By Michael Brooks

Competitive Power Ventures plans to begin major construction next month on its 661-MW combined-cycle plant in Maryland despite an unfavorable ruling last week from the Federal Energy Regulatory Commission.

FERC rejected CPV’s request that it declare the company’s contracts with regulated utilities in New Jersey and Maryland “just and reasonable.” CPV filed the request in early June, believing that FERC’s approval would nullify appellate courts’ determinations that the contracts violated FERC’s ratemaking powers. (See Rebuffed By Courts, CPV Seeks FERC End-Around.)

Instead, FERC said, “In considering whether the rates, terms, and conditions in a contract are just, reasonable and not unduly preferential or discriminatory under the FPA, the contract must first be a valid contract.” As the contracts had already been found invalid by the courts, FERC rejected the filing.

CPV announced Friday that it has obtained financing from 15 lenders, led by GE Energy Financial Services, for the $775 million St. Charles Energy Center in the Southern Maryland community of Waldorf.

CPV Chief Financial Officer Paul Buckovich told The Baltimore Sun that the costs are much higher than if the company had come to lenders with the original contracts. “The financing is much more expensive and less beneficial to sponsors and ultimately to the ratepayers,” he said.

CPV has already begun preliminary site work on the Waldorf site. The plant will be built under a “medium-term contract financing” that will require CPV to refinance five years after starting operations. The arrangement is similar to that used to build CPV’s Woodbridge, N.J., plant, which is also under construction.

CPV had sought to build two plants supported by contracts with utilities in Maryland and New Jersey. Each contract was based on a benchmark amount; if CPV’s capacity revenue was less than this amount, the utilities would pay CPV the difference. If the revenue was more, CPV would pay the utilities.

The utilities were forced to sign the contracts by each state’s public utilities commission, which led to them filing lawsuits.