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UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
8point3 Energy Partners LP ) Docket No. EC15-___-000 Solar Star California XIII, LLC )
APPLICATION FOR AUTHORIZATION UNDER SECTION 203 OF THE FEDERAL POWER ACT AND REQUEST FOR EXPEDITED ACTION
William B. Conway Jr. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 1440 New York Avenue, N.W. Washington, DC 20005 Tel: (202) 371-7135 Fax: (202) 661-0535 [email protected]
Counsel for 8point3 Energy Partners LP and Solar Star California XIII, LLC
April 24, 2015 20150424-5254 FERC PDF (Unofficial) 4/24/2015 1:24:11 PM
UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
8point3 Energy Partners LP ) Docket No. EC15-___-000 Solar Star California XIII, LLC )
APPLICATION FOR AUTHORIZATION UNDER SECTION 203 OF THE FEDERAL POWER ACT AND REQUEST FOR EXPEDITED ACTION
Pursuant to section 203(a)(1) and 203(a)(2) of the Federal Power Act (“FPA”)1 and Part
33 of the regulations of the Federal Energy Regulatory Commission (“FERC” or
“Commission”),2 Solar Star California XIII, LLC (“Solar Star XIII”) and 8point3 Energy
Partners LP3 (“8point3 Partners” and together with Solar Star XIII the “Applicants”) hereby
submit this application (“Application”) requesting authorization for:
1. The contribution to 8point3 Operating Company, LLC (“OpCo”) by SunPower
Corporation (“SunPower”) of SunPower’s indirect ownership interest in Solar Star XIII
and the contribution to OpCo by SunPower and First Solar, Inc. (“First Solar”) of other
indirect ownership interests in certain other solar electric generation companies (such
interests collectively with SunPower’s interest in Solar Star XIII the “Contributed
Interests”);
2. Related transactions by which OpCo will become a partially-owned subsidiary of 8point3
Partners, and 8point3 Partners and OpCo will indirectly be jointly controlled by First
Solar and SunPower; and
1 16 U.S.C. § 824b(a)(1), (2). 2 18 C.F.R. pt. 33. 3 8point3 Partners’ name refers to the number of minutes that sunlight takes to reach the Earth. 20150424-5254 FERC PDF (Unofficial) 4/24/2015 1:24:11 PM
3. The initial public offering and sale (the “IPO”) of Class A limited partnership interests in
8point3 Partners (the “Class A Shares”), through which purchasers of the Class A Shares
will acquire indirect economic interests in the Contributed Interests.
The above contributions of equity interests, related transactions and the IPO as described further
in this Application are referred to collectively as the “Transaction.”
The purpose of the proposed Transaction is to monetize the value of certain of
SunPower’s and First Solar’s contracted, solar generation resources through a public offering.
The primary objective of 8point3 Partners is to generate predictable cash distributions that grow
at a sustainable rate. 8point3 Partners is best characterized as a “yieldco,” and the proposed
Transaction is similar to other recent yieldco transactions.4
Certain aspects of the Transaction may not require Commission pre-approval, including
the transfer of certain of the Contributed Interests and the IPO.5 Nevertheless, because of the
4 NextEra Energy, Inc., Pattern Energy Group LP and NRG Energy, Inc. have all recently sponsored initial public offerings of securities in enterprises similar to 8point3 Partners. See NextEra Energy Partners, LP, Amendment No. 3 to Form S-1 Registration Statement (June 19, 2014) (available at http://www.sec.gov./Archives/edgar/data/1603145/000119312514241693/d696235ds1a.htm); Pattern Energy Group Inc., Prospectus (Sept. 26, 2013) (available at http://www.sec.gov/Archives/edgar/data/1561660/0001193125 13380934/d597019d424b1.htm); NRG Yield, Inc., Preliminary Registration Statement (Form S-1) (June 6, 2013) (available at http://www.sec.gov/Archives/edgar/data/1567683/000104746913006811/a2214173zs-1.htm). 