a “de minimis amount.” The commission declined to require SWG Minnesota Holdings to conduct an analysis to prove no harmful effects on competition.
The commission also said that “treating J.P. Morgan Investment as an affiliate of SWG Minnesota Holdings would not change the ultimate result of the commission’s analysis of the effects of the proposed transaction on competition, rates, regulation or cross-subsidization.”
Xcel Energy purchased Mankato from Southern Co. for $650 million in January. The quick turnaround will net the utility $30 million, two-thirds of which it promised will be earmarked for corporate giving and COVID-19 relief in its eight-state territory.
Mankato will continue to provide energy to Xcel through long-term contracts.