5 The partnership agreement of 8point3 Partners will restrict any purchaser together with its affiliates from acquiring Class A Shares equal to 10% or more of the voting power in 8point3 Partners without Commission authorization. Thus, consistent with Commission precedent, the IPO by itself should not require Commission pre- approval under FPA section 203 because no purchaser of Class A Shares will be able to acquire a controlling interest in 8point3 Partners (and thus indirectly the Contributed Interests). See FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at P 57 (2007) (“Based on the industry’s need for further guidance on what may or may not constitute a transfer of control of jurisdictional facilities under Section 203, and for greater regulatory certainty in undertaking utility investments, the Commission’s general policy in future cases will be to presume that a transfer of less than 10 percent of a public utility’s holdings is not a transfer of control if: (1) after the transaction, the acquirer and its affiliates and associate companies, directly or indirectly, in aggregate will own less than 10 percent of such public utility; and (2) the facts and circumstances do not indicate that such companies would be able to directly or indirectly exercise a controlling influence over the management or policies of the public utility.”), clarific. and reconsid. denied, 122 FERC ¶ 61,157 (2008) (collectively, “Section 203 Supplemental Policy Statement”). Applicants note that they intend to file in the near future a petition for declaratory order seeking a determination by the Commission that the Class A Shares are passive in nature and do not constitute voting securities for purposes of FPA section 203 such that there would not be any section 203-related restriction on the
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highly interrelated nature of the different parts of the Transaction as described in Section III of
this Application, Applicants request, consistent with prior precedent, that the Commission
approve the Transaction in its entirety pursuant to FPA sections 203(a)(1) and 203(a)(2) without
making a determination as to jurisdiction.6
I. REQUEST FOR EXPEDITED CONSIDERATION
Applicants request that the Commission provide for a 21-day comment period7 and
further request the issuance of an order approving the Transaction no later than June 1, 2015.
Approval of the Transaction by June 1, 2015 will allow closing of the IPO to occur as planned on
or about June 8, 2015. Expedited consideration of this Application is warranted under 18 C.F.R.
§ 33.11(b) and (c) of the Commission’s regulations because the Transaction: (1) does not
involve a merger; (2) is consistent with Commission precedent; and (3) does not require an
Appendix A analysis. In addition, as explained below and in Exhibit M, the Transaction does
not raise any cross-subsidization or encumbrance concerns.
II. DESCRIPTION OF THE APPLICANTS AND RELATED PARTIES
A. SunPower and Its Contributed Interests
SunPower is a vertically-integrated solar products and services company organized in
Delaware that designs, manufactures and delivers high-efficiency and high-reliability solar
acquisition of Class A Shares. The restriction on acquisition of Class A Shares will remain in place unless and until the Commission issues a declaratory order making the requested determination. 6 See, e.g., Southern Co., 92 FERC ¶ 62,260 at 64,380 & n.2 (2000) (citing Ocean State Power, 47 FERC ¶61,321 (1989) and Ocean State Power, 43 FERC ¶ 61,466 (1988)) (Commission makes no jurisdictional determination but assumes jurisdiction in light of the need for expedited action); Nat’l Elec. Assocs. Ltd. P’ship, 80 FERC ¶ 62,116 at 64,191 & n.2 (1997) (same). 7 See Transactions Subject to FPA Section 203, Order No. 669, FERC Stats. & Regs. ¶ 31,200 (2005), order on reh’g, Order No. 669-A, FERC Stats. & Regs. ¶ 31,214 at P 155 (establishing a 21-day comment period for section 203 applications that do not require a detailed Appendix A analysis and that do not raise cross-subsidization concerns), order on reh’g, Order No. 669-B, FERC Stats. & Regs. ¶ 31,225 (2006) (collectively, “Order No. 669”) (codified at 18 C.F.R. pts. 2, 33).
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photovoltaic panels and electricity generating systems to residential, business, government and
utility customers. The stock of SunPower is publicly traded on the NASDAQ exchange under
the symbol SPWR. As of the date of this Application, Total Energies Nouvelles Activités USA
(f/k/a Total Gas & Power USA, SAS), which is a wholly-owned subsidiary of Total S.A.
(“Total”), owns approximately 60% of the issued and outstanding shares of SunPower’s common
stock. No other entity directly or indirectly owns, controls, or holds, with power to vote, 10% or
more of SunPower’s outstanding voting securities.
Total is a leading multinational energy company with more than 97,000 employees and
operations in more than 130 countries. Together with its subsidiaries and affiliates, Total is the
fifth largest publicly-traded integrated international oil and gas company in the world.8 In the
U.S., affiliates of Total own two FERC-regulated crude oil pipelines, and various natural gas and
other product pipelines that are used to service Total’s industrial operations in Port Arthur,
Texas. Affiliates of Total also have interests in qualifying cogeneration facilities in Texas.
In the Transaction the Contributed Interests to be contributed by SunPower to OpCo will
consist of SunPower’s ownership interests described below.
1. Solar Star XIII
Solar Star XIII is a Delaware limited liability company formed for the purpose of
developing, constructing, owning, and operating the Quinto Project, an approximately 135 MW9
photovoltaic generating facility in Merced County, California. The Quinto Project will be
interconnected to the Pacific Gas and Electric Company (“PG&E”) transmission system within
8 Total, S.A., http://www.usa.total.com. 9 All of the capacity ratings for the generating facilities in which SunPower has ownership interests that will be Contributed Interests in the Transaction as well as all of the capacity ratings for SunPower’s other generating facilities as listed in Exhibit B are stated in this Application on a nameplate (i.e. direct current) basis. The net power production capacity with which each of these facilities potentially competes in electric markets (i.e. stated in terms of alternating current) is a lower amount.
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the California Independent System Operator Corporation (“CAISO”) balancing authority area
(“BAA”). Solar Star XIII is an exempt wholesale generator (“EWG”)10 and has a pending
application with the Commission for market-based rate authority.11 Solar Star XIII’s market-
based rate application is likely to be accepted by the Commission prior to closing of the
Transaction, and as of that point Solar Star XIII will become a public utility. The Quinto Project
is currently expected to begin generating test power in June 2015 and to commence commercial
operation in January 2016. The entire output of the Quinto Project is committed to Southern
California Edison Company under a long-term power purchase agreement.
Solar Star XIII is an indirect, wholly-owned subsidiary of SunPower. However, prior to
closing of the Transaction SunPower expects to sell indirect, non-controlling interests in Solar
Star XIII to unaffiliated tax equity investors while retaining a controlling, membership interest in
Solar Star XIII. SunPower’s retained controlling interest in Solar Star XIII will be a Contributed
Interest in the Transaction.
2. Commercial Portfolio
(i) Solar Star California XXX, LLC
Solar Star California XXX, LLC (“Solar Star XXX”) is developing and owns
photovoltaic generating facilities located at seven Macy’s stores in northern California having a
combined net power production capacity of approximately 4.8 MW. The facilities are expected
to begin commercial operation in October 2015 and are located within the geographic footprint
of the CAISO BAA. The entire output of each of the facilities will be sold at retail to Macy’s
10 Solar Star California XIII, LLC, Docket No. EG14-104-000 (Dec. 8, 2014) (notice of effectiveness of EWG status); Solar Star California XIII, LLC, Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG14-104-000 (filed Sept. 15, 2014). 11 Solar Star California XIII, LLC, Application for Market-Based Rate Authorization, Docket No. ER15- 1218-000 (Mar. 11, 2015).
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Customer Services pursuant to a long term contract. Each of the facilities will receive all
available regulatory exemptions as a qualifying facility (“QF”) under Public Utility Regulatory
Policies Act of 1978 (“PURPA”)12 (including exemption from FPA section 203) and will in any
case be non-jurisdictional under the FPA by virtue of making all sales of electric energy behind
the retail electric meter, except for such sales as are reconciled pursuant to net metering
arrangements.13 Solar Star XXX is an indirect, wholly-owned subsidiary of SunPower.
(ii) Solar Star California XXXI, LLC
Solar Star California XXXI, LLC (“Solar Star XXXI”) is developing and owns a 7.5 MW
photovoltaic generating facility at the Tequesquite Landfill in Riverside, California. The facility
is expected to begin commercial operation in September 2015 and is located within the
geographic footprint of the CAISO BAA. The entire output of the facility will be sold at
wholesale to the City of Riverside, California pursuant to a long-term agreement. Prior to
operation Solar Star XXXI will file self-certification of the facility as a QF and will receive the
benefit of regulatory exemptions pursuant to 18 C.F.R. §§ 292.601 and 292.602, including
exemption from FPA section 203. Solar Star XXXI is an indirect, wholly-owned subsidiary of
SunPower.
(iii) Solar Star California XXXII, LLC
Solar Star California XXXII, LLC (“Solar Star XXXII”) is developing and owns a 13
MW solar generating facility at the University of California Davis South Campus in Solano
County, California. The facility is expected to begin commercial operation in September 2015
12 Pub. L. No. 95-617, 92 Stat. 3117 (1978) (codified as amended in scattered sections of 15, 16, and 52 U.S.C.). As each of the facilities has a net power production of less than 1 MW when considered together with all affiliated projects located within one mile, the facilities are not required to make self-certification filings of QF status with the Commission. See 18 C.F.R. § 292.203(d). 13 See SunEdison LLC,129FERC¶61,146(2009),order on reh’g, 131 FERC ¶ 61,213 (2010) (collectively, “SunEdison”).
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and is located within the geographic footprint of the CAISO BAA. The entire output of the
facilities will be sold at retail to the University of California pursuant to a long term contract.
Prior to operation Solar Star XXXII will file self-certification of the facility as a QF and will
receive the benefit of regulatory exemptions pursuant to 18 C.F.R. §§ 292.601 and 292.602,
including exemption from FPA section 203. Solar Star XXXII will in any case be non-
jurisdictional under the FPA by virtue of making all sales of electric energy behind the retail
electric meter, except for such sales as are reconciled pursuant to net metering arrangements.14
Solar Star XXXII is an indirect, wholly-owned subsidiary of SunPower.
Prior to close of the Transaction, SunPower will sell indirect passive tax equity interests
in Solar Star XXX, Solar Star XXXI, and Solar Star XXXII to an unaffiliated third party and will
retain an indirect, controlling ownership interest in Solar Star XXX, Solar Star XXXI, and Solar
Star XXXII. SunPower’s retained interests in Solar Star XXX, Solar Star XXXI, and Solar Star
XXXII will be Contributed Interests in the Transaction.
3. Residential Portfolio
SunPower Solar Program I, LLC (“Program 1”), SunPower Solar Program II, LLC
(“Program II”), and SunPower Residential I, LLC (“Residential I”) collectively own a portfolio
of approximately 5,900 residential solar facilities having a combined capacity of approximately
48 MW. The facilities began commercial operation during the period 2012–2014 and are located
in Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, New York, Pennsylvania
and Vermont. Each facility is leased or its output is sold at retail to the relevant homeowner.
14 Id.
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Each facility receives all available regulatory exemptions as a QF under PURPA15 (including
exemption from FPA section 203) and is in any case non-jurisdictional under the FPA by virtue
of making all sales of electric energy behind the retail electric meter, except for such sales as are
reconciled pursuant to net metering arrangements.16 All of the equity interests in each of
Program I, Program II and Residential I are indirectly owned by SunPower with the exception of
a passive, non-controlling interest owned by an unaffiliated third party in Program II. Prior to
closing of the Transaction, the passive interest in Program II will be unwound and Program I,
Program II and Residential I will all be merged into SunPower Residential Holdings I, LLC, an
indirect, wholly-owned subsidiary of SunPower. Residential I will be the surviving entity in the
merger. SunPower’s ownership interests in Residential I will be a Contributed Interest in the
Transaction.
A. First Solar and Its Contributed Interests
First Solar is a Delaware corporation engaged in the business of manufacturing thin film
solar photovoltaic modules for sale, and developing solar power generating facilities through
special purpose project companies. First Solar typically sells the generating projects it develops
to purchasers and provides ongoing operation and maintenance services for the facilities under
the direction of the new owners. First Solar was formed in 1999, and its stock is publicly traded
on the NASDAQ exchange under the symbol FSLR. JCL FSLR Holdings, LLC (“JCL FSLR
Holdings”), an investment vehicle formed for the benefit of members of the Walton family, holds
approximately 25.1 percent of the outstanding shares of First Solar. No other entity directly or
15 As each of the facilities has a net power production of less than 1 MW when considered together with all affiliated projects located within one mile, the facilities are not required to make self-certification filings of QF status with the Commission. See 18 C.F.R. § 292.203(d). 16 See SunEdison, supra note 13.
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indirectly owns, controls, or holds, with power to vote, 10% or more of the voting securities of
First Solar.
Neither JCL FSLR Holdings nor any person or entity controlling JCL FSLR Holdings,
directly or indirectly owns, controls, or holds, with power to vote, 10% or more of the voting
securities of any company owning (i) electric generation, transmission or distribution facilities
other than through First Solar, (ii) intrastate natural gas pipelines, (iii) intrastate natural gas
storage or distribution facilities, (iv) sites for generation capacity development, or (v) physical
coal supply sources and ownership or control over who may access transportation of coal
supplies.
In the Transaction the Contributed Interests to be contributed by First Solar to OpCo will
consist of First Solar’s ownership interests described below.
1. Blackwell Solar, LLC and Lost Hills Solar, LLC
Blackwell Solar, LLC (“Blackwell”) is a Delaware limited liability company engaged in
the business of owning a 12 MW photovoltaic generating facility located in Kern County,
California (the “Blackwell Facility”) and selling electricity exclusively at wholesale from the
Blackwell Facility. Lost Hills Solar, LLC (“Lost Hills”) is a Delaware limited liability company
engaged in the business of owning a 20 MW photovoltaic generating facility located in Kern
County, California (the “Lost Hills Facility”) and selling electricity exclusively at wholesale
from the Lost Hills Facility.
Blackwell and Lost Hills are EWGs,17 and the Commission has authorized each company
to engage in the sale of electric energy, capacity, and ancillary services at market-based rates.18
17 Lost Hills Solar, LLC and Blackwell Solar, LLC, Docket Nos. EG15-2-000 and EG15-300 (Jan. 15, 2015) (notice of effectiveness of EWG status); Lost Hills Solar, LLC, Notice of Self-Certification of Exempt Wholesale
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The Blackwell Facility and the Lost Hills Facility began commercial operation in April 2015.
The Blackwell Facility is interconnected to the distribution system of PG&E, and the Lost Hills
Facility is interconnected with the transmission system of PG&E, both within the CAISO BAA.
The entire output of each facility is contractually committed for a period of approximately 29
years through successive long term power purchase agreements with the City of Roseville,
California and PG&E.
Blackwell and Lost Hills are indirectly owned subsidiaries of First Solar and Southern
Renewable Partnerships, LLC (“SRP”). SRP, an indirect, wholly-owned subsidiary of The
Southern Company,19 has an indirect, controlling membership interest in Blackwell and Lost
Hills, and First Solar has an indirect, passive membership interest in Blackwell and Lost Hills.
First Solar’s retained passive interest in Blackwell and Lost Hills will be a Contributed Interest
in the Transaction.
2. North Star Solar, LLC
North Star Solar, LLC (“North Star”) is a Delaware limited liability company and indirect
wholly-owned subsidiary of First Solar that is currently constructing a 60 MW photovoltaic
generating facility (the “North Star Facility”). The North Star Facility is expected to begin
commercial operation later in the second quarter of 2015 and will interconnect to the PG&E
transmission system within the CAISO BAA via a limited and discrete two mile generator tie
line. The entire output of the North Star Facility is contractually committed to PG&E for a
period of 20 years pursuant to a power purchase agreement. North Star has filed a pending
Generator Status, Docket No. EG15-2-000 (Oct. 7, 2014); Blackwell Solar, LLC, Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG15-3-000 (Oct. 7, 2014). 18 Blackwell Solar, LLC, Docket No. ER15-55-000 (Nov. 25, 2014) (delegated letter order); Lost Hills Solar, LLC, Docket No. ER15-54-000 (Nov. 25, 2014) (delegated letter order). 19 See Blackwell Solar, LLC,150FERC¶62,199(2015).
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application for market-based rate authority20 and will file a self-certification as an EWG with the
Commission. Prior to acceptance of North Star’s market-based rate application and closing of
the Transaction, First Solar intends to sell an indirect, controlling membership interest in North
Star to an unaffiliated third party, while retaining an indirect, passive membership interest. First
Solar’s retained passive interest in North Star will be a Contributed Interest in the Transaction.
3. SG2 Imperial Valley, LLC
SG2 Imperial Valley, LLC (“SG2”) is a Delaware limited liability company and owns an
approximately 150 MW photovoltaic generating facility (“SG2 Facility”) located in Imperial
County, California. The SG2 Facility is interconnected to transmission facilities owned by the
Imperial Irrigation District (“IID”) within the IID BAA. The entire output of the SG2 Facility is
committed to San Diego Gas and Electric Company pursuant to a 25-year power purchase
agreement. SG2 is authorized to sell power at market-based rates21 and is an EWG.22 SRP, an
indirect wholly-owned subsidiary of The Southern Company, controls SG2 through the
ownership of an indirect, controlling membership interest. First Solar indirectly owns a passive
membership interest in SG223 which will be a Contributed Interest in the Transaction.
4. Maryland Solar, LLC
Maryland Solar LLC (“Maryland Solar”) owns and operates a 20 MW photovoltaic
generating facility (“Maryland Solar Project”) near Hagerstown, Maryland within the PJM
Interconnection, L.L.C. (“PJM”) BAA. The Maryland Solar Project is a QF under the
20 See North Star Solar, LLC, Application for Market-Based Rate Authority, Docket No. ER15-1475-000 (Apr. 8, 2015). 21 See SG2 Imperial Valley, LLC, Docket No. ER14-661-002 (Mar. 26, 2014) (delegated letter order). 22 SG2 Imperial Valley, LLC, Docket No. EG14-21-000 (Mar. 24, 2014) (notice of effectiveness of EWG status); SG2 Imperial Valley, LLC, Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG14-21-000 (Dec. 18, 2013). 23 See SG2 Imperial Valley, LLC,148FERC¶62,241(2014).
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Commission’s regulations implementing PURPA.24 As the owner of a QF having a net power
production capacity of 20 MW or less, Maryland Solar receives the benefit of regulatory
exemptions pursuant to 18 C.F.R. §§ 292.601 and 292.602, including exemption from FPA
section 203. The entire output of the Maryland Solar Project is committed to FirstEnergy
Solutions Corp. pursuant to a long term contract. Maryland Solar is an indirect, wholly-owned
subsidiary of First Solar, and First Solar’s ownership interest in Maryland Solar will be a
Contributed Interest in the Transaction.
III. DESCRIPTION OF THE TRANSACTION
The Transaction will be accomplished pursuant to the terms of the Master Formation
Agreement between First Solar and SunPower dated March 10, 2015 and as described in the
Form S-1 registration statement governing the IPO, a preliminary draft of which has been filed
with the Securities and Exchange Commission. Both documents are included in Exhibit I to this
Application.
A. Transaction Steps
Pursuant to the Master Formation Agreement, SunPower has previously formed OpCo,
and SunPower and First Solar have previously formed 8point3 Partners, 8point3 Holding
Company, LLC (“Holdings”), and 8point3 General Partner, LLC (“8point3 GP”).
Prior to the closing of the IPO, the following transactions will occur as part of the
Transaction: