UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Iberdrola, S.A.
Iberdrola USA, Inc.
Iberdrola USA Networks, Inc.
Green Merger Sub, Inc.
UIL Holdings Corporation
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Docket No. EC15-___-000
JOINT APPLICATION FOR AUTHORIZATION OF TRANSACTION
UNDER SECTION 203 OF THE FEDERAL POWER ACT
AND REQUESTS FOR WAIVERS OF FILING REQUIREMENTS,
SHORTENED COMMENT PERIOD AND EXPEDITED CONSIDERATION
Pursuant to Sections 203(a)(1) and (a)(2) of the Federal Power Act
(“FPA”)1 and Part 33 of the Rules and Regulations of the Federal Energy Regulatory
Commission (“FERC” or the “Commission”),2 Iberdrola, S.A. (“Iberdrola”), Iberdrola
USA, Inc. (“IUSA”), Iberdrola USA Networks, Inc. (“Networks”), Green Merger Sub,
Inc. (“Merger Sub” and together with Iberdrola, IUSA and Networks, the “Iberdrola
Applicants”) and UIL Holdings Corporation (“UIL”)3 (collectively, the “Applicants”),
hereby request Commission authorization for the disposition of jurisdictional facilities
resulting from a transaction whereby UIL will merge with and into Merger Sub, a direct,
wholly-owned subsidiary of IUSA and an indirect subsidiary of Iberdrola (as described
further herein, the “Merger Transaction”) and the subsequent transfer of Merger Sub,
1
16 U.S.C. §§ 824b(a)(1) and (a)(2).
2
18 C.F.R. pt. 33.
3
UIL is filing on behalf of itself and the wholly- and partially-owned subsidiaries of UIL
described in Section I.B.2 that are “public utilities” under Section 201 of the FPA, 16
U.S.C. § 824.
which will be renamed UIL Holdings Corporation, to Networks, a direct, wholly-owned
subsidiary of IUSA (collectively referred to as the “Proposed Transaction”).
The Merger Transaction will be effected pursuant to the terms of the
Agreement and Plan of Merger, dated February 25, 2015, by and among IUSA, UIL and
Merger Sub (the “Merger Agreement”), in which UIL will merge with and into Merger
Sub, a direct, wholly-owned subsidiary of IUSA created solely for the purpose of
effectuating the Proposed Transaction, with Merger Sub as the surviving entity of the
merger. In connection with the Merger Transaction, Merger Sub will be renamed UIL
Holdings Corporation. As a result of consummating the Merger Transaction, the whollyand partially-owned public utility subsidiaries of UIL will become wholly- and partiallyowned subsidiaries of the new UIL Holdings Corporation (f/k/a Merger Sub), IUSA and
Iberdrola.
Following the closing of the Merger Transaction, IUSA intends to transfer
100% of the ownership interests in the new UIL Holdings Corporation (f/k/a Merger Sub)
to Networks, such that Merger Sub would become a direct, wholly-owned subsidiary of
Networks. As a result of this part of the Proposed Transaction, the wholly- and partiallyowned public utility subsidiaries of UIL will become wholly- and partially-owned
subsidiaries of the new UIL Holdings Corporation (f/k/a Merger Sub), Networks, IUSA
and Iberdrola.
As described herein, the Proposed Transaction will have no adverse effect
on competition, rates, or regulation, and will not result in any cross-subsidization of a
non-utility company or the encumbrance or pledge of utility assets for the benefit of an
2
associate company. The Commission should therefore approve the Proposed Transaction
as consistent with the public interest without hearing or condition.
Applicants further request that the Commission, consistent with its
precedent, grant limited waivers of its Part 33 filing requirements to the extent that the
information required by Part 33 is not necessary to determine that the Proposed
Transaction meets the statutory requirements of Section 203.4
Finally, the Proposed Transaction is scheduled to close promptly upon
receipt of the necessary regulatory approvals, shareholder approvals and customary
closing conditions. Applicants respectfully request that the Commission establish a
comment period for this Application of no greater than 21 days and issue an order
granting the requested authorizations as expeditiously as possible, and in any event, by no
later than June 23, 2015, in order to allow the Proposed Transaction to close as quickly as
possible.
I.
THE PARTIES
A.
Iberdrola and its U.S. Energy Affiliates
1.
Iberdrola USA, Inc.
IUSA, a New York corporation, is a direct, wholly-owned subsidiary of
Iberdrola and holds all of Iberdrola’s energy-related operations in the United States.
IUSA directly and wholly owns two intermediate holding companies: (i) Networks (i.e.,
Iberdrola USA Networks, Inc.), a Maine corporation, which holds Iberdrola’s
transmission-owning public utility affiliates in New York and Maine; and (ii) Iberdrola
Renewables Holdings, Inc., a Delaware corporation, which directly or indirectly holds (a)
4
See, e.g., Elizabethtown Energy, LLC, 148 FERC ¶ 62,095 (2014); MACH Gen, LLC, 148
FERC ¶ 61,045 (2014); SunEdison LLC, 147 FERC ¶ 62,234 (2014).
3
through Iberdrola Renewables, LLC, all of Iberdrola’s competitive generation businesses
in the United States, making Iberdrola Renewables, LLC the second largest wind operator
in the United States, and (b) through Iberdrola Energy Holdings, LLC, all of Iberdrola’s
gas storage and gas marketing businesses in the United States, with approximately 67.5
MMdth of gas storage installations and 59.6 Bcf of contracted or managed capacity in
North America.
2.
Iberdrola’s Transmission-Owning Public Utility Affiliates
a.
New York State Electric & Gas Corporation
New York State Electric & Gas Corporation (“NYSEG”), a direct, whollyowned subsidiary of RGS Energy Group, Inc. (“RGS Energy”), which, in turn, is a direct,
wholly-owned subsidiary of Networks, is a New York corporation and franchised electric
and gas public utility regulated by both the Commission and the New York State Public
Service Commission (“NYPSC”). NYSEG is engaged in, among other things, the
business of purchasing, transmitting, generating, distributing and selling electric power
and natural gas. NYSEG has approximately 884,000 electric customers and 265,000
natural gas customers across more than 40% of upstate New York. NYSEG has no
captive customers or bundled wholesale customers because all of NYSEG’s electric
customers have the right to choose an alternative supplier of electricity. NYSEG’s
electric system includes hydroelectric and small gas turbine generating stations,
substations and transmission and distribution lines, substantially all of which are located
in the state of New York.
4
NYSEG sold a majority of its generation assets in 1999 and most of its
remaining generation assets in 2001.5 NYSEG currently owns approximately 70 MW of
generation, consisting primarily of hydroelectric facilities, and has power purchase
contracts from third-parties. NYSEG’s transmission system is under the operational
control of the New York Independent System Operator, Inc. (“NYISO”) and has a range
in voltage from 34.5 kV to 345 kV. NYSEG provides transmission service and collects
wholesale transmission charges pursuant to the NYISO Open Access Transmission Tariff
(“NYISO OATT”). NYSEG’s natural gas system consists of 20 miles of transportation
pipeline and 8,189 miles of distribution pipeline in New York.
The Commission regulates the wholesale power sales and electric
transmission rates and services of NYSEG. Among its other FERC rate schedules,
NYSEG has a market-based rate schedule on file with the Commission.6
b.
Rochester Gas and Electric Corporation
Rochester Gas and Electric Corporation (“RG&E”), a direct and whollyowned subsidiary of RGS Energy, is a New York corporation and franchised electric and
gas public utility regulated by both the Commission and the NYPSC. RG&E is engaged
in, among other things, the business of purchasing, generating, distributing and selling
electric power and natural gas. RG&E serves approximately 374,000 electricity
customers and 309,000 natural gas customers in western New York. RG&E has no
captive customers or bundled wholesale customers because all of RG&E’s electric
5
Niagara Mohawk Power Corp., 95 FERC ¶ 62,165 (2001) (authorizing transfer to Nine
Mile Point Nuclear Station, LLC of NYSEG’s 18% interest in the Nine Mile Point
Nuclear Station); N. E State Elec. & Gas Corp., 86 FERC ¶ 62,079 (1999) (authorizing
transfer of NYSEG’s generation facilities to AES NY, L.L.C.).
6
NYSEG Solutions, Inc., et al., 85 FERC ¶ 61,342 (Dec. 14, 1998) (granting NYSEG
market-based rate authority).
5
customers have the right to choose an alternative supplier of electricity. RG&E’s electric
system includes coal-fired, combustion turbine and hydroelectric generating stations,
substations and transmission and distribution lines, all of which are located in the state of
New York.
RG&E owns 69.4 MW (seasonal) of operating electric generation
(excluding the 257 MW Russell facility which was decommissioned in 2008 and for
which a demolition and remediation plan has been accepted for filing by the NYPSC).
RG&E also has power purchase agreements for energy and capacity from third-parties.
RG&E’s transmission system is under NYISO’s operational control and has a range in
transmission voltage from 11 kV to 345 kV. RG&E provides transmission service and
collects wholesale transmission charges pursuant to the NYISO OATT. RG&E’s natural
gas system consists of 105 miles of transportation pipeline and 9,230 miles of distribution
pipeline in the state of New York.
The Commission regulates the wholesale power sales and wholesale
electric transmission rates and services of RG&E. RG&E has the authority to sell
wholesale electric power in interstate commerce at market-based rates.7
c.
Central Maine Power Company
Central Maine Power Company (“CMP”), a direct and wholly-owned
subsidiary of CMP Group, Inc., which, in turn, is a direct and wholly-owned subsidiary
of Networks, is a Maine corporation and franchised electric utility regulated by both the
Commission and the Maine Public Utilities Commission (“MPUC”). CMP is primarily
engaged in transmitting and distributing electricity generated by others to retail customers
7
Rochester Gas and Elec. Corp., 80 FERC ¶ 61,284 (1997).
6
in Maine. CMP serves more than 600,000 customers in central and southern Maine.
CMP has no captive customers or bundled wholesale customers because all of CMP’s
electric customers have the right to choose an alternative supplier of electricity.
CMP, along with its partially-owned subsidiary Maine Electric Power
Company, Inc. (“MEPCO”), has an ownership interest in and operates a 345 kV bulk
transmission network in Maine. Additionally, CMP owns and operates all lower voltage
transmission in the southern, western and central regions of Maine. CMP’s transmission
system is responsible for carrying bulk electricity between generators and ties to the rest
of New England and Canada, and throughout the service territory to distribution
substations and its customers. CMP’s transmission system is under ISO New England
Inc.’s (“ISO-NE”) operational control and has a range in transmission voltage from 34.5
kV to 345 kV. CMP provides transmission service and collects transmission charges
pursuant to the ISO-NE Open Access Transmission Tariff (“ISO-NE OATT”).
CMP no longer owns generating assets but retains some power
entitlements under long-term contracts with non-utility generators and other market
entities. CMP sells its power entitlements for periods ranging from one to three years
under auctions approved by the MPUC.
The Commission regulates the wholesale power sales and electric
transmission rates and services of CMP. Among its other FERC rate schedules, CMP has
a market-based rate schedule on file with the Commission.8
CMP also has an interest in three atomic power companies that have been
permanently shut down pursuant to Nuclear Regulatory Commission oversight: (i) Maine
8
Letter Order, 111 FERC ¶ 61,240, Docket No. ER05-731-000 (May 25, 2005).
7
Yankee Atomic Power Company (38%) (“Maine Yankee”);9 (ii) Connecticut Yankee
Atomic Power Company (6%) (“Connecticut Yankee”);10 and (iii) Yankee Atomic
Electric Power Company (9.5%) (“Yankee Rowe”).11 Other New England utilities own
the remaining interests in each of these companies. 12 Maine Yankee operated the Maine
Yankee nuclear facility in Wiscasset, Maine; Connecticut Yankee operated the
Connecticut Yankee facility in Haddam Neck, Connecticut; and Yankee Rowe operated
the Yankee Atomic facility in Rowe, Massachusetts. Each of these nuclear generation
facilities has permanently ceased commercial operations.
d.
Maine Electric Power Company
MEPCO is a transmission-only utility organized under the laws of the
state of Maine. MEPCO’s sole asset is a 182-mile, 345 kV transmission line connecting
the state of Maine and New Brunswick Power. As described above, MEPCO has ceded
operational control over its transmission system to ISO-NE. The Commission regulates
the wholesale power sales and electric transmission rates and services of MEPCO.
9
Maine Yankee has on file with the Commission a power contract addressing the
decommissioning expenses incurred by Maine Yankee. See Maine Yankee Atomic Power
Co., 105 FERC ¶ 61,309 (2003); Maine Yankee Atomic Power Co., 108 FERC ¶ 61,241
(2004); Maine Yankee Atomic Power Co., Letter Order, ER06-1262-000 (Sew. I l, 2006).
10
Connecticut Yankee has two rate schedules on file with the Commission, each of which
is wholesale power contract addressing the decommissioning expenses incurred by
Connecticut Yankee. See Connecticut Yankee Atomic Power Co., 108 FERC ¶ 61,212
(2004), denying reh’g, 113 FERC ¶ 61,057 (2005); Connecticut Yankee Atomic Power
Co., 117 FERC ¶ 61,192 (2006).
11
Yankee Rowe has on file with the Commission a wholesale power contract addressing
the decommissioning expenses incurred by Yankee Rowe. See Yankee Atomic Elec. Co.,
103 FERC ¶ 61,268 (2003); Yankee Atomic Elec. Co., Letter Order, Docket No. ER037044)01 (Jan. 13, 2004). The Commission has accepted a settlement agreement
effectuating certain amendments to that rate schedule. Yankee Atomic Elec. Co., 114
FERC ¶ 61,090 (2006); Yankee Atomic Elec. Co., 116 FERC ¶ 61,100 (2006).
12
UIL indirectly owns 9.5% of the remaining interests in Connecticut Yankee through its
wholly-owned subsidiary The United Illuminating Company.
8
MEPCO uses the same formula rates for transmission services as the other New England
Transmission Owners that are regulated by the Commission and are set forth in the ISONE OATT.13 CMP owns 78.3% of MEPCO’s common stock. The remaining 21.7% of
MEPCO’s common stock is owned by Emera Maine.
3.
Maine Natural Gas Company
Networks also indirectly and wholly owns Maine Natural Gas Company
(“MNG”), which is a local gas distribution company that delivers natural gas to
approximately 4,000 customers in southern Maine.
4.
Iberdrola’s Competitive Generation
IRHI owns and operates its competitive generation segment in the United
States through a number of indirect subsidiaries that are identified and discussed in
Exhibit B. Each of these subsidiaries whose facilities are interconnected to the interstate
transmission grid is either: (i) a public utility under the FPA and an exempt wholesale
generator (“EWG”) under the Public Utility Holding Company Act of 2005 (“PUHCA
2005”); or (ii) the owner of a generating facility that is a qualifying facility (“QF”) under
the Public Utility Regulatory Policies Act of 1978 (“PURPA”). As further described in
Exhibit B, wholesale sales by these entities are made either pursuant to market-based rate
authority granted by the Commission or pursuant to authority under PURPA. In ISONE—the only market where there is an overlap with generation controlled by UIL and its
affiliates—Iberdrola indirectly owns approximately 100.5 MW, all of which is committed
under long-term power purchase agreements.
13
ISO New England Inc., 111 FERC ¶ 61,277 (2005); see also ISO New England Inc., 124
FERC ¶ 61,297 (2008).
9
5.
Green Merger Sub, Inc.
Merger Sub, a Connecticut corporation, is a direct, wholly-owned
subsidiary of IUSA. Merger Sub was formed on February 24, 2015 for the sole purpose
of effecting the Proposed Transaction and has not conducted any activities other than
those incidental to its formation and matters contemplated in the Merger Agreement.
6.
Iberdrola, S.A.
Iberdrola is a corporation (Sociedad Anónima) organized under the Laws
of the Kingdom of Spain, whose shares are publicly traded on the Spanish stock
exchanges. Iberdrola is a global energy holding company with business operations in gas
and electricity across almost 30 countries. The primary non-U.S. geographic markets in
which Iberdrola operates are the United Kingdom, Mexico, Brazil and Spain. Globally,
Iberdrola serves approximately 32 million electric and gas customers through its
subsidiaries and indirectly owns over 45,000 MW of installed generation capacity, of
which over 14,600 MW comes from wind energy, making Iberdrola a leading producer of
wind energy in the world. Iberdrola is also a gas supplier in Europe and the Americas,
supplying natural gas to 3.63 million customers worldwide.
In the United States, through IUSA, Iberdrola indirectly owns and operates
approximately 6.5 GW of installed generation capacity across 18 states and serves
approximately 2.4 million electric and gas customers in New York and Maine through its
franchised public utilities. 14 Iberdrola, through IUSA, also indirectly owns 2.44 billion
14
Iberdrola also owns 19.69% of the publicly-traded shares of Gamesa Corporación
Tecnológica, S.A. (“Gamesa”), a Spanish renewable energy company listed on the
Madrid Stock Exchange. Gamesa is primarily engaged in manufacturing wind turbine
generators and developing, constructing and operating wind farms worldwide. Gamesa
wholly owns Gamesa Energy USA, LLC (“Gamesa USA”), a Delaware limited liability
10
cubic meters of gas storage installations and 1.7 billion cubic meters of contracted or
managed capacity, making it the third largest independent operator of natural gas storage
in North America. A list of Iberdrola’s U.S. energy affiliates is provided in Exhibit B,
and Exhibit C-1 provides a simplified organizational chart showing Iberdrola and its
subsidiaries.
B.
UIL and the Energy Companies in its Holding Company System
1.
UIL
UIL is incorporated under the laws of the state of Connecticut and is
headquartered in New Haven, Connecticut. UIL’s primary business is the ownership of
its operating regulated utilities businesses, which serve more than 725,000 electric and
natural gas utility customers in 67 communities across Connecticut and Massachusetts.
UIL is a holding company system under the Public Utility Holding Company Act of
2005,15 and its common stock trades on the New York Stock Exchange (“NYSE”) under
the symbol “UIL.” A list of UIL’s energy affiliates is provided in Exhibit B, and Exhibit
C-1 provides a simplified organizational chart showing UIL and its subsidiaries.
2.
The United Illuminating Company
The United Illuminating Company (“United Illuminating”) is an investorowned public utility organized and operated under the laws of the state of Connecticut.
company that is primarily engaged in the business of developing and constructing wind
farms in the United States.
15
UIL Holdings Corp., Docket Nos. PH06-92-000, et al., Notice of Effectiveness of
Holding Company and Transaction Exemptions and Waivers (Oct. 11, 2006). On
December 16, 2010, UIL filed a notice of change in material facts with respect to its
single-state holding company system waiver. UIL Holdings Corp., Docket No. PH11-700, Notice of Change in Material Facts (Dec. 16, 2010). In that filing, UIL demonstrated
that the material change in facts, i.e., UIL’s acquisition of CTG Resources, Inc.,
Connecticut Energy Corporation, and Berkshire Energy Resources, does not affect UIL’s
eligibility for its waiver.
11
United Illuminating is a wholly-owned subsidiary of UIL and is engaged in the purchase,
transmission, distribution, and sale of electricity for residential, commercial, and
industrial purposes in a service area of approximately 335 square miles in the
southwestern part of Connecticut.
United Illuminating owns Pool Transmission Facilities (“PTF”) and NonPool Transmission Facilities (“Non-PTF”) in the ISO-NE market. United Illuminating
also has an approximately 5.4 percent entitlement interest in the HQ Interconnection
(“HQI”), the United States portion of the transmission interconnection that connects
Hydro-Quebec and ISO-NE. ISO-NE provides transmission service over all of United
Illuminating’s PTF, Non-PTF, and its HQI entitlement, subject to the rates, terms, and
conditions of the ISO-NE OATT.16
United Illuminating has market-based rate authority to sell capacity and
energy and to sell ancillary services in the ISO-NE, New York Independent System
Operator, Inc., and PJM Interconnection, L.L.C. markets.17 United Illuminating is
developing a 2.8 MW fuel cell-powered generator in the New Haven, CT area, which is
expected become operational in April 2015, and another 2.8 MW fuel cell-powered
16
ISO New England Inc., Transmission, Markets and Services Tariff, FERC Electric Tariff
No. 3, § II.
17
See United Illuminating Co., 132 FERC ¶ 61,181 at P 2 (2010) (“August 27 Order”).;
United Illuminating Co., 63 FERC ¶ 61,212 (1992), reh’g denied, 64 FERC ¶ 61,087
(1993); United Illuminating Co., Docket No. ER00-656-000, Letter Order (Dec. 27,
1999) (authorizing United Illuminating to make sales of ancillary services). The
Commission accepted United Illuminating’s August 1, 2005 market power analysis on
November 3, 2005, United Illuminating Co., 113 FERC ¶ 61,123 (2005) (“November 3,
2005 Order”), and accepted United Illuminating’s baseline market-based rate eTariff for
filing on December 3, 2010, United Illuminating Co., Docket No. ER10-3160-000, et al.,
Letter Order (Dec. 3, 2010).
12
generator in the Bridgeport, CT area, which is expected to become operational in August
2015.18 Both generators will sell into the ISO-NE market.
United Illuminating owns 50 percent of the equity interests in GCE
Holding LLC (“GCE Holding”), which, in turn, wholly owns GenConn Devon LLC
(“GenConn Devon”) and GenConn Middletown LLC (“GenConn Middletown”). GCE
Holding also wholly owns GenConn Energy LLC (“GenConn Energy” and together with
GenConn Devon and GenConn Middletown, the “GenConn Entities”).19 The remaining
50 percent of the equity interests in GCE Holding is owned by NRG Connecticut Peaking
LLC and NRG Yield Operating LLC, neither of which are affiliated with UIL or party to
this Application.
GenConn Devon owns and operates a 187.6 MW (summer) dual fuel-fired
peaking generation facility in Milford, Connecticut, which is in the Southwest
Connecticut (“SWCT”) submarket of ISO-NE.20 GenConn Devon commenced
commercial operations in June 2010. GenConn Devon is an EWG21 and is authorized to
18
UIL Distributed Resources LLC, a wholly-owned subsidiary of United Resources, Inc.,
itself a wholly-owned subsidiary of UIL, is also developing a fuel cell-powered generator
in the area of Glastonbury, CT, which is expected to become operational and begin
selling into the ISO-NE market in May 2015. Although the New Haven, Bridgeport, and
Glastonbury fuel cell projects are not currently operational, they are included here
because they are expected to become operational during the Commission’s consideration
of this Application.
19
See August Order at PP 5 and 6.
20
See id.; GenConn Devon LLC, Request for Acceptance of Initial Market-Based Rate
Tariff and Associated Waivers under Section 205 of the Federal Power Act; Request for
Blanket Authority under Part 34 of the Commission’s Regulations; and Request for
Expedited Treatment, Docket No. ER09-1300-000, Transmittal Letter at 3 (June 15,
2009) (“GenConn Devon Market-Based Rate Application”).
21
See GenConn Devon LLC Notice of Self-Certification of Exempt Wholesale Generator
Status, Docket No. EG09-56-000 (filed June 17, 2009); EC&R Papalote Creek I, LLC,
Notice of Effectiveness of Exempt Wholesale Generator Status, Docket Nos. EG09-39000, et al. (Sept. 10, 2009) (unreported) (“EC&R Papalote”).
13
make wholesale sales of electric capacity, energy and ancillary services at market-based
rates.22
GenConn Middletown owns and operates a 187.6 MW (summer) dual
fuel-fired peaking generation facility in Middletown, Connecticut, which is in the
Connecticut Import interface (“CT”) submarket of ISO-NE.23 GenConn Middletown
commenced commercial operations in June 2011. GenConn Middletown is an EWG24
and is authorized to make wholesale sales of electric capacity, energy and ancillary
services at market-based rates.25
GenConn Energy acts as an agent for GenConn Devon and GenConn
Middletown in the ISO-NE market.26 GenConn Energy is authorized to make wholesale
sales of electric capacity, energy and ancillary services at market-based rates.27
3.
UIL’s Local Gas Distribution Companies
UIL also owns CTG Resources, Inc. (“CTG”), which owns the
Connecticut Natural Gas Corporation (“CNG”). 28 UIL also wholly owns Connecticut
Energy Corporation (“CEC”), which wholly owns The Southern Connecticut Gas
Company (“SCG”). Finally, UIL wholly owns Berkshire Energy Resources (“BER”),
22
GenConn Devon LLC, Docket Nos. ER09-1300-000, et al. (July 29, 2009) (unreported)
(“GenConn Devon”) (granting market-based rate authorization).
23
See August 27 Order at P 5; GenConn Devon Market-Based Rate Application, Docket
No. ER09-1300-000, Transmittal Letter at 6.
24
See GenConn Middletown LLC Notice of Self-Certification of Exempt Wholesale
Generator Status, Docket No. EG09-55-000 (filed June 17, 2009); EC&R Papalote,
Docket Nos. EG09-39-000, et al. (notice of effectiveness of EWG status).
25
See GenConn Devon (granting GenConn Middletown market-based rate authorization).
26
See August 27 Order at P 6.
27
GenConn Energy LLC, Docket No. ER10-1291-000, Letter Order at 1 (July 13, 2010)
(“GenConn Energy Market-Based Rate Order”).
28
Certain minority interests in CNG’s preferred stock are held by unaffiliated entities.
CTG Resources, Inc. holds approximately 65% of the preferred stock in CNG.
14
which wholly owns the Berkshire Gas Company (“BGC”). Each of CNG, SCG, and
BGC is a natural gas local distribution company. CNG and SCG deliver natural gas to
residential, commercial, and industrial customers in central and southern Connecticut,
respectively, and BGC delivers natural gas to residential, commercial, and industrial
customers in western Massachusetts.
4.
UIL’s LNG Companies
United Resources, Inc. (“URI”), a wholly-owned subsidiary of UIL, owns
Total Peaking Services, LLC (“Total Peaking”), a Delaware limited liability company
principally engaged in the business of liquefied natural gas (“LNG”) storage services.
Total Peaking is the owner of a 1.2 bcf LNG open access storage facility in Milford,
Connecticut and contracts with SCG for operation of the facility. The facility is
physically connected only to the local distribution system of SCG and supports SCG’s
Connecticut retail gas utility distribution services. 29 The maximum daily delivery
capability of this storage facility is 90 MMcf/d; the liquefaction rate is 6 MMcf/d. Open
access to the storage capacity of Total Peaking is provided under a FERC-approved
tariff. 30
29
The facility potentially could indirectly access through displacement three major natural
gas pipelines in New England: Algonquin Gas Transmission Company, Iroquois Gas
Transmission System, L.P. and Tennessee Gas Pipeline Company. URI also owns CNE
Peaking, LLC (“CNE Peaking”), which holds the full long-term firm rights to the LNG
facility. CNE Peaking provides service to SCG for the full capabilities and capacity of
the LNG facility under a long-term contract approved by the State of Connecticut Public
Utilities Regulatory Authority (“Connecticut PURA”).
30
First Revised Volume No. 1 of Total Peaking Services, L.L.C. See B-R Pipeline Co., 149
FERC ¶ 61,031 (2014) (approving revisions to the Total Peaking tariff to provide for the
posting of offers to purchase released capacity in a manner compliant with 18 C.F.R. §
284.8(d)).
15
II.
THE PROPOSED TRANSACTION
The Proposed Transaction is the Merger Transaction and the transfer of
the new UIL Holdings Corporation (f/k/a Merger Sub) to Networks.
Pursuant to the Merger Transaction, UIL will merge with and into Merger
Sub, with Merger Sub being the surviving entity of the merger. Merger Sub will
subsequently be renamed UIL Holdings Corporation. As a result of consummating the
Merger Transaction, the wholly- and partially-owned public utility subsidiaries of UIL
will become wholly- and partially-owned subsidiaries of the new UIL Holdings
Corporation (f/k/a Merger Sub), IUSA, and Iberdrola. A copy of the Merger Agreement
is provided as Exhibit I.
Following the closing of the Merger Transaction, IUSA intends to transfer
100% of the ownership interests in the new UIL Holdings Corporation (f/k/a Merger Sub)
to Networks, making the wholly- and partially-owned public utility subsidiaries of UIL
wholly- and partially-owned indirect subsidiaries of Networks as well as the new UIL
Holdings Corporation (f/k/a Merger Sub), IUSA, and Iberdrola. Throughout the
Proposed Transaction, CNG will continue to be directly owned by CTG,31 SCG will
continue to be directly and wholly-owned by CEC, BGC will continue to be directly and
wholly-owned by BER, and CTG, CEC, BER and United Illuminating will remain direct,
wholly-owned subsidiaries of the new UIL Holdings Corporation (f/k/a Merger Sub).32
31
Certain minority interests in CNG’s preferred stock are held by unaffiliated entities.
CTG holds approximately 65% of the preferred stock in CNG.
32
The GenConn Entities will remain only 50 percent owned by the new UIL Holdings
Corporation (f/k/a Merger Sub).
16
Upon the closing of the Merger Transaction, each outstanding share of
UIL common stock will be converted into one share of IUSA common stock.33 In
addition to receiving one share of IUSA common stock for each outstanding share of UIL
common stock, current UIL shareholders will also receive a one-time cash payment of
$10.50 per share.
UIL’s current shareholders (as of the record date set by UIL) will receive
18.5% of the outstanding voting securities in IUSA upon the closing of the Merger
Transaction, and Iberdrola will continue to hold the remaining 81.5%.34 IUSA will also
become a publicly traded company listed on the NYSE as of the closing of the Merger
Transaction. The total consideration to be paid by IUSA, based upon the number of UIL
shares outstanding as of February 25, 2015, is approximately $3 billion. Finally, the
wholly- and partially-owned public utility subsidiaries of UIL will not incur any debt as a
result of the Proposed Transaction.
III.
THE PROPOSED TRANSACTION IS CONSISTENT WITH THE PUBLIC
INTEREST
Section 203(a)(4) of the FPA provides that the Commission must
authorize a proposed transaction under Section 203 if it determines that the transaction
“will be consistent with the public interest.”35 The Commission reviews three factors
33
The Iberdrola Applicants will file a notice of consummation within ten days of the
consummation of the Merger Transaction and will file a second notice of consummation
within ten days of the consummation of the remainder of the Proposed Transaction.
34
Those voting securities in IUSA to be held by UIL’s current shareholders as of the
closing of the Merger Transaction are expected to be widely distributed with no entity or
entities under common control owning 10% or more of IUSA’s voting securities.
35
16 U.S.C. § 824b(a)(4). Section 203 does not require a demonstration that a proposed
transaction will result in a positive benefit to the public. Rather, the Commission need
only conclude that the proposed transaction is consistent with the public interest. See
Tex.-N.M. Power Co., 105 FERC ¶ 61,028 at P 23 (2003); Entergy Servs., Inc., 62 FERC
17
when evaluating proposed transactions under the Section 203 public interest standard: (i)
the effect on competition; (ii) the effect on rates; and (iii) the effect on regulation.36 In
addition, Section 203(a)(4) requires that the Commission consider whether a proposed
transaction would “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.”37 As
described below, the Proposed Transaction is consistent with the public interest under the
Commission’s applicable tests and otherwise meets the statutory requirements of Section
203 of the FPA.
A.
The Proposed Transaction Will Not Have An Adverse Effect On
Competition
The Commission’s objective in analyzing the effect on competition of a
proposed transaction is to determine whether the proposed transaction will “result in
higher prices or reduced output in electricity markets.”38 The Commission has ruled that
higher prices and reduced output in electricity markets may occur if the applicants for
Section 203 authorization are able to exercise market power, either alone or in
¶ 61,073 at 61,370, clarified, 62 FERC ¶ 61,156, reh’g denied, 64 FERC ¶ 61,001,
clarification denied, 64 FERC ¶ 61,191, reh’g denied, 64 FERC ¶ 61,326 (1993);
Fitchburg Gas & Elec. Light Co., 58 FERC ¶ 61,201 at 61,624 (1992); Ky. Utils. Co., 56
FERC ¶ 61,184 at 61,655 (1991); Savannah Elec. & Power Co., 42 FERC ¶ 61,240 at
61,780 (1988); Pac. Power & Light Co. v. FPC, 111 F.2d 1014, 1016-17 (9th Cir. 1940).
36
Inquiry Concerning the Commission’s Merger Policy Under the Federal Power Act:
Policy Statement, Order No. 592, FERC Stats. & Regs. ¶ 31,044 at 30,111-112 (1996)
(“Merger Policy Statement”), order on recons., Order No. 592-A, 79 FERC ¶ 61,321
(1997).
37
16 U.S.C. § 824b(a)(4).
38
Revised Filing Requirements under Part 33 of the Commission’s Regulations, Order No.
642, FERC Stats. & Regs. ¶ 31,111, at 31,879 (2000), order on reh’g, Order No. 642-A,
94 FERC ¶ 61,289 (2001) (“Order No. 642”); Merger Policy Statement at 31,044; 18
C.F.R. § 2.26.
18
conjunction with others.39 The Commission’s Merger Policy Statement and Order No.
642 established both horizontal and vertical competitive analysis screens to allow the
Commission to identify proposed transactions that may present competitive concerns.40
The Applicants have engaged Dr. William H. Hieronymus of CRA
International, Inc. to analyze the horizontal and vertical market power effects of the
Proposed Transaction. Dr. Hieronymus’s affidavit explaining his economic analysis,
together with his exhibits and workpapers, are provided as Exhibit J hereto (the
“Hieronymus Affidavit”). As demonstrated below and in the Hieronymus Affidavit, the
Proposed Transaction will have no adverse effect on competition.
1.
The Proposed Transaction Does Not Raise Any Horizontal
Market Power Issues
Section 33.3(a)(2)(i) of the Commission’s regulations provides that no
horizontal competitive screen analysis, as set forth in Appendix A to the Merger Policy
Statement, is required if the applicant “[a]ffirmatively demonstrates that the merging
entities do not currently conduct business in the same geographic markets or that the
extent of the business transactions in the same geographic markets is de minimis.”41
While the Proposed Transaction involves a transfer of ownership with respect to entities
with indirect interests in generation, rather than a merger, the same exception applies.42
39
Order No. 642 at 31,879.
40
See Order No. 642 at 31,879, 31,903.
41
18 C.F.R. § 33.3(a)(2)(i).
42
See, e.g., Liberty Elec. Power, LLC, 110 FERC ¶ 62,152 at 64,320 (2005) (approving
upstream transfer of jurisdictional facilities without requiring a horizontal competitive
screen analysis where parties held only de minimis interests in the relevant markets);
LenderCo, 110 FERC ¶ 61,044 (2005) (same); Athens Generating Co., L.P., 103 FERC ¶
61,290 (2003) (same).
19
As described in the Hieronymus Affidavit, the extent of the Applicants’ business
transactions in the same geographic markets is de minimis.43
As Dr. Hieronymus explains, the only geographic market in which both
the Iberdrola Applicants and UIL own or control overlapping generation is the control
area operated by ISO-NE.44 Although UIL indirectly owns generation in identified ISONE submarkets, the Iberdrola Applicants and UIL do not own or control any overlapping
generation in any of the ISO-NE submarkets. In the ISO-NE market, the Iberdrola
Applicants and the UIL own or control only small amounts of generation and clearly
meet the de minimis standard. As demonstrated in the Hieronymus Affidavit, the
Applicants together own or control, conservatively including potential imports from
NYISO, reflect only 0.36 percent and 0.55 percent of the installed capacity in the ISONE market, respectively, for a combined market share of less than 1 percent.45 As such,
no horizontal competitive analysis is required with respect to the Proposed Transaction.
2.
The Proposed Transaction Does Not Raise Any Vertical
Market Power Issues
The Commission does not require a vertical competitive analysis if the
applicants demonstrate that (i) the merging entities either currently do not provide
electricity products or inputs to electricity products in the same geographic market, or any
business transactions in the same geographic market are de minimis, and no intervenor
has alleged that one of the merging entities is a perceived potential competitor in the
same geographic market as the other; and (ii) the extent of the relevant upstream products
43
Hieronymus Aff. at PP 2-4.
44
Id. at PP 2-4, 31-32.
45
Id. at PP 2, 30.
20
currently provided by the merging entities is used to produce a de minimis amount of the
relevant downstream products in the relevant destination markets.46
As described in the attached Hieronymus Affidavit, the extent of the
Applicants’ business transactions in the same geographic markets is de minimis. None of
the Iberdrola Applicants own or control transmission assets other than the transmission
assets in New York and Maine that are operated by NYISO and ISO-NE, respectively,
and those limited facilities necessary to interconnect their generating facilities to the
transmission grid.47 UIL does not own or control transmission assets other than the
transmission assets in Connecticut that are operated by ISO-NE and those limited
facilities necessary to interconnect their generating facilities to the transmission grid.48
Dr. Hieronymus concludes that there are no vertical market power issues arising from the
Applicants’ ownership of transmission assets because all of the Applicants’ transmission
assets are under the control of either ISO-NE or NYISO.49
Dr. Hieronymus further concludes that, while UIL has affiliated local
natural gas distribution companies (“LDCs”) that operate in the Northeast markets where
the Iberdrola Applicants own or control generation, the Iberdrola Applicants will not be
able to use those LDCs either to favor their own generation, raise rivals’ costs or
otherwise disadvantage rivals. 50 As explained above, the generation owned or controlled
by the Applicants in the relevant markets is de minimis and, in any case, nearly all of the
generating facilities owned by the Iberdrola Applicants in these markets are wind
46
18 C.F.R. § 33.4(a)(2)(i) and (ii).
47
Hieronymus Aff. at P 6.
48
Id.
49
Id.
50
Id. at PP 7-8.
21
generators, and therefore do not take delivery of natural gas from UIL’s affiliated LDCs.
Moreover, none of those UIL affiliates own significant interstate or intrastate gas
transmission pipelines. Dr. Hieronymus also analyzed the upstream gas transportation
market in ISO-NE and found that the upstream market is not highly concentrated.51
Thus, even if the Proposed Transaction did not satisfy the de minimis standard, which it
does, the fact that the upstream market in ISO-NE is not highly concentrated means that
the Proposed Transaction also passes the vertical market power test relating to control
over gas transmission. 52
Finally, Dr. Hieronymus explains that neither the Iberdrola Applicants nor
UIL have dominant control over generating sites in any relevant market, or dominant
control of fuel inputs to generation or any equipment suppliers, and there are no other
barriers to entry that would raise any concerns.53 Accordingly, under Section 33.4(a)(2)
of the Commission’s regulations, 54 there is no need to file a vertical competitive analysis,
and the Proposed Transaction does not raise any vertical market power concerns.
B.
The Proposed Transaction Will Not Have An Adverse Effect On Rates
In assessing the effect that a proposed transaction could have on rates, the
Commission’s primary concern is “the protection of wholesale ratepayers and
transmission customers.”55 The Commission requires merger applicants to “propose
51
Id. at P 48.
52
Id.
53
Id. at PP 49-50.
54
18 C.F.R. § 33.4(a)(2).
55
New England Power Co., 82 FERC ¶ 61,179 at 61,659, order on reh’g, 83 FERC ¶
61,275 (1998), aff’d sub nom. Town of Norwood v. FERC, 202 F.3d 392 (1st Cir. 2000);
see also Merger Policy Statement, FERC Stats. & Regs. ¶ 31,044 at 30,123 (concern is to
protect ratepayers from rate increases because of a merger); ITC Midwest LLC, 140
22
ratepayer protection mechanisms to assure that customers are protected if expected
benefits do not materialize.”56 The Commission has stated that an enforceable and
administratively manageable “general hold harmless provision” or commitment from the
applicants that they will “protect wholesale customers from any adverse rate effects
resulting from the merger for a significant period of time following the merger” would
serve as a sufficient ratepayer protection mechanism. 57
To ensure that the Proposed Transaction will have no adverse effect on
rates, the Applicants commit that they will not seek to recover any acquisition premium
and will not seek to recover any transaction-related costs incurred to consummate the
Proposed Transaction from any transmission customer or any customer purchasing
wholesale power at cost-based rates following the consummation of the Proposed
Transaction.58 The Applicants are similarly committing to the State of Connecticut
Public Utilities Regulatory Authority (“Connecticut PURA”) and the Massachusetts
Department of Public Utilities (“Massachusetts DPU”) that they will not seek to recover
from any retail customers any acquisition premium or costs incurred to consummate the
FERC ¶ 61,125 at P 19 (2012) (explaining that the Commission focuses on “the effect
that a proposed transaction itself will have on rates, whether that effect is adverse, and
whether any adverse effect will be offset or mitigated by benefits that are likely to result
from the proposed transaction”).
56
Merger Policy Statement, FERC Stats. & Regs ¶ 31,044 at 30,124.
57
Id.
58
The Applicants note that the Proposed Transaction will not have any adverse rate effect
on the Applicants with market-based rate authority’s sales pursuant to their respective
market-based rate tariffs, because all such sales will continue to be made at market-based
rates authorized by the Commission. Cinergy Corp., 140 FERC ¶ 61,180, at P 41 (2012)
(citing Duquesne Light Holdings, Inc., 117 FERC ¶ 61,326, at P 25 (2006)) (“The
Commission has previously stated that, when there are market-based rates, the effect on
rates is not of concern. The effect on rates is not of concern in these circumstances
because market-based rates will not be affected by the seller’s cost of service and, thus,
will not be adversely affected by the Proposed Transaction.”).
23
Proposed Transaction. The Commission has determined that such a commitment is
sufficient to protect customers for jurisdictional services from any potential adverse
effects on their rates that arise from a proposed merger.59 As such, the Proposed
Transaction will have no adverse impact on rates.
In addition, the Applicants note that the Commission’s regulations
promulgated under PUHCA 2005 require that holding companies and their associate
companies make available to the Commission and state regulatory authorities their books
and records relating to costs incurred by their jurisdictional companies. 60 This books and
records requirement offers additional assurance that the Commission and the applicable
states will have the ability to monitor the Applicants’ compliance with their pledge to
hold harmless any and all transmission customers, customers taking power service under
cost-based rates, and retail customers from any acquisition premium and costs incurred to
consummate the Proposed Transaction.
C.
The Proposed Transaction Will Not Have An Adverse Effect On
Regulation
The Proposed Transaction will not diminish the Commission’s regulatory
authority or create a regulatory gap or shift regulatory authority between the Commission
and any state commission. No FPA-jurisdictional Applicant’s status as an FPAjurisdictional utility will change as a result of the Proposed Transaction, and the Proposed
Transaction will not result in any facilities being removed from the Commission’s
59
See, e.g., Silver Merger Sub, Inc., 145 FERC ¶ 61,261 at P 68 (2013); ITC Holdings
Corp., 121 FERC ¶ 61,229 at P 128; Exelon Corp., 138 FERC ¶ 61,167 at P 117-18
(2012); National Grid plc, 117 FERC ¶ 61,080 at P 54 (2006); Ameren Corp., 108 FERC
¶ 61,094 at PP 62-68 (2004) (finding no adverse rate effects in connection with merger
where applicants committed to hold ratepayers harmless from merger related costs in
excess of merger savings).
60
18 C.F.R. § 366.2.
24
jurisdiction. Moreover, the Proposed Transaction will not in any way modify the
applicable states’ jurisdiction and authority over the Applicants’ state-regulated utility
operations. Accordingly, the Proposed Transaction will not impair the Commission’s
existing jurisdiction over the Applicants.
The Applicants have filed, or will shortly file, applications for approval of
the Proposed Transaction with the Connecticut PURA and Massachusetts DPU. These
filings will provide an opportunity for the applicable state commissions to evaluate any
potential effects on state regulation and state jurisdictional rates and services related to
the Proposed Transaction. Each state will directly address any concerns it may have with
respect to the Proposed Transaction in such proceedings, and the Commission, therefore,
need not review any such concerns here. In each such state application, the Applicants
have made, or will make, a similar commitment that the Proposed Transaction will not
impact the state commissions’ jurisdiction over the applicable Applicant public utility
affiliates. Although the Proposed Transaction does not require approval from the NYPSC
or MPUC, the applicable Iberdrola Applicants’ subsidiaries that are currently subject to
the jurisdiction of the NYPSC and MPUC will continue to be subject to the same
regulatory oversight after the Proposed Transaction.
Finally, the books and records access requirements of PUHCA 2005
described above in Section III.B will further help to ensure that state regulators have the
information necessary to oversee the state-jurisdictional rates of the Applicants’ utility
subsidiaries.
25
D.
The Proposed Transaction Will Not Result In Cross-Subsidization Or
The Pledge Or Encumbrance Of Utility Assets
Section 203(a)(4) of the FPA provides that the Commission must find that
a proposed jurisdictional transaction will not result in cross-subsidization of a non-utility
associate company or pledge or encumbrance of utility assets for the benefit of an
associate company, unless the Commission finds that such cross-subsidization, pledge or
encumbrance is consistent with the public interest.61 The Commission has stated that its
concern about cross-subsidization is principally a concern over the effect of a transaction
on rates charged to captive customers.62
Here, the Proposed Transaction falls within two of the Commission’s
“safe harbors” under Section 203(a)(4), such that detailed explanation and evidentiary
support to demonstrate a lack of cross-subsidization is not required. 63 First, the Proposed
Transaction does not involve any franchised public utility with captive customers (i.e.,
wholesale or retail electric energy customers served under cost-based regulation) because
each of the states in which the Applicants have franchised electric public utilities (i.e.,
Connecticut, New York and Maine) has instituted retail energy choice. 64 The
Commission has determined that retail cost-based sales in retail choice states are not
61
16 U.S.C. § 824b(a)(4).
62
Transactions Subject to FPA Section 203, Order No. 669, FERC Stats. & Regs. ¶ 31,200
at P 167, on reh’g, Order No. 669-A, FERC Stats. & Regs. ¶ 31,214, on reh’g, Order No.
669-B, FERC Stats. & Regs. ¶ 31,225 (2006); FPA Section 203 Supplemental Policy
Statement, FERC Stats. & Regs. ¶ 31,253 at P 13 (2007).
63
FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at PP 17
and 18.
64
FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at PP 17.
26
considered to be sales to captive customers.65 In these circumstances, the Commission
has found there is no potential for harm to customers due to cross-subsidization, and no
further showing is required under the Commission’s FPA Section 203 Supplemental
Policy. 66
Second, as discussed above in Section III.C, the Proposed Transaction is
subject to review by the Connecticut PURA and the Massachusetts DPU and thus falls
within the second safe harbor where state commissions have the authority to protect
captive customers, if any, against inappropriate cross-subsidization for the benefit of
“unregulated” affiliates.67
As described in Exhibit M attached hereto, based on the facts and
circumstances known to the Applicants or those that are reasonably foreseeable, the
Proposed Transaction will not result in, at the time of the Proposed Transaction or in the
future, cross-subsidization of a nonutility associate company or the pledge or
encumbrance of utility assets for the benefit of an associate company. Exhibit M also
contains, as required by 18 C.F.R. § 33.2(1)(j)(i), a listing of the existing pledges and
encumbrances of the Applicants’ regulated utilities.
65
Market-Based Rates For Wholesale Sales Of Electric Energy, Capacity And Ancillary
Services By Public Utilities, 119 FERC ¶ 61,295 (2007) at P 480; Duquesne Light
Holdings, Inc., et al., 117 FERC ¶ 61,326 at P 38 (2006).
66
Id. (“If no captive customers are involved, then there is no potential for harm to
customers. Therefore, compliance with Exhibit M could be a showing that no franchised
public utility with captive customers is involved in the transaction.”) (footnote omitted).
67
FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at P 18.
27
IV.
INFORMATION REQUIRED OF APPLICANTS BY SECTION 33.2 OF
THE COMMISSION’S REGULATIONS AND REQUESTS FOR
WAIVERS
Applicants herein provide the information necessary for the Commission
to determine that the Proposed Transaction is consistent with the public interest as
required under FPA Section 203. Because certain information specified in the
Commission’s regulations is inapplicable to the Commission’s consideration of whether
the Proposed Transaction is consistent with the public interest, Applicants respectfully
request that the Commission waive certain of the filing requirements in Part 33 of its
regulations, as discussed below. The Commission has granted such waivers in similar
circumstances. 68
A.
The exact name and address of the principal business office of
Applicants
The Applicants’ exact legal names and principal business addresses are as
follows:
Iberdrola, S.A.
Plaza de Euskadi, 5
48009 Bilbao, Spain
Iberdrola USA, Inc.
52 Farm View Drive
New Gloucester, Maine 04260
Iberdrola USA Networks, Inc.
52 Farm View Drive
New Gloucester, Maine 04260
Green Merger Sub, Inc.
52 Farm View Drive
New Gloucester, Maine 04260
UIL Holdings Corporation
157 Church Street
New Haven, CT 06510
68
See, e.g., MACH Gen, LLC, 113 FERC ¶ 61,138; Boston Generating, LLC, 113 FERC ¶
61,109; La Paloma, Holding Co., LLC, 112 FERC ¶ 61,052; Lake Road Holding Co.,
LLC, 112 FERC ¶ 61,051.
28
B.
Name and address of persons authorized to receive notices and
communications regarding this Application
Applicants request that the following persons be placed on the official
service list for this proceeding and, to the extent necessary, respectfully request waiver of
Section 385.203(b)(3) of the Commission’s regulations, 69 in order to permit designation
of such persons for service in this proceeding.
For the Iberdrola Applicants:
For UIL:
David L. Schwartz
Natasha Gianvecchio
David E. Pettit
Latham & Watkins LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
Telephone: (202) 637-2200
Email: david.schwartz@lw.com
natasha.gianvecchio@lw.com
david.pettit@lw.com
R. Scott Mahoney
General Counsel
Iberdrola USA, Inc. and
Iberdrola USA Networks. Inc.
52 Farm View Drive
New Gloucester, Maine 04260
Telephone: (207) 688-6363
Email: scott.mahoney@iberdrolausa.com
Manuel Toledano
Development Legal Services Director
Iberdrola, S.A.
Tomás Redondo 1
28033 Madrid, Spain
Telephone: +(34) 91 325 77 64
Email: mtoledano@iberdrola.es
69
18 C.F.R. § 385.203(b)(3).
29
Stephen M. Spina
J. Daniel Skees
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave., NW
Washington, DC 20004
Telephone: (202) 739-5958/5834
Email: sspina@morganlewis.com
dskees@morganlewis.com
Linda L. Randell
Senior Vice President and
General Counsel
UIL Holdings Corporation
The United Illuminating
Company
157 Church Street
P.O. Box 1564
New Haven, CT 06506-0901
Telephone: (203) 499-2575
Email: linda.randell@uinet.com
Sigrid E. Kun
Vice President, Assistant General
Counsel and Corporate Secretary
UIL Holdings Corporation
The United Illuminating
Company
157 Church Street
P.O. Box 1564
New Haven, CT 06506-0901
Telephone: (203) 499-5858
Email: sigrid.kun@uinet.com
Rafael Gil Nievas
Director of Legal Corporate Services
for the Americas
Iberdrola, S.A.
52 Farm View Drive
New Gloucester, Maine 04260
Tel: 607-372-8410
Email: rgilnievas@iberdrola.es
C.
Description of Applicants, including:
1.
All business activities of the applicants, including
authorizations by charter or regulatory approval
The business activities of the Applicants are fully described in Section I of
this Application. The Applicants respectfully request a waiver of the requirement to
submit Exhibit A to the extent otherwise deemed necessary.
2.
A list of all energy subsidiaries and energy affiliates,
percentage ownership in such subsidiaries and affiliates, and a
description of the primary business in which each energy
subsidiary and affiliate is engaged
The Applicants’ U.S. energy subsidiaries and energy affiliates that are not
otherwise described in Section I are described in Exhibit B. To the extent necessary,
Applicants respectfully request a waiver of the information requirements of 18 C.F.R. §
33.2(c)(2) to provide any additional information on the Applicants’ non-U.S. energy
affiliates because such affiliates are not relevant to the Commission’s evaluation of the
Proposed Transaction.
3.
Organizational charts depicting the applicant’s current and
post-transaction corporate structures (including any pending
authorized but not implemented changes), indicating all parent
companies, energy subsidiaries and energy affiliates unless the
applicant demonstrates that the proposed transaction does not
affect the corporate structure of any party to the transaction
Organizational charts illustrating the current ownership structure of the
Applicants are attached hereto as Exhibit C-1(a) and (b). Organizational charts showing
30
the Applicants’ post-Merger Transaction and post-Proposed Transaction ownership
structure are attached hereto as Exhibit C-2(a) and C-2(b), respectively.
4.
Description of all joint ventures, strategic alliances, tolling
arrangements or other business arrangements, including
transfers of operational control of transmission facilities to
Commission approved Regional Transmission Organizations,
both current, and those planned to occur within a year from
the date of filing, to which the applicant or its parent
companies, energy subsidiaries, and energy affiliates is a party,
unless the proposed transaction does not affect any of its
business interests
The pertinent business interests of the Applicants are described in the text
of this Application. The Applicants request waiver of the requirement to provide Exhibit
D, to the extent necessary, as the Proposed Transaction will not affect any business
interests except as discussed herein.
5.
Identity of common officers or directors of parties to the
proposed transaction
There are no common officers or directors among Iberdrola and its
affiliates, on the one hand, and UIL and its affiliates, on the other hand. To the extent
that any person may in the future hold an interlocking position subject to the
Commission’s regulations, the appropriate filings under 18 C.F.R. Parts 45 and 46 will be
timely made. Accordingly, the Applicants request waiver of the requirement to provide
Exhibit E.
6.
Description and location of wholesale power customers and
unbundled transmission services customers served by the
applicants or their parent companies, subsidiaries, affiliates
and associate companies
Information regarding the description and location of the transmission
services customers served by CMP, MEPCO, NYSEG, RG&E and United Illuminating is
provided in Exhibit F.
31
As described in Section I, certain Applicants and their affiliates sell
electric energy, capacity and ancillary services pursuant to market-based rate tariffs on
file with the Commission. Where applicable, each of these market-based rate sellers
reports the transactions that occur under its respective market-based rate tariff and other
wholesale power contracts on file with the Commission in its electric quarterly reports.
Any such sales will not be affected by the Proposed Transaction. Accordingly, to the
extent necessary, the Applicants respectfully request waiver of the requirement to submit
this information with respect to the market-based rate sales of the Applicants’ and their
affiliates in Exhibit F.
D.
Description of jurisdictional facilities owned, operated, or controlled
by the applicants or their parent companies, subsidiaries, affiliates
and associate companies
The jurisdictional facilities implicated by the Transaction are described in
the text of this Application. The Applicants respectfully request waiver of the
requirement to describe any jurisdictional facilities not implicated or affected by the
Proposed Transaction or to file a separate Exhibit G.
E.
A narrative description of the proposed transaction for which
Commission authorization is requested
The Proposed Transaction is described in Section II of this Application.
Therefore, to the extent necessary, the Applicants respectfully request waiver of the
requirement to file Exhibit H.
32
F.
All contracts related to the proposed transaction together with copies
of all other written instruments entered into or proposed to be entered
into by the parties to the transaction
The Merger Transaction will be accomplished in accordance with the
terms of the Merger Agreement provided in Exhibit I.70
G.
A statement explaining the facts relied upon to demonstrate that the
proposed transaction is consistent with the public interest
This information is provided in Section III of this Application and in the
testimony of Dr. Hieronymus, which is attached in Exhibit J.
H.
A general or key map showing the properties of each party to the
transaction
The Proposed Transaction does not involve a physical merger or other
combination of jurisdictional facilities, and a map would not provide the Commission
with information relevant to the Proposed Transaction. For the convenience of the
Commission, the Applicants include in Exhibit K maps of the service territories of CMP,
NYSEG, RG&E and United Illuminating. Applicants respectfully request waiver of the
requirement to file a map with respect to other properties.
I.
Identify the licenses, orders, or other approvals required from other
regulatory bodies in connection with the proposed transaction, and
the status of other regulatory actions
See Exhibit L.
J.
70
An explanation, with appropriate evidentiary support for such
explanation (i) of how applicants are providing assurances that the
proposed transaction will not result in cross-subsidization of a nonutility associate company or pledge or encumbrance of utility assets
As noted above, certain information specified in the Commission’s regulations is
inapplicable to the Commission’s consideration of whether the Proposed Transaction is
consistent with the public interest and does not relate to the effect of the Proposed
Transaction on the factors identified in 18 C.F.R. § 2.26 that are addressed herein.
Applicants respectfully request that the Commission waive any requirement to submit
such extraneous information.
33
for the benefit of an associate company; or (ii) if no such assurance
can be provided, an explanation of how such cross-subsidization,
pledge or encumbrance will be in the public interest
See Exhibit M.
V.
INFORMATION REQUIRED OF APPLICANTS BY SECTION 33.5 OF
THE COMMISSION’S REGULATIONS: ACCOUNTING ENTRIES
The Applicants do not intend to reflect any aspect of the Proposed
Transaction on the books of any entity that is required to keep its books in accordance
with the Commission’s Uniform System of Accounts. Therefore, there are no pro forma
accounting entries to be provided with respect to the Proposed Transaction. In the event
this determination should change, any required accounting entries will be submitted
within six months of the consummation of the Proposed Transaction. 71
VI.
INFORMATION REQUIRED OF APPLICANTS BY SECTION 33.7 OF
THE COMMISSION’S REGULATIONS: VERIFICATIONS
In addition to the Exhibits described above, attached to this Application as
Attachment 1 are verifications from authorized representatives of the Applicants, as
required under Section 33.7 of the Commission’s regulations.
VII.
REQUEST FOR SHORTENED COMMENT PERIOD AND EXPEDITED
CONSIDERATION
The Applicants respectfully request that the Commission establish a
comment period of no greater than 21 days on this Application and issue an order
granting the requested authorization as expeditiously as possible, and in any event, no
later than June 23, 2015, in order to allow the Proposed Transaction to close as quickly as
possible.
71
See 18 C.F.R. Part 101, Acct. 102.B.
34
Section 203(a)(5) of the FPA requires the Commission to provide for
expedited review of certain applications under Section 203.72 Pursuant to the
Commission’s regulations under Section 203(a)(5), the Commission typically will act on
a completed Section 203 application within 180 days but will undertake a more expedited
review when the application is not contested, does not involve a merger, and is consistent
with Commission precedent.73 The Commission’s regulations also generally provide for
expedited review if the transaction does not require an Appendix A analysis. 74
Here, expedited review is warranted because, as described in Section III
above, approval of the Proposed Transaction is consistent with the Commission’s
precedent, the Proposed Transaction does not involve a merger and because an Appendix
A analysis is not required for the Commission’s evaluation of the Proposed Transaction.
Finally, issuing an order on this Application within the requested timeframe is consistent
with other examples where the Commission has given such expedited consideration.75
72
16 U.S.C. § 824b(a)(5).
73
18 C.F.R. § 33.11(b); Transactions Subject to FPA Section 203, Order No. 669, FERC
Stats. & Regs. ¶ 31,200 at P 188 (2006).
74
18 C.F.R. § 33.11(c)(2).
75
See, e.g., Fortis, Inc., 147 FERC ¶ 62,004 (2014) (authorizing disposition of
jurisdictional facilities in 54 days).
35
VIII. CONCLUSION
For the reasons described herein, the Applicants respectfully request that
the Commission: (i) authorize the Proposed Transaction pursuant to Section 203 of the
FPA; (ii) grant a limited waiver of the Commission’s Part 33 filing requirements with
respect to information not necessary to ensure that the Proposed Transaction meets the
statutory requirements of Section 203; (iii) establish a comment period of no greater than
21 days for this Application; and (iv) issue an order granting the requested authorizations
as expeditiously as possible, and in any event, by no later than June 23, 2015.
Respectfully submitted,
/s/ David L. Schwartz
David L. Schwartz
Natasha Gianvecchio
David E. Pettit
Latham & Watkins LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
/s/ Stephen M. Spina
Stephen M. Spina
J. Daniel Skees
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave., NW
Washington, DC 20004
Counsel for UIL
Counsel for the Iberdrola Applicants
Dated: March 25, 2015
36
EXHIBIT B
ENERGY-RELATED SUBSIDIARIES
AND AFFILIATES
Exhibit B
Exhibit B-1: A list of the Iberdrola Applicants’ U.S. energy subsidiaries and affiliates
Exhibit B-2: A list of the UIL Applicants’ U.S. energy subsidiaries and affiliates
Exhibit B-1
The Iberdrola Applicants’ U.S. Energy Subsidiaries and Affiliates
For the convenience of the Commission, the Iberdrola Applicants provide the
following brief descriptions of their U.S. energy subsidiaries and affiliates that have been
authorized to sell electric energy, capacity and ancillary services in wholesale markets at
market-based rates. Those U.S. energy subsidiaries and affiliates that own competitive
generation and are not described below make wholesale sales pursuant to authority under
the Public Utility Regulatory Policies Act of 1978 and are listed in the tables listing all of
the Iberdrola Applicants’ U.S. energy subsidiaries and affiliates that follow these
descriptions.1
1.
Iberdrola Renewables, LLC
Iberdrola Renewables, LLC (“Iberdrola Renewables”), an indirect, wholly-owned
subsidiary of Iberdrola S.A., operates as a power marketer, purchasing electricity and
reselling it to wholesale customers. Iberdrola Renewables does not directly own or
control any generating or transmission facilities. Iberdrola Renewables is authorized to
sell electric energy and capacity at market-based rates.2
2.
Atlantic Renewable Projects II LLC
Atlantic Renewable Projects II LLC (“Atlantic Renewable”) is a direct, whollyowned subsidiary of Aeolus Wind Power III LLC (Aeolus III”), which, in turn, is a direct
subsidiary of PPM Wind Energy LLC (“PPM Wind”). Iberdrola Renewables is the
managing member of PPM Wind and controls Aeolus III pursuant to the terms of the
Aeolus III Limited Liability Company Agreement (the “Aeolus III LLC Agreement”).
Morgan Stanley Wind LLC (“Morgan Stanley Wind”), a wholly-owned subsidiary of
Morgan Stanley, a publicly-held, diversified financial company, has made a tax equity
investment in Aeolus III purely for financial purposes and holds only limited veto or
consent rights under the Aeolus III LLC Agreement necessary for it to protect its
economic interest in Aeolus III.3 Atlantic Renewable operates as a power marketer,
1
Energy subsidiaries and affiliates located within the Electric Reliability Council of Texas
are not included.
2
PacifiCorp Power Mktg., Inc., 74 FERC ¶ 61,139 (1996). See Notices of Succession
submitted in Docket Nos. ER03-478-000 (filed Jan. 31, 2003) and ER08-912-000 (filed
May 2, 2008) reflecting subsequent name changes.
3
On October 5, 2012, Iberdrola Renewables and its subsidiaries and affiliates operating in
the Central Region with market-based rate authority (the “IRL Central MBR
Companies”) filed a supplement to their updated market power analysis detailing the
limited veto and consent rights Morgan Stanley Wind holds under the Aeolus III LLC
Agreement and the Aeolus IV LLC Agreement. Supplement to Updated Market Power
Analysis – Central Region, Docket No. ER10-2994-006 (filed Oct. 5, 2012) (the
“October 2012 Filing”). The IRL MBR Companies hereby incorporate that aspect of the
October 2012 Filing by reference into this filing. The rights detailed in the October 2012
Filing are akin to the rights held by the passive tax equity investors in AES Creative
purchasing electricity and reselling it to wholesale customers. Atlantic Renewables is
authorized to sell electric energy, capacity and ancillary services in wholesale markets at
market-based rates.4
3.
Barton Windpower LLC
Barton Windpower LLC (“Barton”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. Barton owns and operates an approximately 160 MW windpowered electric generating facility located in Grafton, Iowa, within the Midwest
Independent Transmission System Operator, Inc. (“MISO”) balancing authority area
(“BAA”). The Barton facility is interconnected with transmission facilities owned by
ITC Holdings Corp. Barton does not own or control transmission facilities other than
those limited and discrete facilities necessary to interconnect the Barton facility to the
transmission grid. Barton has self-certified the Barton facility as an exempt wholesale
generator (“EWG”)5 and is authorized to sell electric energy, capacity and ancillary
services in wholesale markets at market-based rates.6
4.
Big Horn Wind Project LLC
Big Horn Wind Project LLC (“Big Horn”) is a direct, wholly-owned subsidiary of
Aeolus III, whose ownership structure is described above. Big Horn owns and operates
an approximately 200 MW wind-powered electric generation facility located in Klickitat,
Washington, within the balancing authority area operated by Bonneville Power
Administration (“BPAT”). The Big Horn facility is interconnected with BPAT’s
transmission system. Big Horn does not own or control transmission facilities other than
those limited and discrete facilities necessary to interconnect the Big Horn facility to the
Resources, which the Commission determined are not “affiliates” of the electric
generating facilities in which they invested and that their membership interests did not
constitute “voting securities” as defined in the Commission’s regulations. AES Creative
Resources, 129 FERC ¶ 61,239 (2009). On January 3, 2013, the Commission accepted
the IRL Central MBR Companies’ updated market power analysis, as supplemented by
the October 5 Filing. Iberdrola Renewables, LLC, Docket No. ER10-2994-006 (letter
order issued Jan. 3, 2013).
4
Atlantic Renewable Projects II LLC, Docket No. ER08-387-000 (letter order issued Feb.
22, 2008).
5
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG09-6000 (filed Oct. 28, 2008).
6
Barton Windpower LLC, Docket No. ER09-32-000 (letter order issued Nov. 14, 2008)
(granting market-based rate authority on the basis of Barton’s 80 MW wind-powered
electric generating facility). On August 28, 2009, Barton acquired the wind-power
electric generating facility of its affiliate, Barton Windpower II LLC. See Barton
Windpower LLC, Docket No. ER09-32-004 (letter order issued Nov. 18, 2009) (accepting
notice of change in status filing).
2
transmission grid. Big Horn is an EWG7 and is authorized to sell electric energy,
capacity, and ancillary services in wholesale markets at market-based rates.8
5.
Big Horn II Wind Project LLC
Big Horn II Wind Project LLC (“Big Horn II”) is a direct, wholly-owned
subsidiary of Iberdrola Renewables. Big Horn II owns and operates an approximately 50
MW wind-powered electric generating facility located in Klickitat, Washington, within
the balancing authority area operated by BPAT. The Big Horn II facility is
interconnected with BPAT’s transmission system. Big Horn II does not own or control
transmission facilities other than those limited and discrete facilities that will be
necessary to interconnect the Big Horn II facility to the transmission grid. Big Horn II is
an EWG9 and is authorized to sell electric energy, capacity, and ancillary services in
wholesale markets at market-based rates.10
6.
Blue Creek Wind Farm LLC
Blue Creek Wind Farm LLC (“Blue Creek”) is a direct, wholly-owned subsidiary
of Iberdrola Renewables. Blue Creek owns and operates an approximately 304 MW
wind-powered electric generating project located in Van Wert and Paulding Counties,
Ohio within the PJM Interconnection, L.L.C. (“PJM”) BAA. Blue Creek’s facility is
interconnected with the transmission facilities of American Electric Power. Blue Creek
is an EWG11 and was granted market-based rate authority on December 22, 2010.12
7.
Buffalo Ridge I LLC
Buffalo Ridge I LLC (“Buffalo Ridge I”) is a direct, wholly-owned subsidiary of
Aeolus Wind Power V LLC (“Aeolus V”), which, in turn, is a direct subsidiary of PPM
Wind. Iberdrola Renewables is the managing member of PPM Wind and controls Aeolus
V pursuant to the terms of the Aeolus V Limited Liability Company Agreement (the
“Aeolus V LLC Agreement”). In addition, CNE Energy Services Group, LLC (“CNE”)
has made a tax equity investment in Aeolus V. CNE is a wholly-owned subsidiary of
Iberdrola USA. As noted above, Iberdrola USA is a wholly-owned subsidiary of
Iberdrola, which is the ultimate upstream owner of the IRL MBR Companies. Thus,
7
Big Horn Wind Project LLC, 113 FERC ¶ 62,230 (2005).
8
Big Horn Wind Project LLC, Letter Order, Docket No. ER06-200-000 (Feb. 8, 2006).
9
Big Horn II Wind Project LLC, Notice of Self-Certification of EWG Status, Docket No.
EG10-29-000 (Apr. 7, 2010).
10
Big Horn II Wind Project LLC, Letter Order, Docket Nos. ER10-974-000, et al. (May 17,
2010).
11
Blue Creek Wind Farm LLC, Notice of Self-Certification of EWG Status, Docket No.
EG11-2-000 (Oct. 1, 2010).
12
Blue Creek Wind Farm LLC, Docket No. ER11-2112-000 (letter order issued Dec. 22,
2010).
3
CNE is already deemed to be under common control with the IRL MBR Companies for
all purposes under Section 205 of the Federal Power Act. Buffalo Ridge I owns and
operates an approximately 50.4 MW wind-powered electric generating facility located in
Brookings County, South Dakota, within the MISO BAA. The Buffalo Ridge I facility is
interconnected with transmission facilities owned by Northern States Power (“NSP”).
Buffalo Ridge I does not own or control transmission facilities other than those limited
and discrete facilities necessary to interconnect the Buffalo Ridge I facility to the
transmission grid. Buffalo Ridge I is an EWG13 and is authorized to sell electric energy,
capacity and ancillary services in wholesale markets at market-based rates.14
8.
Buffalo Ridge II LLC
Buffalo Ridge II LLC (“Buffalo Ridge II”) is a direct, wholly-owned subsidiary
of Aeolus Wind Power VI LLC (“Aeolus VI”), which, in turn, is a direct subsidiary of
PPM Wind. Iberdrola Renewables is the managing member of PPM Wind and controls
Aeolus VI pursuant to the terms of the Aeolus VI Limited Liability Company Agreement
(the “Aeolus VI LLC Agreement”). In addition, CNE has made a tax equity investment
in Aeolus VI. CNE is a wholly-owned subsidiary of Iberdrola USA. As noted above,
Iberdrola USA is a wholly-owned subsidiary of Iberdrola, which is the ultimate upstream
owner of the IRL MBR Companies. Thus, CNE is already deemed to be under common
control with the IRL MBR Companies for all purposes under Section 205 of the Federal
Power Act. Buffalo Ridge II owns and operates an approximately 200 MW windpowered electric generating facility located in Brookings and Deuel Counties, South
Dakota, within the MISO BAA. The Buffalo Ridge II facility is interconnected with
transmission facilities owned by Xcel Energy. Buffalo Ridge II does not own or control
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Buffalo Ridge II facility to the transmission grid. Buffalo Ridge II is an
EWG15 and is authorized to sell electric energy, capacity and ancillary services in
wholesale markets at market-based rates.16
9.
Casselman Windpower LLC
Casselman Windpower LLC (“Casselman”) is a direct, wholly-owned subsidiary
of Aeolus Wind Power IV LLC (“Aeolus IV”), which, in turn, is a direct subsidiary of
PPM Wind. Iberdrola Renewables is the managing member of PPM Wind and controls
Aeolus IV pursuant to the terms of the Aeolus IV Limited Liability Company Agreement
(the “Aeolus IV LLC Agreement”). Morgan Stanley Wind has made a tax equity
investment in Aeolus IV purely for financial purposes and holds only limited veto or
consent rights under the Aeolus IV LLC Agreement necessary for it to protect its
13
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG0915-000 (filed Nov. 18, 2008).
14
Buffalo Ridge I LLC, Docket No. ER09-279-000 (letter order issued Dec. 17, 2008).
15
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG1014-000 (filed Dec. 17, 2009).
16
Buffalo Ridge II LLC, Docket No. ER10-378-001 (letter order issued Feb. 23, 2010).
4
economic interest in Aeolus IV.17 Casselman owns and operates an approximately 35
MW wind-powered electric generating project located in Somerset County, Pennsylvania
within the PJM BAA. Casselman’s facility is interconnected with the FirstEnergy Corp.
transmission system. Casselman is an EWG18 and was granted market-based rate
authority on December 29, 2006.19
10.
Colorado Green Holdings LLC
Colorado Green Holdings LLC (“Colorado Green”) is a direct, wholly-owned
subsidiary of Colorado Wind Ventures, LLC (“Colorado Wind”). Colorado Wind is 50%
owned by PPM Colorado Wind Ventures, Inc. (“PPM Colorado”) and 50% owned by
Shell WindEnergy Inc. (“Shell WindEnergy”). PPM Colorado is a wholly-owned direct
subsidiary of Iberdrola Renewables. Shell WindEnergy is a wholly-owned subsidiary of
Shell Oil Company. 20 Colorado Green owns and operates an approximately 162 MW
wind-powered electric generation facility in Prowers County, Colorado, within the Public
Service Company of Colorado (“PSCo”) BAA. The Colorado Green facility
interconnects with PSCo’s transmission system. Colorado Green does not own or control
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Colorado Green facility to the transmission grid. 21 Colorado Green is an
17
Specifically, the limited veto and consent rights that Morgan Stanley Wind holds under
the Aeolus IV LLC Agreement are substantively identical to the limited rights that FC
Energy Finance I, Inc. (“FC Energy”), a wholly-owned subsidiary of JPMorgan Chase &
Co. (“JPMCC”), holds in Aeolus Wind Power I LLC (“Aeolus I”), which owns affiliates
of the Iberdrola Renewables MBR Companies and is also controlled by Iberdrola
Renewables. On May 5, 2010, affiliates of JPMCC with market-based rate authority
submitted a filing in Docket Nos. ER05-1232, ER09-335 and ER07-1117 detailing the
limited rights of FC Energy in Aeolus I (the “JPMCC May 5 Filing”). The IRL MBR
Companies hereby incorporate that aspect of the JPMCC May 5 Filing by reference into
this filing. These rights are akin to the rights held by the passive tax equity investors in
AES Creative Resources, which the Commission determined are not “affiliates” of the
electric generating facilities in which they invested and that their membership interests
did not constitute “voting securities” as defined in the Commission’s regulations. AES
Creative Resources, 129 FERC ¶ 61,239 (2009).
18
Casselman Windpower, LLC, 114 FERC ¶ 62,026 (Jan. 13, 2006).
19
Casselman Windpower, LLC, Docket No. ER07-254-000 (letter order issued Dec. 29,
2006).
20
A description of Shell Oil Company and its energy-related affiliates is set forth in the
Updated Market Power Analysis for the Southwest Region of Shell Energy North
America (US), L.P. filed in Docket No. ER10-1484-008 on July 1, 2013.
21
On September 24, 2013, the Commission (1) accepted for filing a Feeder Line Ownership
Agreement among Colorado Green, Twin Buttes and Pacific Wind Development, LLC
which governs the terms and conditions under which such entities own, use, operate and
maintain their interests in a feeder line that connects their generating facilities with the
integrated transmission grid and (2) granted waivers of Order Nos. 888, 889, 890 and
related orders and regulations. Colorado Green Holdings LLC, 144 FERC ¶ 61,228
(2013).
5
EWG22 and is authorized to sell electric energy and capacity in wholesale markets at
market-based rates.23
11.
Dillon Wind LLC
Dillon Wind LLC (“Dillon”) is a direct, wholly-owned subsidiary of Aeolus V,
whose ownership structure is described above. Dillon owns and operates an
approximately 45 MW wind-powered electric generating facility located in Riverside
County, California within the California Independent System Operator Corporation
(“CAISO”) BAA. The Dillon facility is interconnected with transmission facilities
owned by Southern California Edison Company (“SCE”). Dillon does not own or control
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Dillon facility to the transmission grid. Dillon is an EWG24 and is
authorized to sell electric energy and capacity in wholesale markets at market-based
rates.25
12.
Elk River Windfarm, LLC
Elk River Windfarm, LLC (“Elk River”) is a direct, wholly-owned subsidiary of
Aeolus Wind Power II LLC (“Aeolus II”), which, in turn, is a direct subsidiary of PPM
Wind. Iberdrola Renewables is the managing member of PPM Wind and controls Aeolus
II pursuant to the terms of the Aeolus II Limited Liability Company Agreement (the
“Aeolus II LLC Agreement”). A syndicate of investors made a tax equity investment in
Aeolus II purely for financial purposes and holds only limited veto or consent rights
under the Aeolus II LLC Agreement necessary for it to protect its economic interest in
Aeolus II.26 Elk River owns and operates an approximately 150 MW wind-powered
electric generating facility located in Butler County, Kansas, within the Southwest Power
Pool, Inc. (“SPP”) BAA. The Elk River facility is interconnected with transmission
owned by Empire District Electric Company. Elk River does not own or control
22
Colorado Green Holdings LLC, 105 FERC ¶ 62,070 (2003).
23
Colorado Green Holdings, LLC, Letter Order, Docket No. ER03-1326-000 (Oct. 15,
2003).
24
Twin Buttes Wind LLC, Docket No. EG07-15-000 (letter order issued Apr. 4, 2007)
(deeming Dillon’s EWG status effective).
25
Dillon Wind LLC, Docket No. ER07-460-000 (letter order issued May 30, 2007).
26
The syndicate includes JPMCC, Halsey Street Investment LLC, Lease Plan North
America, Inc., New York Life Insurance Company, and New York Life Insurance and
Annuity Corporation. The limited veto and consent rights the syndicate holds under the
Aeolus II LLC Agreement are substantively identical to those limited rights FC Energy
has in Aeolus I, which are detailed in the JPMCC May 5 Filing. These rights are akin to
the rights held by the passive tax equity investors in AES Creative Resources, which the
Commission determined are not “affiliates” of the electric generating facilities in which
they invested and that their membership interests did not constitute “voting securities” as
defined in the Commission’s regulations. AES Creative Resources, 129 FERC ¶ 61,239
(2009).
6
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Elk River facility to the transmission grid. Elk River is and EWG27 and
is authorized to sell electric energy, capacity and ancillary services in wholesale markets
at market-based rates.28
13.
Elm Creek Wind, LLC
Elm Creek Wind, LLC (“Elm Creek”) is a direct, wholly-owned subsidiary of
Aeolus V, whose ownership structure is described above. Elm Creek owns and operates
an approximately 99 MW wind-powered electric generating facility located in Martin
County, Minnesota, within the MISO BAA. The Elm Creek facility is interconnected
with transmission facilities owned by Xcel Energy, Inc. Elm Creek does not own or
control transmission facilities other than those limited and discrete facilities necessary to
interconnect the Elm Creek facility to the transmission grid. Elm Creek is an EWG29 and
is authorized to sell electric energy, capacity and ancillary services in wholesale markets
at market-based rates.30
14.
Elm Creek Wind II LLC
Elm Creek Wind II LLC (“Elm Creek II”) is a direct, wholly-owned subsidiary of
Aeolus VI, whose ownership structure is described above. Elm Creek II owns and
operates an approximately 148.8 MW wind-powered electric generating facility located
in Jackson and Martin Counties, Minnesota, within the MISO BAA. The Elm Creek II
facility is interconnected with transmission facilities owned by Great River Energy. Elm
Creek II does not own or control transmission facilities other than those limited and
discrete facilities necessary to interconnect the Elm Creek II facility to the transmission
grid. Elm Creek II is an EWG31 and is authorized to sell electric energy, capacity and
ancillary services in wholesale markets at market-based rates.32
15.
Farmers City Wind, LLC
Farmers City Wind, LLC (“Farmers City”) is a direct, wholly-owned subsidiary
of Iberdrola Renewables. Farmers City owns and operates an approximately 146 MW
wind-powered electric generating facility located in Atchison County, Missouri, within
the MISO BAA. The Farmers City facility is interconnected with transmission facilities
owned by MidAmerican Energy Company. Farmers City does not own or control
27
Elk River Windfarm LLC, Docket No. EG05-25-000 (letter order issued Feb. 22, 2005).
28
Elk River Windfarm LLC, Docket No. ER05-365-000 (letter order issued Feb. 10, 2005).
29
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG09-7000 (filed Oct. 28, 2008).
30
Elm Creek Wind, LLC, Docket No. ER09-30-000 (letter order issued Nov. 14, 2008).
31
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG1015-000 (Dec. 17, 2009).
32
Elm Creek II LLC, Docket No. ER10-377-000 (letter order issued Mar. 4, 2010).
7
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Farmers City facility to the transmission grid. Farmers City is an EWG33
and is authorized to sell electric energy, capacity and ancillary services in wholesale
markets at market-based rates.34
16.
Flat Rock Windpower LLC
Flat Rock Windpower LLC (“Flat Rock”) owns and operates an approximately
231 MW wind power project in Lewis County, New York, within the New York
Independent System Operator, Inc. (“NYISO”) BAA. The facility is interconnected with
the Niagara Mohawk Power Corporation (“NIMO”) transmission system. Flat Rock is
50% owned by Atlantic Renewable Projects LLC (“ARP”). ARP is a direct, whollyowned subsidiary of Aeolus II, whose ownership structure is described above. The
remaining 50% interest in Flat Rock is held by affiliates of Horizon Wind Energy LLC.
Flat Rock is an EWG35 and was granted market-based rate authority on September 14,
2005.36
17.
Flat Rock Windpower II LLC
Flat Rock Windpower II LLC (“Flat Rock II”) owns and operates an
approximately 90.75 MW wind power project in Lewis County, New York, within the
NYISO BAA. The facility is interconnected to the NIMO transmission system. Flat
Rock II is 50% owned by Atlantic Renewable, whose ownership structure is described
above. The remaining 50% interest in Flat Rock is held by affiliates of Horizon Wind
Energy LLC. Flat Rock II is an EWG, 37 and was granted market-based rate authority on
June 13, 2006.38
18.
Flying Cloud Power Partners, LLC
Flying Cloud Power Partners, LLC (“Flying Cloud”) is a direct, wholly-owned
subsidiary of Aeolus Wind Power I LLC (“Aeolus I”), which, in turn, is a direct
subsidiary of PPM Wind. Iberdrola Renewables is the managing member of PPM Wind
and controls Aeolus I pursuant to the terms of the Aeolus I Limited Liability Company
Agreement (the “Aeolus I LLC Agreement”). FC Energy Finance I, Inc. (“FC Energy”),
33
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG09-8000 (Oct. 28, 2008).
34
Farmers City Wind, LLC, Docket No. ER09-31-000 (letter order issued Nov. 14, 2008).
35
Flat Rock Windpower LLC, 105 FERC ¶ 62,066, (letter order issued Nov. 4, 2003).
36
Flat Rock Windpower LLC, Docket No. ER05-1262-000 (letter order issued Sept. 14,
2005).
37
Notice of Self-Certification of EWG Status, Flat Rock Windpower II, LLC, Docket No.
EG06-62-000 (June 12, 2006).
38
Flat Rock Windpower II, LLC, Docket No. ER06-1093-000 (letter order issued Jul. 13,
2006).
8
an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. (“JPMCC”), has made a
tax equity investment in Aeolus I purely for financial purposes and holds only limited
veto or consent rights under the Aeolus I LLC Agreement necessary for it to protect its
economic interest in Aeolus I.39 Flying Cloud owns and operates an approximately 43.5
MW wind-powered electric generating facility located in Dickinson County, Iowa, within
the MISO BAA. The Flying Cloud facility is interconnected with transmission facilities
owned by Interstate Power, a division of Alliant Energy Corporation. Flying Cloud does
not own or control transmission facilities other than those limited and discrete facilities
necessary to interconnect the Flying Cloud facility to the transmission grid. Flying Cloud
is an EWG40 and is authorized to sell electric energy, capacity and ancillary services in
wholesale markets at market-based rates.41
19.
Groton Wind, LLC
Groton Wind, LLC (“Groton”) is a direct, wholly-owned subsidiary of Iberdrola
Renewables. Groton owns and operates an approximately 48 MW wind-powered electric
generating facility located in Grafton County, New Hampshire, within the ISO New
England Inc. (“ISO-NE”) BAA. The facility is interconnected with the transmission
facilities owned and controlled by Public Service Company of New Hampshire
(“PSNH”). Groton is an EWG, 42 and was granted market-based rate authority on October
19, 2012.43
20.
Hardscrabble Wind Power LLC
Hardscrabble Wind Power LLC (“Hardscrabble”) is a direct, wholly-owned
subsidiary of Iberdrola Renewables. Hardscrabble owns and operates an approximately
74 MW wind-powered electric generating facility located in Herkimer County, New
York, within the NYISO BAA. The facility is interconnected with the transmission
facilities owned and controlled by NIMO (d/b/a National Grid). Hardscrabble is an
EWG44 and was granted market-based rate authority on August 12, 2010.45
39
The limited veto and consent rights that FC Energy holds under the Aeolus I LLC
Agreement are detailed in the JPMCC May 5 Filing. See supra n. 20. These limited
rights are akin to the rights held by the passive tax equity investors in AES Creative
Resources, which the Commission determined are not “affiliates” of the electric
generating facilities in which they invested and that their membership interests did not
constitute “voting securities” as defined in the Commission’s regulations. AES Creative
Resources, 129 FERC ¶ 61,239.
40
Flying Cloud Power Partners, LLC, 102 FERC ¶ 62,043 (2003).
41
Flying Cloud Power Partners, LLC, Docket No. ER03-296-000 (letter order issued Jan.
24, 2003).
42
Notice of Self-Certification of EWG Status, Docket No. EG12-113-000 (Sept. 24, 2012).
43
Groton Wind, LLC, Docket no. ER12-2649-000 (letter order issued Oct. 19, 2012).
44
Notice of Self-Certification of EWG Status, Docket No. EG10-63-000 (Aug. 30, 2010).
9
21.
Hay Canyon Wind LLC
Hay Canyon Wind LLC (“Hay Canyon”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. Hay Canyon owns and operates an approximately 100 MW windpowered electric generation facility in Sherman County, Oregon, within the balancing
authority area operated by BPAT. The Hay Canyon facility is interconnected with
BPAT’s transmission system. Hay Canyon does not own or control transmission
facilities other than those limited and discrete facilities necessary to interconnect the Hay
Canyon facility to the transmission grid. Hay Canyon is authorized to sell electric
energy, capacity, and ancillary services in wholesale markets at market-based rates.46
22.
Iberdrola Arizona Renewables, LLC
Iberdrola Arizona Renewables, LLC (“Iberdrola Arizona”) is a direct, whollyowned subsidiary of Iberdrola Renewables. Iberdrola Arizona owns and operates an
approximately 63 MW wind-powered electric generating facility and an approximately
65 MW wind-powered electric generating facility, both of which are located in Navajo
County, Arizona, within the Arizona Public Service Company (“AZPS”) BAA. These
facilities are interconnected with the transmission facilities owned and controlled by
AZPS. Iberdrola Arizona also owns and operates a 20 MW photovoltaic solar-power
electric generating facility located in Pinal County, Arizona, within the Salt River Project
(“SRP”) BAA, which is a Qualifying Facility. 47 Iberdrola Arizona is an EWG,48 and was
granted market-based rate authority on December 16, 2009.49
23.
Juniper Canyon Wind Power LLC
Juniper Canyon Wind Power LLC (“Juniper Canyon”) is a direct, wholly-owned
subsidiary of Aeolus VI, whose ownership structure is described above. Juniper Canyon
owns and operates an approximately 151.2 MW wind-powered electric generation facility
in Klickitat County, Washington, within the balancing authority area operated by BPAT.
The Juniper Canyon facility is interconnected with BPAT’s transmission system. Juniper
does not own or control transmission facilities other than those limited and discrete
facilities necessary to interconnect the Juniper Canyon facility to the transmission grid.
45
Hardscrabble Wind Power LLC, Docket No. ER10-1725-000 (letter order issued Aug.
12, 2010).
46
Hay Canyon Wind LLC, Docket Nos. ER09-382-000, et al. (letter order issued Feb. 3,
2009).
47
Form 556 of Iberdrola Arizona Renewables, LLC, Docket No. QF11-447-001 (filed Nov.
12, 2014).
48
Notice of Self-Certification of EWG Status, Iberdrola Arizona Renewables, LLC, Docket
No. EG15-13-000 (filed Nov. 12, 2014).
49
Dry Lake Wind Power, LLC, Docket No. ER09-1723-000 (letter order issued Dec. 16,
2009). See Notice of Succession submitted in Docket No. ER14-2676-000 (filed Aug.
19, 2014) reflecting subsequent name change.
10
Juniper Canyon is and EWG50 and is authorized to sell electric energy, capacity, and
ancillary services in wholesale markets at market-based rates.51
24.
Klamath Energy LLC
Klamath Energy LLC (“Klamath Energy”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. Klamath Energy owns and operates: (1) an approximately 100
MW simple-cycle combustion turbine facility in Klamath County, Oregon (the “CT
Facility”); and (2) an approximately 536 MW natural gas-fired combined-cycle electric
generation facility in Klamath County, Oregon (the “CC Facility”). The CT Facility and
the CC Facility are located within the balancing authority area operated by BPAT and are
interconnected with PacifiCorp’s transmission system. Klamath Energy does not own or
control transmission facilities other than those limited and discrete facilities necessary to
interconnect the CT Facility and the CC Facility to the transmission grid. Klamath
Energy is an EWG52 and is authorized to sell energy and capacity in wholesale markets at
market-based rates.53
25.
Klamath Generation LLC
Klamath Generation LLC (“Klamath Generation”) is a direct, wholly-owned
subsidiary of Iberdrola Renewables. Klamath Generation is developing an approximately
550 MW natural gas-fired electric generation facility to be located in Klamath County,
Oregon. The Klamath Generation facility will be located within the balancing authority
area operated by BPAT and interconnected with PacifiCorp’s transmission system.
Klamath Generation does not own or control transmission facilities other than those
limited and discrete facilities that will be necessary to interconnect the Klamath
Generation facility to the transmission grid. Klamath Generation is authorized to sell
energy and capacity in wholesale markets at market-based rates.54
50
Notice of Self-Certification of EWG Status, Docket No. EG10-30-000 (filed Apr. 7,
2010).
51
Big Horn II Wind Project LLC, Docket Nos. ER10-974-000, et al. (letter order issued
May 17, 2010).
52
Klamath Energy LLC, 97 FERC ¶ 62,106 (2001).
53
PPM Three LLC, Docket No. ER97-3928-000 (letter order issued Sept. 10, 1997)
(approving market-based rate schedule for PPM Three LLC). PPM Three LLC later
changed its name to Klamath Energy LLC and notified the Commission of such change.
See Notification of Change in Name, Docket No. ER01-3121-000 (filed Aug. 27, 2001).
54
PPM Four LLC, Docket No. ER97-3929-000 (letter order issued Sept. 10, 1997)
(approving market-based rate schedule for PPM Four LLC). PPM Four LLC later
changed its name to Klamath Generation LLC and notified the Commission of such
change. See Notice of Succession, Docket No. ER02-418-000 (filed Nov. 27, 2001).
11
26.
Klondike Wind Power LLC
Klondike Wind Power LLC (“Klondike Wind”) is a direct, wholly-owned
subsidiary of Aeolus I, whose ownership structure is described above. Klondike Wind
owns and operates an approximately 24 MW wind-powered electric generation facility
located in Sherman County, Oregon within the balancing authority area operated by
BPAT and interconnected with BPAT’s transmission system. Klondike Wind does not
own or control transmission facilities other than those limited and discrete facilities
necessary to interconnect the Klondike Wind facility to the transmission grid. Klondike
Wind is authorized to sell energy and capacity in wholesale markets at market-based
rates.55
27.
Klondike Wind Power II LLC
Klondike Wind Power II LLC (“Klondike Wind II”) is a direct, wholly-owned
subsidiary of Aeolus V, whose ownership structure is described above. Klondike Wind II
owns and operates an approximately 75 MW wind-powered electric generation facility
located in Sherman County, Oregon, within the balancing authority area operated by
BPAT and interconnected with BPAT. Klondike Wind II does not own or control
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Klondike Wind II facility to the transmission grid. Klondike Wind II is
an EWG56 and is authorized to sell energy, capacity, and ancillary services in wholesale
markets at market-based rates.57
28.
Klondike Wind Power III LLC
Klondike Wind Power III LLC (“Klondike Wind III”) is a direct, wholly-owned
subsidiary of Aeolus IV, whose ownership structure is described above. Klondike Wind
III owns and operates an approximately 297.5 MW wind-powered generation facility
located in Sherman County, Washington, within the balancing authority area operated by
BPAT and interconnected with BPAT. Klondike Wind III does not own or control
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Klondike Wind III facility to the transmission grid. Klondike Wind III is
55
Letter Order, Docket No. ER97-3931-000 (Sept. 10, 1997) (approving market-based rate
schedule for PPM Six LLC). PPM Six LLC later changed its name to West Valley
Generation LLC and notified the Commission of such change. See Notification of
Change in Name, Docket No. ER01-2942-000 (filed Aug. 7, 2001). West Valley
Generation LLC later changed its name to Klamath Generation LLC and notified the
Commission of such change. See Notification of Change in Name, Docket No. ER03416-000 (filed Jan. 21, 2003).
56
Klondike Wind Power II LLC, 110 FERC ¶ 62,184 (2005).
57
Klondike Wind Power II LLC, Docket No. ER05-332-000 (letter order issued Feb. 10,
2005).
12
an EWG58 and is authorized to sell energy, capacity, and ancillary services in wholesale
markets at market-based rates.59
29.
Leaning Juniper Wind Power II LLC
Leaning Juniper Wind Power II LLC (“Leaning Juniper”) is a direct, whollyowned subsidiary of Aeolus VI, whose ownership structure is described above. Leaning
Juniper owns and operates an approximately 201.3 MW wind-powered electric
generating facility located in Grilliam County, Oregon, within the BPAT balancing
authority area. The Leaning Juniper facility is interconnected with BPAT’s transmission
facilities. Leaning Juniper does not own or control transmission facilities other than
those limited and discrete facilities necessary to interconnect the Leaning Juniper facility
to the transmission grid. Leaning Juniper is an EWG60 and is authorized to sell energy,
capacity, and ancillary services at market-based rates.61
30.
Lempster Wind, LLC
Lempster Wind, LLC (“Lempster Wind”) is a direct, wholly-owned subsidiary of
Aeolus V, whose ownership structure is described above. Lempster owns and operates
an approximately 24 MW wind-powered electric generating project located in Lempster,
New Hampshire, within the ISO-NE BAA. The facility is interconnected with the
distribution system of the PSNH. Lempster is an EWG,62 a qualifying facility (“QF”),63
and was granted market-based rate authority on July 30, 2008.64
31.
Locust Ridge Wind Farm, LLC
Locust Ridge Wind Farm, LLC (“Locust Ridge”) owns and operates an
approximately 26 MW wind-powered electric generating project located northeast of
Harrisburg, Pennsylvania, within the PJM BAA. The facility is interconnected with the
transmission system of PPL. Iberdrola Renewables holds approximately 46% of the
interests in Locust Ridge and controls Locust Ridge. Fortis Capital Corp. (“Fortis
Capital”), a wholly-owned subsidiary of Fortis Bank S.A./N.V., made a tax equity
58
Klondike Wind Power III, LLC, 113 FERC ¶ 62,244 (2005).
59
Klondike Wind Power III, LLC, Docket Nos. ER07-287-00, et al. (letter order issued Mar.
13, 2007).
60
Notice of Self-Certification of Exempt Wholesale Generator Status of Leaning Juniper
Wind Power II LLC, Docket No. EG10-62-000 (filed Aug. 30, 2010).
61
Leaning Juniper Wind Power II LLC, Docket No. ER10-1776-000 (letter order issued
Aug. 12, 2010).
62
Notice of Self-Certification of EWG Status, Lempster Wind, LLC, Docket No. EG08-73000 (May 16, 2008).
63
Notice of Self-Certification as a Qualifying Small Power Production Facility, Lempster
Wind, LLC, Docket No. QF08-129-002 (May 1, 2009).
64
Lempster Wind, LLC, Docket No. ER08-933-000 (letter order issued Jul. 30, 2008).
13
investment in Locust Ridge purely for financial purposes and holds only limited veto or
consent rights necessary for it to protect its economic interest in Locust Ridge. 65 Locust
Ridge is an EWG, 66 a QF,67 and was granted market-based rate authority on December
12, 2006.68
32.
Locust Ridge II, LLC
Locust Ridge II, LLC (“Locust Ridge II”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. Locust Ridge II owns and operates an approximately 102 MW
wind-powered electric generating project located in Mahanoy City, Pennsylvania, within
the PJM BAA. The facility is interconnected with the PPL transmission system. Locust
Ridge II is an EWG69 and was granted market-based rate authority on July 30, 2008.70
33.
Manzana Wind LLC
Manzana Wind LLC (“Manzana”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. Manzana owns and operates an approximately 246 MW windpowered electric generating facility located in Kern County, California, within the
CAISO balancing authority area. The Manzana facility is interconnected with
transmission facilities owned by SCE. Manzana does not own or control transmission
facilities other than those limited and discrete facilities necessary to interconnect the
Manzana facility to the transmission grid. Manzana is an EWG71 and is authorized to sell
65
Specifically, the limited veto and consent rights that Fortis Capital holds in Locust Ridge
are substantively identical to those limited rights that FC Energy has in Aeolus I, which
are detailed in the JPMCC May 5 Filing. These rights are akin to the rights held by the
passive tax equity investors in AES Creative Resources, which the Commission
determined are not “affiliates” of the electric generating facilities in which they invested
and that their membership interests did not constitute “voting securities” as defined in the
Commission’s regulations. AES Creative Resources, 129 FERC ¶ 61,239 (2009).
66
Notice of Self-Certification of EWG Status, Locust Ridge Wind Farm, LLC, Docket No.
EG07-12-000 (Nov. 13, 2006).
67
Notice of Self-Certification as a Qualifying Small Power Production Facility, Locust
Ridge Wind Farm, Docket No. QF07-31-005 (June 2, 2009).
68
Locust Ridge Wind Farm, LLC, Docket No. ER07-195-000 (letter order issued Dec. 12,
2006).
69
Notice of Self-Certification of EWG Status, Locust Ridge Wind Farm II, LLC, Docket
No. EG08-72-000 (May 14, 2008).
70
Locust Ridge Wind Farm II, LLC, Docket No. ER08-934-000 (letter order issued Jul. 30,
2008).
71
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG12-7000 (filed Oct. 31, 2011).
14
electric energy, capacity and ancillary services in wholesale markets at market-based
rates.72
34.
MinnDakota Wind LLC
MinnDakota Wind LLC (“MinnDakota”) is a direct, wholly-owned subsidiary of
Aeolus IV, whose ownership structure is described above. MinnDakota owns and
operates an approximately 150 MW wind-powered electric generating facility located in
Lincoln County, Minnesota and Brookings County, South Dakota, within the MISO
BAA. The MinnDakota facility is interconnected with transmission facilities owned by
NSP. MinnDakota does not own or control transmission facilities other than those
limited and discrete facilities necessary to interconnect the MinnDakota facility to the
transmission grid. MinnDakota is an EWG73 and is authorized to sell electric energy,
capacity and ancillary services in wholesale markets at market-based rates.74
35.
Moraine Wind LLC
Moraine Wind LLC (“Moraine”) is a direct, wholly-owned subsidiary of Aeolus I,
whose ownership structure is described above. Moraine owns and operates an
approximately 51 MW wind-powered electric generating facility located in Murray and
Pipestone counties, Minnesota, within the MISO balancing authority area. The Moraine
facility is interconnected with transmission facilities owned by NSP. Moraine does not
own or control transmission facilities other than those limited and discrete facilities
necessary to interconnect the Moraine facility to the transmission grid. Moraine is an
EWG75 and is authorized to sell electric energy, capacity and ancillary services in
wholesale markets at market-based rates.76
36.
Moraine Wind II LLC
Moraine Wind II LLC (“Moraine II”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. Moraine II owns and operates an approximately 49.5 MW windpowered electric generating facility located in Murray County, Minnesota, within the
MISO balancing authority area. The Moraine II facility is interconnected with
transmission facilities owned by NSP. Moraine II does not own or control transmission
facilities other than those limited and discrete facilities necessary to interconnect the
72
Manzana Wind, LLC, Docket No. ER12-308-001 (letter order issued Jan. 12, 2012).
73
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG0681-000 (filed Sept. 8, 2006).
74
MinnDakota Wind LLC, Docket No. ER07-242-000 (letter order issued Mar. 13, 2007).
75
By Letter Order dated January 31, 2002 in Docket No. EG02-63-000, the Commission
granted MAPP Wind I, LLC Exempt Wholesale Generator status. MAPP Wind I, LLC
subsequently changed its name to Moraine Wind LLC, and notified the Commission of
this change in name by letter filed on September 25, 2002.
76
Moraine Wind LLC, Docket No. ER03-951-000 (letter order issued July 17, 2003).
15
Moraine II facility to the transmission grid. Moraine II is an EWG77 and is authorized to
sell electric energy, capacity and ancillary services in wholesale markets at market-based
rates.78
37.
Mountain View Power Partners III, LLC
Mountain View Power Partners III, LLC (“Mountain View III”) is a direct,
wholly-owned subsidiary of Aeolus I, whose ownership structure is described above.
Mountain View III owns and operates an approximately 22.4 MW wind-powered electric
generating facility located in Riverside County, California, within the CAISO balancing
authority area. The Mountain View III facility is interconnected with transmission
facilities owned by SCE. Mountain View III does not own or control transmission
facilities other than those limited and discrete facilities necessary to interconnect the
Mountain View III facility to the transmission grid. Mountain View III is an EWG79 and
is authorized to sell electric energy and capacity in wholesale markets at market-based
rates.80
38.
New England Wind, LLC
New England Wind, LLC (“New England Wind”) is a direct, wholly-owned
subsidiary of Iberdrola Renewables. New England Wind owns and operates a 28.5 MW
wind-powered electric generating facility located in Franklin and Berkshire Counties,
Massachusetts within the ISO-NE BAA. New England Wind is interconnected with
transmission facilities owned and controlled by National Grid. New England Wind is an
EWG81 and was granted market-based rate authority on December 22, 2011.82
39.
New Harvest Wind Project LLC
New Harvest Wind Project LLC (“New Harvest”) is a direct, wholly-owned
subsidiary of Iberdrola Renewables. New Harvest owns and operates an approximately
100 MW wind-powered electric generating facility located in Crawford County, Iowa,
within the MISO balancing authority area. The New Harvest facility is interconnected
with transmission facilities owned by MidAmerican Electric Company. New Harvest
does not own or control transmission facilities other than those limited and discrete
77
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG0916-000 (filed Nov. 18, 2008).
78
Moraine Wind II LLC, Docket No. ER09-282-000 (letter order issued Dec. 17, 2008).
79
Mountain View Power Partners III, LLC, Docket No. EG04-7-000 (letter order issued
Dec. 4, 2003).
80
Mountain View Power Partners III, LLC, Docket No. ER04-94-000 (letter order issued
Dec. 15, 2003).
81
Notice of Self-Certification of EWG Status, New England Wind, LLC, Docket No.
EG12-114-000 (Sept. 24, 2012).
82
New England Wind, LLC, Docket No. ER12-422-000 (letter order issued Dec. 22, 2011).
16
facilities necessary to interconnect the New Harvest facility to the transmission grid.
New Harvest is an EWG83 and is authorized to sell electric energy, capacity and ancillary
services in wholesale markets at market-based rates.84
40.
Northern Iowa Windpower II LLC
Northern Iowa Windpower II LLC (“Northern Iowa”) is a direct, wholly-owned
subsidiary of Aeolus IV, whose ownership structure is described above. Northern Iowa
owns and operates an approximately 80 MW wind-powered electric generating facility
located in Worth County, Iowa, within the MISO balancing authority area. The Northern
Iowa facility is interconnected with transmission facilities owned by ITC Midwest LLC.
Northern Iowa does not own or control transmission facilities other than those limited
and discrete facilities necessary to interconnect the Northern Iowa facility to the
transmission grid. Northern Iowa has self-certified its facility as a QF85 and is authorized
to sell electric energy, capacity and ancillary services in wholesale markets at marketbased rates.86
41.
Pebble Springs Wind LLC
Pebble Springs Wind LLC (“Pebble Springs”) is a direct, wholly-owned
subsidiary of Iberdrola Renewables. Pebble Springs owns and operates an approximately
98.7 MW wind-powered electric generating facility located in Gilliam County, Oregon,
within the BPAT balancing authority area and interconnected with BPAT’s transmission
facilities. Pebble Springs does not own or control transmission facilities other than those
limited and discrete facilities necessary to interconnect the Pebble Springs facility to the
transmission grid. Pebble Springs is an EWG87 and is authorized to sell energy, capacity,
and ancillary services at market-based rates.88
42.
Providence Heights Wind, LLC
Providence Heights Wind, LLC (“Providence Heights”) is a direct, wholly-owned
subsidiary of Aeolus V, whose ownership structure is described above. Providence
Heights owns and operates an approximately 75 MW wind-powered electric generating
83
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG1060-000 (filed Aug. 30, 2010).
84
New Harvest Wind Project, LLC, Docket No. ER11-2032-000 (letter order issued Dec.
22, 2010).
85
Notice of Self-Recertification as a Qualifying Small Power Production Facility of N.
Iowa Windpower II LLC, Docket No. QF04-175-003 (filed May 1, 2009).
86
N. Iowa Windpower II, LLC, Docket No. ER02-2085-005 (letter order issued Oct. 31,
2007).
87
Notice of Self-Certification of Exempt Wholesale Generator Status of Pebble Springs
Wind LLC, Docket No. EG09-17-000 (filed Nov. 18, 2008).
88
Buffalo Ridge I LLC, et al., Docket Nos. ER09-279-000, et al. (letter order issued Dec.
17, 2008).
17
project located within the PJM BAA. The facility is interconnected with the
Commonwealth Edison Company (“Commonwealth Edison”) transmission system.
Providence Heights is an EWG89 and was granted market-based rate authority on
November 9, 2007.90
43.
Rugby Wind LLC
Rugby Wind LLC (“Rugby”) is a direct, wholly-owned subsidiary of Iberdrola
Renewables. Rugby owns and operates an approximately 150 MW wind-powered electric
generating facility located in Rugby, North Dakota, within the MISO balancing authority
area. The Rugby facility is interconnected with transmission facilities owned by Otter
Tail Power Company. Rugby does not own or control transmission facilities other than
those limited and discrete facilities necessary to interconnect the Rugby facility to the
transmission grid. Rugby is an EWG91 and is authorized to sell electric energy, capacity
and ancillary services in wholesale markets at market-based rates.92
44.
San Luis Solar LLC
San Luis Solar LLC (“San Luis Solar”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. San Luis Solar leases and operates an approximately 30 MW
solar-powered electric generation facility located in Alamosa County, Colorado within
the PSCo balancing authority area. The San Luis Solar facility is interconnected with the
transmission facilities of PSCo. San Luis Solar does not own or control transmission
facilities other than those limited and discrete facilities necessary to interconnect the San
Luis Solar facility to the transmission grid. San Luis Solar is authorized to sell electric
energy, capacity, and ancillary services at market-based rates.93
45.
Shiloh I Wind Project, LLC
Shiloh I Wind Project, LLC (“Shiloh I”) is a direct, wholly-owned subsidiary of
Aeolus II, whose ownership structure is described above. Shiloh I owns and operates an
approximately 168 MW wind-powered electric generating facility located in Solano
County, California, within the CAISO balancing authority area. The Shiloh I facility is
interconnected with transmission facilities owned by Pacific Gas & Electric Company.
Shiloh I does not own or control transmission facilities other than those limited and
discrete facilities necessary to interconnect the Shiloh I facility to the transmission grid.
89
Notice of Self-Certification of EWG Status, Providence Heights Wind, LLC, Docket No.
EG08-39-000 (Feb. 20, 2008).
90
Providence Heights Wind, LLC, Docket No. ER07-1378-000 (letter order issued Nov. 9,
2007).
91
Notice of Self-Certification of Exempt Wholesale Generator Status, Docket No. EG0965-000 (filed June 25, 2009).
92
Rugby Wind LLC, Docket No. ER09-1284-000 (letter order issued Aug. 7, 2009).
93
San Luis Solar LLC, Docket No. ER11-2196-000 (letter order issued Jan. 19, 2011).
18
Shiloh I is an EWG94 and is authorized to sell electric energy, capacity and ancillary
services in wholesale markets at market-based rates.95
46.
South Chestnut LLC
South Chestnut LLC (“South Chestnut”) is a direct, wholly-owned subsidiary of
Iberdrola Renewables. South Chestnut owns and operates a 46 MW wind-powered
electric generating facility located in Fayette County, Pennsylvania in the PJM BAA.
South Chestnut is an EWG96 and was granted market-based rate authority on November
17, 2011.97
47.
Star Point Wind Project LLC
Star Point Wind Project LLC (“Star Point”) is a direct, wholly-owned subsidiary
of Iberdrola Renewables. Star Point owns and operates an approximately 100 MW windpowered electric generation facility in Sherman County, Oregon, within the BPAT
balancing authority area. The Star Point facility is interconnected with transmission
facilities owned by BPAT. Star Point does not own or control transmission facilities
other than those limited and discrete facilities necessary to interconnect the Star Point
facility to the transmission grid. Star Point is an EWG98 and is authorized to sell electric
energy, capacity and ancillary services at market-based rates.99
48.
Streator-Cayuga Ridge Wind Power LLC
Streator-Cayuga Ridge Wind Power LLC (“Streator-Cayuga Ridge”) is a direct,
wholly-owned subsidiary of Iberdrola Renewables. Streator-Cayuga Ridge owns and
operates a 300 MW wind-powered electric generating project in Pontiac, Illinois in the
PJM BAA. Streator-Cayuga Ridge is interconnected with the transmission facilities of
94
Shiloh I Wind Project, LLC, Docket No. EG05-82-000 (letter order issued Aug. 15,
2005).
95
Shiloh I Wind Project, LLC, Docket No. ER05-1146-000 (letter order issued Aug. 24,
2005).
96
Notice of Self-Certification of EWG Status, South Chestnut LLC, Docket No. EG12-3000 (Oct. 17, 2011).
97
South Chestnut, LLC, Docket No. ER12-96-000 (letter order issued Nov. 17, 2011).
98
Notice of Self-Certification of EWG Status, Docket No. EG10-8-000 (Nov. 17, 2009).
99
Star Point Wind Project LLC, Letter Order, Docket Nos. ER10-228-000, et al. (Jan. 13,
2010).
19
Commonwealth Edison. Streator-Cayuga Ridge is an EWG100 and was granted marketbased rate authority on August 7, 2009.101
49.
Trimont Wind I LLC
Trimont Wind I LLC (“Trimont”) is a direct, wholly-owned subsidiary of Aeolus
II, whose ownership structure is described above. Trimont owns and operates an
approximately 101 MW wind-powered electric generating facility located in Martin and
Jackson counties, Minnesota, within the MISO BAA. The Trimont facility is
interconnected with transmission facilities owned by NSP. Trimont does not own or
control transmission facilities other than those limited and discrete facilities necessary to
interconnect the Trimont facility to the transmission grid. Trimont is an EWG102 and is
authorized to sell electric energy, capacity and ancillary services in wholesale markets at
market-based rates.103
50.
Twin Buttes Wind LLC
Twin Buttes Wind LLC (“Twin Buttes”) is a direct, wholly-owned subsidiary of
Aeolus III, whose ownership structure is described above. Twin Buttes owns and
operates an approximately 75 MW wind-powered electric generating facility located in
Prowers County, Colorado, within the PSCo balancing authority area and interconnected
with transmission facilities owned by PSCo. Twin Buttes does not own or control
transmission facilities other than those limited and discrete facilities necessary to
interconnect the Twin Buttes facility to the transmission grid.104 Twin Buttes is an
EWG105 and is authorized to sell energy, capacity, and ancillary services at market-based
rates.106
100
Notice of Self-Certification of EWG Status, Streator-Cayuga Ridge Wind Power LLC,
Docket No. EG09-66-000 (June 25. 2009).
101
Streator-Cayuga Ridge Wind Power LLC, Docket No. ER09-1285-000 (letter order
issued Aug. 7, 2009).
102
Trimont Wind I LLC, 110 FERC ¶ 62,187 (2005).
103
Trimont Wind I LLC, Docket No. ER05-481-000 (letter order issued Mar. 3, 2005).
104
See supra n. 24.
105
Twin Buttes Wind LLC, Docket No. EG07-15-000 (Nov. 22, 2006).
106
Twin Buttes Wind LLC, et al., Docket No. ER07-240-000, et al. (letter order issued
March 14, 2007).
20
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By107
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
Atlantic Renewable
Projects II LLC
ER08-387-000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Barton Windpower LLC
ER09-32-000
Barton
Barton
Windpower
LLC
Barton
Windpower
LLC
N/A
MISO
Central
6/2009
160 MW
(nameplate)
Big Horn Wind Project
LLC
ER06-200-000
Big Horn
Big Horn
Wind Project
LLC
Big Horn
Wind Project
LLC
N/A
BPA
Northwest
10/2006
200 MW
(nameplate)
Big Horn II Wind Project
LLC
ER10-974-000
Big Horn II
Big Horn II
Wind Project
LLC
Big Horn II
Wind Project
LLC
N/A
BPA
Northwest
10/2010
50 MW
(nameplate)
Blue Creek Wind Farm
LLC
ER11-2112-000
Blue Creek
Blue Creek
Wind Farm
LLC
Blue Creek
Wind Farm
LLC
N/A
PJM
Northeast
6/2012
304 MW
(nameplate)
Buffalo Ridge I LLC
ER09-279-000
Buffalo
Ridge I
Buffalo Ridge
I LLC
Buffalo Ridge
I LLC
N/A
MISO
Central
12/2008
50.4 MW
(nameplate)
Buffalo Ridge II LLC
ER10-378-000
Buffalo
Ridge II
Buffalo Ridge
II LLC
Buffalo Ridge
II LLC
N/A
MISO
Central
12/2010
200 MW
(nameplate)
107
The information provided by the Appendix B Entities in the “Controlled By” and “Date Control Transferred” columns takes the most
conservative approach, i.e., that the generation owner also controls the generation, even though, in many instances, the generation is committed
to a wholesale purchaser under a long-term power sale agreement. In addition, in some cases, the Appendix B entity in question is only partially
owned or controlled Iberdrola Renewables, LLC or its subsidiaries.
21
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By107
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
Casselman Windpower
LLC
ER07-254-000
Casselman
Windpower
Casselman
Windpower
LLC
Casselman
Windpower
LLC
N/A
PJM
Northeast
2/2008
35 MW
(nameplate)
Colorado Green Holdings
LLC
ER03-1326-000
Colorado
Green
Colorado
Green
Holdings LLC
Colorado
Green
Holdings LLC
N/A
PSCo
Northwest
12/2003
162 MW
(nameplate)
Deerfield Wind LLC
N/A
Deerfield
Wind
Deerfield
Wind, LLC
Deerfield
Wind, LLC
N/A
ISO-NE
Northeast
In
development
30 MW
(nameplate)
Dillon Wind LLC
ER07-460-000
Dillon Wind
Dillon Wind
LLC
Dillon Wind
LLC
N/A
CAISO
Southwest
4/2008
45 MW
(nameplate)
Elk River Windfarm, LLC
ER05-365-000
Elk River
Elk River
Windfarm,
LLC
Elk River
Windfarm,
LLC
N/A
SPP
SPP
12/2005
150 MW
(nameplate)
Elm Creek Wind, LLC
ER09-30-000
Elm Creek
Elm Creek
Wind, LLC
Elm Creek
Wind, LLC
N/A
MISO
Central
12/2008
99 MW
(nameplate)
Elm Creek Wind II LLC
ER10-377-000
Elm Creek II
Elm Creek
Wind II LLC
Elm Creek
Wind II LLC
N/A
MISO
Central
12/2010
148.8 MW
(nameplate)
Farmers City Wind, LLC
ER09-31-000
Farmers City
Farmers City
Wind, LLC
Farmers City
Wind, LLC
N/A
MISO
Central
4/2009
146 MW
(nameplate)
Flat Rock Windpower
LLC
ER05-1262-000
Maple Ridge
I
Flat Rock
Windpower
LLC
Flat Rock
Windpower
LLC
N/A
NYISO
Northeast
1/2006
231 MW
(nameplate)
22
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By107
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
Flat Rock Windpower II
LLC
ER06-1093-000
Maple Ridge
II
Flat Rock
Windpower II
LLC
Flat Rock
Windpower II
LLC
N/A
NYISO
Northeast
11/2006
90.75 MW
(nameplate)
Flying Cloud Power
Partners, LLC
ER03-296-000
Flying Cloud
Flying Cloud
Partners, LLC
Flying Cloud
Partners, LLC
N/A
MISO
Central
12/2003
43.5 MW
(nameplate)
Groton Wind, LLC
ER12-2649-000
Groton Wind
Groton Wind,
LLC
Groton Wind,
LLC
N/A
ISO-NE
Northeast
12/2012
48 MW
(nameplate)
Hardscrabble Wind Power
LLC
ER10-1725-000
Hardscrabble
Hardscrabble
Wind Power
LLC
Hardscrabble
Wind Power
LLC
N/A
NYISO
Northeast
1/2011
74 MW
(nameplate)
Hay Canyon Wind LLC
ER09-382-000
Hay Canyon
Hay Canyon
Wind LLC
Hay Canyon
Wind LLC
N/A
BPA
Northwest
2/2009
100 MW
(nameplate)
Iberdrola
Arizona
Renewables,
LLC
N/A
Dry Lake II
Iberdrola
Arizona
Renewables,
LLC
N/A
N/A
N/A
N/A
Dry Lake
Iberdrola Arizona
Renewables, LLC
Iberdrola Renewables,
LLC
ER09-1723-000
ER08-912-000
23
9/2009
APS
N/A
63 MW
(nameplate)
Southwest
N/A
12/2010
65 MW
(nameplate)
N/A
N/A
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Juniper Canyon Wind
Power LLC
Klamath Energy LLC
Docket # where
MBR authority
was granted
ER10-975-000
ER01-3121-000
Generation
Name
Juniper
Canyon
Klamath I
Owned By
Controlled
By107
Juniper
Canyon Wind
Power LLC
Juniper
Canyon Wind
Power LLC
Klamath
Energy LLC
Klamath
Energy LLC
Date
Control
Transferred
N/A
N/A
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
BPA
Northwest
BPA
Northwest
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
3/2011
151.2 MW
(nameplate)
*Peaker:
5/17/2002
100 MW
(nameplate)
*Cogen
Facility:
7/29/2001
536 MW
(nameplate)
Klamath Generation LLC
ER02-418-000
Klamath II
Klamath
Generation
LLC
Klamath
Generation
LLC
N/A
BPA
Northwest
In
development
550 MW
(nameplate)
Klondike Wind Power
LLC
ER03-416-000
Klondike I
Klondike
Wind Power
LLC
Klondike
Wind Power
LLC
N/A
BPA
Northwest
12/2001
24 MW
(nameplate)
Klondike Wind Power II
LLC
ER05-332-000
Klondike II
Klondike
Wind Power
II LLC
Klondike
Wind Power
II LLC
N/A
BPA
Northwest
7/2005
75 MW
(nameplate)
Klondike Wind Power III
LLC
ER07-287-000
Klondike III
Klondike
Wind Power
III LLC
Klondike
Wind Power
III LLC
N/A
BPA
Northwest
10/2007
297.5 MW
(nameplate)
Leaning Juniper Wind
Power II LLC
ER10-1776-000
Leaning
Juniper II
Leaning
Juniper Wind
Power II LLC
Leaning
Juniper Wind
Power II LLC
N/A
BPA
Northwest
2/2011
201.3 MW
(nameplate)
24
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By107
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
Lempster Wind, LLC
ER08-933-000
Lempster
Lempster
Wind, LLC
Lempster
Wind, LLC
N/A
ISO-NE
Northeast
10/2008
24 MW
(nameplate)
Locust Ridge Wind Farm,
LLC
ER07-195-000
Locust Ridge
Locust Ridge
Wind Farm,
LLC
Locust Ridge
Wind Farm,
LLC
N/A
PJM
Northeast
12/2007
26 MW
(nameplate)
Locust Ridge II, LLC
ER08-934-000
Locust Ridge
II
Locust Ridge
II, LLC
Locust Ridge
II, LLC
N/A
PJM
Northeast
5/2009
102 MW
(nameplate)
Manzana Wind LLC
ER12-308-000
Manzana
Manzana
Wind LLC
Manzana
Wind LLC
N/A
CAISO
Southwest
12/2012
246 MW
(nameplate)
MinnDakota Wind LLC
ER07-242-000
MinnDakota
MinnDakota
Wind LLC
MinnDakota
Wind LLC
N/A
MISO
Central
2/2008
150 MW
(nameplate)
Moraine Wind LLC
ER03-951-000
Moraine
Moraine
Wind LLC
Moraine
Wind LLC
N/A
MISO
Central
12/2003
51 MW
(nameplate)
Moraine Wind II LLC
ER09-282-000
Moraine II
Moraine
Wind II LLC
Moraine
Wind II LLC
N/A
MISO
Central
2/2009
49.5 MW
(nameplate)
Mountain View Power
Partners III, LLC
ER04-94-000
Mountain
View
Mountain
View Power
Partners III,
LLC
Mountain
View Power
Partners III,
LLC
N/A
CAISO
Southwest
12/2003
22.4 MW
(nameplate)
New England Wind, LLC
ER12-422-000
Hoosac
New England
Wind, LLC
New England
Wind, LLC
N/A
ISO-NE
Northeast
12/2012
28.5 MW
(nameplate)
25
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By107
ER11-2032-000
New Harvest
New Harvest
Wind Project
LLC
New Harvest
Wind Project
LLC
Northern Iowa Windpower
II LLC
ER02-2085-000
Northern
Iowa
Northern
Iowa
Windpower
II, LLC
Pebble Springs Wind LLC
ER09-281-000
Pebble
Springs
Phoenix Wind Power LLC
N/A
Providence Heights Wind,
LLC
Date
Control
Transferred
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
N/A
MISO
Central
6/2012
100 MW
(nameplate)
Northern
Iowa
Windpower
II, LLC
N/A
MISO
Central
12/2007
80 MW
(nameplate)
Pebble
Springs Wind
LLC
Pebble
Springs Wind
LLC
N/A
BPA
Northwest
1/2009
98.7 MW
(nameplate)
Phoenix
Phoenix Wind
Power LLC
N/A
N/A
CAISO
Southwest
9/1999
2.1 MW
(nameplate)
ER07-1378-000
Providence
Heights
Providence
Heights
Wind, LLC
Providence
Heights
Wind, LLC
N/A
PJM
Northeast
7/2008
75 MW
(nameplate)
Rugby Wind LLC
ER09-1284-000
Rugby
Rugby Wind
LLC
Rugby Wind
LLC
N/A
MISO
Central
12/2009
150 MW
(nameplate)
San Luis Solar LLC
ER11-2196-000
San Luis
San Luis
Solar LLC
San Luis
Solar LLC
N/A
PSCo
Northwest
3/2012
30 MW
(nameplate)
Shiloh I Wind Project,
LLC
ER05-1146-000
Shiloh I
Shiloh I Wind
Project, LLC
Shiloh I Wind
Project, LLC
N/A
CAISO
Southwest
4/2006
168 MW
(nameplate)
New Harvest Wind Project
LLC
26
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Iberdrola Renewables, LLC and its Subsidiaries
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By107
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
South Chestnut LLC
ER12-96-000
South
Chestnut
South
Chestnut LLC
South
Chestnut LLC
N/A
PJM
Northeast
12/2011
46 MW
(nameplate)
Star Point Wind Project
LLC
ER10-228-000
Star Point
Star Point
Wind Project
LLC
Star Point
Wind Project
LLC
N/A
BPA
Northwest
2/2010
100 MW
(nameplate)
Streator-Cayuga Ridge
Wind Power LLC
ER09-1285-0000
StreatorCayuga
StreatorCayuga Ridge
Wind Power
LLC
StreatorCayuga Ridge
Wind Power
LLC
N/A
PJM
Northeast
3/2010
300 MW
(nameplate)
Trimont Wind I LLC
ER05-481-000
Trimont
Trimont Wind
I LLC
Trimont Wind
I LLC
N/A
MISO
Central
11/2005
101 MW
(nameplate)
Twin Buttes Wind LLC
ER07-240-000
Twin Buttes
Twin Buttes
Wind LLC
Twin Buttes
Wind LLC
N/A
PSCo
Northwest
7/2007
75 MW
(nameplate)
Winnebago Windpower
LLC
N/A
Winnebago
Winnebago
Windpower
LLC
Winnebago
Windpower
LLC
N/A
MISO
Central
8/2008
20 MW
(nameplate)
27
Order No. 697 Appendix B (as of March 25, 2015)
Electric Transmission Assets, Natural Gas Pipelines and/or Gas Storage Facilities of Iberdrola Renewables, LLC and its
Subsidiaries
Location
Filing Entity and its Energy Affiliates
Asset Name and Use
Owned By
Controlled
By
Date Control
Transferred
Balancing Authority
Area
Geographic
Region (per
Appendix D)
Size
Enstor Grama Ridge Storage and
Transportation, LLC (“Enstor Grama
Ridge”)
Enstor Grama Ridge
provides firm and
interruptible storage and
storage-related hub
services in Lea County,
New Mexico and is
interconnected with one
New Mexico intrastate
natural gas pipeline and
two interstate natural gas
pipelines. Currently
undergoing expansion
activities.
Enstor Grama
Ridge
Enstor Grama
Ridge
N/A
N/A
Southwest
15.7 Bcf
(working)
Enstor Katy Storage and Transportation,
L.P. (“Enstor Katy”)
Enstor Katy provides firm
and interruptible storage
and storage-related hub
services near Katy, Fort
Bend County, Texas and
is interconnected with
nine Texas intrastate and
five interstate natural gas
pipelines.
Enstor Katy
Enstor Katy
N/A
N/A
Southwest
20.7 Bcf
(working)
28
Order No. 697 Appendix B (as of March 25, 2015)
Electric Transmission Assets, Natural Gas Pipelines and/or Gas Storage Facilities of Subsidiaries of Iberdrola Renewables, LLC
Location
Filing Entity and its Energy Affiliates
Asset Name and Use
Owned By
Controlled
By
Date Control
Transferred
Enstor Operating Company, LLC
(“Enstor Operating Company”)
Enstor Operating
Company engages in gas
storage facility
management and
operations in Texas, New
Mexico, Alabama and
Mississippi and serves as
the general partner of
Enstor Katy and Enstor
Houston and manager of
Enstor Grama Ridge,
Freebird and Caledonia.
Freebird Gas Storage, LLC(“Freebird”)
Freebird provides firm
and interruptible storage
and storage-related hub
services in Lamar County,
Alabama, and is
interconnected with one
interstate natural gas
pipeline.
Freebird
Freebird
N/A
Caledonia Energy Partners, LLC
(“Caledonia”)
Caledonia provides firm
and interruptible storage
and storage-related hub
services in Lowndes and
Monroe Counties,
Mississippi, and is
interconnected with one
interstate natural gas
pipeline. Currently
undergoing expansion
activities.
Caledonia
Caledonia
N/A
N/A
N/A
29
N/A
Balancing Authority
Area
N/A
Geographic
Region (per
Appendix D)
Size
N/A
N/A
N/A
Southeast
9.76 Bcf
(FERCjurisdictio
nal
working)
N/A
Southeast
19.9 Bcf
(working)
Order No. 697 Appendix B (as of March 25, 2015)
Electric Transmission Assets, Natural Gas Pipelines and/or Gas Storage Facilities of Subsidiaries of Iberdrola Renewables, LLC
Location
Filing Entity and its Energy Affiliates
Enstor Houston Hub Storage and
Transportation, L.P. (“Enstor Houston”)
Asset Name and Use
Enstor Houston received,
April 4, 2008, FERC
approval to begin
construction on a salt
dome natural gas storage
facility located in Liberty
County, Texas.
Colorado Green Holdings LLC
Twin Buttes Wind LLC
Pacific Wind Development LLC
Generator Tie Line
Owned By
Controlled
By
Enstor
Houston
Enstor
Houston
Colorado
Green
Holdings
LLC
Colorado
Green
Holdings
LLC
Twin Buttes
Wind LLC
Twin Buttes
Wind LLC
Pacific Wind
Development
LLC
Pacific Wind
Development
LLC
30
Date Control
Transferred
Balancing Authority
Area
Geographic
Region (per
Appendix D)
Size
N/A
N/A
Southwest
N/A
N/A
PSCo
Northwest
44 circuit
miles; 230
kV
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Subsidiaries of Iberdrola USA
Location
Filing Entity and its
Energy Affiliates
New York State Electric &
Gas Corporation
(“NYSEG”)
NYSEG
NYSEG
NYSEG
NYSEG
108
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By108
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
ER99-221
AuburnState Street
NYSEG
NYSEG
N/A
NYISO
Northeast
2000
ER99-221
Harris
Lake:
Newcomb,
NY
NYSEG
NYSEG
N/A
NYISO
Northeast
1967
ER99-221
Cadyville
1-3
ER99-221
ER99-221
NYSEG
NYSEG
NYSEG
NYSEG
NYSEG
NYSEG
N/A
N/A
N/A
NYISO
NYISO
NYISO
Northeast
Northeast
Northeast
1921
1948
1928
Nameplate
and/or Seasonal
Rating
7.4 MW
(nameplate)
5.8 MW
(summer)
1.7 MW
(summer)
5.5 MW
(nameplate)
4.7 MW
(summer)
15.0 MW
(nameplate)
16.4 MW
(summer)
12.4 MW
(nameplate)
12.0 MW
(summer)
The information provided by the Appendix B Entities in the “Controlled By” and “Date Control Transferred” columns takes the most
conservative approach, i.e., that the generation owner also controls the generation, even though, in many instances, the generation is committed
to a wholesale purchaser under a long-term power sale agreement.
31
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Subsidiaries of Iberdrola USA
Location
Filing Entity and its
Energy Affiliates
NYSEG
NYSEG
Docket # where
MBR authority
was granted
Generation
Name
ER99-221
Owned By
NYSEG
ER99-221
NYSEG
Controlled
By108
NYSEG
NYSEG
Date
Control
Transferred
N/A
N/A
Balancing
Authority
Area
NYISO
NYISO
Geographic
Region (per
Appendix D)
Northeast
Northeast
In-service
Date
1983
1943
NYSEG
ER99-221
NYSEG
NYSEG
N/A
NYISO
Northeast
1926
NYSEG
ER99-221
NYSEG
NYSEG
N/A
NYISO
Northeast
N/A
Rochester Gas and Electric
Corporation (“RG&E”)
ER97-3553
Allegany
GT
RG&E
RG&E
32
N/A
NYISO
Northeast
1994
Nameplate
and/or Seasonal
Rating
16.4 MW
(nameplate)
19.5 MW
(summer)
6.0 MW
(nameplate)
6.0 MW
(summer)
2.6 MW
(nameplate)
3.1 MW
(summer)
1.8 MW
(summer)
42.0 MW
(nameplate)
39.8 MW
(summer)
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Subsidiaries of Iberdrola USA
Location
Filing Entity and its
Energy Affiliates
RG&E
RG&E
RG&E
RG&E
RG&E
RG&E
Docket # where
MBR authority
was granted
ER97-3553
ER97-3553
ER97-3553
ER97-3553
ER97-3553
ER97-3553
Generation
Name
Allegany
ST
Beebee GT
Station 9
Station 5
Station 2
Station 26
Owned By
RG&E
RG&E
RG&E
RG&E
RG&E
RG&E
Controlled
By108
RG&E
RG&E
RG&E
RG&E
RG&E
RG&E
33
Date
Control
Transferred
N/A
N/A
N/A
N/A
N/A
N/A
Balancing
Authority
Area
NYISO
NYISO
NYISO
NYISO
NYISO
NYISO
Geographic
Region (per
Appendix D)
Northeast
Northeast
Northeast
Northeast
Northeast
Northeast
In-service
Date
1994
1969
1969
1917
1960
1952
Nameplate
and/or Seasonal
Rating
25.0 MW
(nameplate)
21.7 MW
(summer)
19.0 MW
(nameplate)
14.0 MW
(summer)
19.0 MW
(nameplate)
15.0 MW
(summer)
42.0 MW
(nameplate)
38.01 MW
(summer)
6.5 MW
(nameplate)
5.7 MW
(summer)
3.0 MW
(nameplate)
2.6 MW
(summer)
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Subsidiaries of Iberdrola USA
Location
Docket # where
MBR authority
was granted
Generation
Name
Central Maine Power
Company (“CMP”)
ER05-731
N/A
N/A
N/A
N/A
N/A
N/A
N/A
PEI Power II, LLC (50.1%)
ER01-1764
Archbald
NUG
PEI Power II
PEI Power II
N/A
PJM
Northeast
May 2001
Filing Entity and its
Energy Affiliates
109
Owned By
Controlled
By108
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Nameplate
and/or Seasonal
Rating
N/A
43.7 MW109
(summer)
43.7 MW represents the entire seasonal capacity of the facility. The entire output of the facility is being attributed to PEI Power II, LLC due to
the majority ownership interest of 50.1%.
34
Order No. 697 Appendix B (as of March 25, 2015)
Electric Transmission Assets, Natural Gas Pipelines and/or Gas Storage Facilities of Subsidiaries of Iberdrola USA
Location
Filing Entity and its
Energy Affiliates
Asset Name and Use
Owned By
Controlled By
Date Control
Transferred
Balancing
Authority Area
Geographic
Region (per
Appendix D)
Size
NYSEG
Electric Transmission
Lines
NYSEG
NYISO
November 1999
NYISO
Northeast
4,315 circuit miles;
voltage range 13kV
– 345 kV
NYSEG
Natural gas
transportation pipeline
(Hinshaw pipeline)
NYSEG
NYSEG
N/A
N/A
Northeast
72 miles
NYSEG
Natural gas distribution
pipeline
NYSEG
NYSEG
N/A
N/A
Northeast
7,878 miles
RG&E
Electric Transmission
Lines
RG&E
NYISO
November 1999
NYISO
Northeast
1,283 circuit miles;
voltage range 11kV
– 115 kV
RG&E
Natural gas
transportation pipeline
RG&E
RG&E
N/A
N/A
Northeast
109 miles
RG&E
Natural gas distribution
pipeline
RG&E
RG&E
N/A
N/A
Northeast
8,471 miles
CMP
Electric Transmission
Lines
CMP
ISO-NE
February 2005
ISO-NE
Northeast
2,593 circuit miles;
34.5 kV, 115kV and
345kV lines (also
includes 183.36
miles associated
with the 450kV
HVDC Hydro
Quebec tie-line in
which CMP has an
entitlement)
Maine Electric Power
Company (“MEPCO”)
Electric Transmission
Line
MEPCO
ISO-NE
April 2005
ISO-NE
Northeast
182 circuit miles;
345 kV line
35
Order No. 697 Appendix B (as of March 25, 2015)
Electric Transmission Assets and/or Natural Gas Pipelines and/or Gas Storage Facilities of Subsidiaries of Iberdrola USA
Location
Filing Entity and its
Energy Affiliates
Asset Name and Use
Owned By
Controlled By
Date Control
Transferred
Balancing
Authority Area
Size
Geographic
Region (per
Appendix D)
Maine Natural Gas
Corporation (“MNG”)
Natural gas
transportation pipeline
MNG
MNG
N/A
N/A
Northeast
2 miles
MNG
Natural gas distribution
line
MNG
MNG
N/A
N/A
Northeast
80 miles
36
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of Subsidiaries of Gamesa108
Location
Filing Entity and its
Energy Affiliates
Docket # where
MBR authority
was granted
Generation
Name
Owned By
Controlled
By
Date
Control
Transferred
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
In-service
Date
Approximate
Nameplate
and/or
Seasonal
Rating
First State Marine Wind,
LLC
N/A
First State
Marine
Wind, LLC
First State
Marine Wind,
LLC
First State
Marine Wind,
LLC
N/A
PJM
Northeast
6/2010
2 MW
Pocahontas Prairie Wind,
LLC
ER11-3736-000
Pocahontas
Prairie Wind,
LLC
Pocahontas
Prairie Wind,
LLC
Pocahontas
Prairie Wind,
LLC
N/A
MISO
Central
11/2011
80 MW
110
Information regarding Gamesa assets is compiled from Application for Authorization for Disposition of Jurisdictional Facilities for Minonk
Wind, LLC, filed December 19, 2013 in Docket No. EC14-38-000.
37
Order No. 697 Appendix B (as of March 25, 2015)
Electric Tarnsmission Assets and/or Natural Gas Intrastate Pipelines and/or Gas Storage Facilities
of Subsidiaries of Gamesa108
Location
Filing Entity and its
Energy Affiliates
N/A
Docket # where
MBR authority
was granted
N/A
Generation
Name
N/A
Owned By
N/A
Controlled
By
N/A
38
Date
Control
Transferred
N/A
Balancing
Authority
Area
Geographic
Region (per
Appendix D)
N/A
N/A
In-service
Date
N/A
Approximate
Nameplate
and/or
Seasonal
Rating
N/A
Exhibit B-2
Order No. 697 Appendix B (as of March 25, 2015)
Market-Based Rate Authority and Generation Assets of UIL Holdings Corporation and Its Subsidiaries
Filing Entity
and Its
Energy
Affiliates
The United
Illuminating
Company
UIL
Distributed
Resources
LLC1
The United
Illuminating
Company2
The United
Illuminating
Company3
GCE Holding
LLC
Docket
No.
Where
Generation
MBR
Name
Authority
Was
Granted
ER93-3
N/A
N/A
Glastonbury
Fuel Cell
N/A
New Haven
Fuel Cell
Project
Bridgeport
Fuel Cell
Project
N/A
N/A
N/A
Location
Owned By
Controlled
By
Date Control
Transferred
Balancing
Authority
Area
Geographic
Region
InService
Date
Nameplate
and/or
Seasonal
Rating
UIL
Holdings
Corporation
United
Resources,
Inc.
UIL
Holdings
Corporation
United
Resources,
Inc.
N/A
ISO-NE
Northeast
N/A
N/A
N/A
ISO-NE
Northeast
May
2015
2.8 MW
(nameplate)
The United
Illuminating
Company
The United
Illuminating
Company
The United
Illuminating
Company
The United
Illuminating
Company
The United
Illuminating
Company
The United
Illuminating
Company
N/A
ISO-NE
Northeast
April
2015
2.8 MW
(nameplate)
N/A
ISO-NE
Northeast
August
2015
2.8 MW
(nameplate)
N/A
N/A
N/A
N/A
N/A
NRG
Energy,
Inc.4
NRG
Energy,
Inc.
1
The Glastonbury Fuel Cell is not yet commercially operational, and is included herein for the purpose of identifying all of UIL Holdings Corporation’s
generation assets that are expected to come online during the Commission’s consideration of the instant application.
2
The New Haven Fuel Cell Project is not yet commercially operational, and is included herein for the purpose of identifying all of UIL Holdings Corporation’s
generation assets that are expected to come online during the Commission’s consideration of the instant application.
3
The Bridgeport Fuel Cell Project is not yet commercially operational, and is included herein for the purpose of identifying all of UIL Holdings Corporation’s
generation assets that are expected to come online during the Commission’s consideration of the instant application.
GenConn
Energy LLC
ER101291
N/A
GenConn
Devon LLC
ER091300
Devon
Project
GenConn
Middletown
LLC
ER091301
Middletown
Project
GCE
Holding
LLC5
GCE
Holding
LLC6
GCE
Holding
LLC7
GCE
Holding
LLC
GCE
Holding
LLC
GCE
Holding
LLC
N/A
N/A
N/A
N/A
N/A
N/A
ISO-NE
Northeast
June
2010
187.6 MW
(summer)
N/A
ISO-NE
Northeast
June
2011
187.6 MW
(summer)
4
United Illuminating owns 50 percent of the equity interests in GCE Holding LLC. The remaining 50 percent of the equity interests in GCE Holding is owned
by NRG Connecticut Peaking LLC and NRG Yield Operating LLC.
5
United Illuminating owns 50 percent of the equity interests in GCE Holding LLC, which wholly owns GenConn Energy LLC. The remaining 50 percent of the
equity interests in GCE Holding is owned by NRG Connecticut Peaking LLC and NRG Yield Operating LLC.
6
United Illuminating owns 50 percent of the equity interests in GCE Holding LLC, which wholly owns GenConn Devon LLC. The remaining 50 percent of the
equity interests in GCE Holding is owned by NRG Connecticut Peaking LLC and NRG Yield Operating LLC.
7
United Illuminating owns 50 percent of the equity interests in GCE Holding LLC, which wholly owns GenConn Middletown LLC. The remaining 50 percent
of the equity interests in GCE Holding is owned by NRG Connecticut Peaking LLC and NRG Yield Operating LLC.
Order No. 697 Appendix B (as of March 25, 2015)
Electric Transmission Assets and/or Natural Gas Intrastate Pipelines and/or Gas Storage Facilities of
UIL Holdings Corporation and Its Subsidiaries
Filing Entity
and Its
Energy
Affiliates
The United
Illuminating
Company
The United
Illuminating
Company
Berkshire Gas
Company
Connecticut
Natural Gas
Corporation
The Southern
Connecticut
Gas Company
Total Peaking
Services, LLC
8
Location
Asset Name
and Use
Various Pool
Transmission
Facilities
(“PTF”) and
Non-PTF
Transmission
Facilities
HQ
Interconnection
Natural gas
distribution
lines
Natural gas
distribution
lines
Natural gas
distribution
lines
Milford LNG
Plant; provides
LNG peakshaving facility
Date Control
Transferred
The United
Illuminating
Company
ISO New
England Inc.
February 2005
Balancing
Authority
Area
ISO-NE
Approximate
5.4%
participation
share owned by
The United
Illuminating
Company
Berkshire
Energy
Resources
CTG
Resources,
Inc.8
Connecticut
Energy
Corporation
United
Resources, Inc.
ISO New
England Inc.
February 2005
ISO-NE
Northeast
108 MW
(Approx.)
Berkshire
Energy
Resources
CTG
Resources,
Inc.
Connecticut
Energy
Corporation
United
Resources, Inc.
N/A
N/A
Northeast
N/A
N/A
Northeast
N/A
N/A
Northeast
July 2014
N/A
Northeast
751 miles of
distribution
main
2,035 miles of
distribution
main
2,301 miles of
distribution
main
Liquefaction
rate – 6
MMcf/d; send
out capacity –
Owned By
Controlled By
Geographic
Region
Size
Northeast
Various
Certain minority interests in Connecticut Natural Gas Corporation’s preferred stock are held by unaffiliated entities. CTG Resources, Inc. holds approximately
65% of the preferred stock in Connecticut Natural Gas Corporation.
90 MMcf/d;
and a working
gas capacity –
1,140 MMcf
EXHIBIT C
ORGANIZATIONAL CHARTS
Exhibit C-1(a): Current Corporate Structure
UIL Holdings
Corporation
The United
Illuminating
Company
United
Resources, Inc.
50%
GCE Holding LLC
GenConn Energy
LLC
GenConn Devon
LLC
GenConn
Middletown LLC
Exhibit C-1(b): Current Corporate Structure
Iberdrola, S.A.
Iberdrola
USA, Inc.
Iberdrola USA
Networks, Inc.
Green Merger
Sub, Inc.
Exhibit C-2(a): Post-Merger Transaction Corporate Structure
Iberdrola, S.A.
Iberdrola USA, Inc.
Iberdrola USA
Networks, Inc.
UIL Holdings
Corporation
(f/k/a Green Merger
Sub, Inc.)
The United Illuminating
Company
United Resources, Inc.
50%
GCE Holding LLC
GenConn Energy LLC
GenConn Devon LLC
GenConn Middletown
LLC
Exhibit C-2(b): Post-Proposed Transaction Corporate Structure
Iberdrola, S.A.
Iberdrola USA, Inc.
Iberdrola USA
Networks, Inc.
UIL Holdings
Corporation
(f/k/a Green Merger
Sub, Inc.)
The United
Illuminating Company
United Resources, Inc.
50%
GCE Holding LLC
GenConn Energy LLC
GenConn Devon LLC
GenConn Middletown
LLC
EXHIBIT F
DESCRIPTION AND LOCATION OF
WHOLESALE POWER CUSTOMERS
AND UNBUNDLED TRANSMISSION
SERVICE CUSTOMERS SERVED BY
APPLICANTS OR THEIR AFFILIATES
Exhibit F
Exhibit F-1: A list of wholesale power customers and unbundled transmission services
customers served by NYSEG, RG&E, CMP and MEPCO.
Exhibit F-2: A list of wholesale power customers and unbundled transmission services
customers served by United Illuminating.
Exhibit F-1
Central Maine Power Company, Transmission Service,
provided under the ISO-NE OATT
Alltrista Plastic Corporation
Androscoggin Reservoir Company (Brookfield)
Aquila Power Corporation
Baltimore Gas & Electric Company
Bangor Hydro Electric Company (Emera)
Barker Mill Lower Hydro
Barker Mill Upper Hydro
Bath Iron Works Corporation
Beaver Ridge Wind, LLC
Benton Falls Associates
Boralex Livermore Falls Inc
Boralex Stratton Energy, Inc.
Brassua Hydroelectric Ltd Partnership
Brookfield Energy Marketing LP
Brookfield White Pine Hydro LLC
Brown's Mill Hydro
Canton Mountain Wind, LLC
Cargill Power Markets, LLC
Cascade Auburn Fiber
Casco Bay Energy Company, LLC
Central Maine Power Company
Central Vermont Public Service Marketer
Cinergy Capital and Trading, Inc.
Citizens Power
CNG Power Services Corporation
Consolidated Hydro New Hampshire Inc.
Cyro Industries
Damariscotta Hydro
Dragon Products Company
Duke Energy Trading & Marketing
ECO Maine
Elmet Technologies, Inc.
Emera Energy Services Inc.
Entergy Power Inc.
Equitable Power Services Company
Eustis Hydro
Fairchild Semiconductor
First Wind
Fox Islands Electric Cooperative, Inc
FPL Energy Cape, LLC
FPL Energy Maine Hydro, LLC
FPL Energy Power Marketing, Inc.
FPL Energy Wyman 4, LLC
FPL Energy Wyman, LLC
Gardiner Hydro
Gates Formed Fiber
Green Mountain Power Corporation
Greenville Hydro
H.Q. Energy Services (U.S.) Inc.
Hancock Lumber of Bethel, Inc.
Huhtamaki Foodservice, Inc.
Hydro Kennebec LLC
Kennebec River Development Park
Kennebec Water District
Kennebunk Light & Power District
Kezar Falls Hydro (Upper, Middle, Lower, Haket, Ledgemere)
Linde Energy Service, Inc.
Madison Electric Works
Maine Public Services Co.
Mechanic Falls Hydro
Messalonskee Stream Hydro, LLC
Mid-Maine Waste Action Corporation
Midwest Price Company, LLC
Miller Hydro Group
Mirant Americas Energy Marketing, LP
Wilton, ME
Lincoln Plantation, ME
Omaha, NE
Baltimore, MD
Bangor, ME
Lewiston, ME
Lewiston, ME
Bath, ME
Freedom, ME
Benton, ME
Livermore Falls, ME
Stratton, ME
Taunton, ME
Canada
Various
Dover Foxcroft, ME
Canton, ME
Minnetonka, MN
Auburn, ME
Veazie, Maine
Augusta, ME
Rutland, VT
Cincinnati, OH
Boston, MA
Pittsburgh, PA
Andover, MA
Sanford, ME
Damariscotta, ME
Thomaston, ME
Houston, TX
Scarborough, ME
Lewiston, ME
Bangor, ME
The Woodlands, TX
Pittsburgh, PA
Eustis, ME
South Portland, ME
Portland, ME
Rockport, ME
Yarmouth, ME
Various
Various
Bingham, ME
Bingham, ME
Gardiner, ME
Lewiston, ME
Colchester, VT
Greenville, ME
Canada
Bethel, ME
Fairfield, ME
Winslow, ME
Winslow, ME
Waterville, ME
Kennebunk, ME
Parsonfield, ME
Kittery, ME
Madison, ME
New Hampshire
Mechanic Falls, ME
Waterville, ME
Auburn, ME
Bethel, ME
Lisbon, ME
Atlanta, GA
Morgan Stanley Capital Group
National Semiconductor
Nestle Waters of North America
NewPage Corporation
NextEra Energy Maine LLC
NextEra Energy Power Marketing, LLC
Niagara Mohawk Power Corporation
NorAm Energy Services
Norway Hydro
NP Energy, Inc.
NRG Power Marketing, Inc.
NRG Power Marketing, Inc.
Ontario Power Generation Inc.
PECO Energy Co.
Pejepscot Industrial Park, Inc.
Pioneer Hydro
Pittsfield Hydro
Poland Springs Bottling
Portland Pipeline Corporation
Portland Pipeline Corporation
Portland Pipeline Corporation
Portsmouth Naval Shipyard - Kittery
Power Company of America, L.P.
PowerEx Corp.
Pratt & Whitney
Record Hill Wind LLC
Robbins Lumber, Inc
Rocky Gorge Corporation
Royal Bank of Canada
Rumford Falls Hydro LLC
Rumford Power Inc.
S.D. Warren Company
S.D. Warren Company
Saddleback Ridge Wind, LLC
Sempra Energy Trading Corporation
South Berwick Hydro
Sparhawk Mill Associates, LLC
Spruce Mountain Wind, LLC
Stony Brook
Sugarloaf Mountain Corporation
Sunday River Skiway
Topsham Hydro Partners, LP
Trans Canada Maine Wind Development
TransAlta Energy Marketing (U.S.) Inc.
TransCanada Power Marketing Ltd
True Textiles
VanEastland LLC
Vermont Electric Cooperative
Verso
Verso (Bucksport Energy)
Verso (Bucksport G-5)
Verso (Bucksport Mill)
Verso Androscoggin LLC
Verso Androscoggin LLC (Gas)
Waverly Hydro
Western Power Services
Wight Brook
York Hydro
Westbrook
New York, NY
South Portland, ME
Hollis, ME
Rumford, ME
Various
Skowhegan, ME
Syracuse, NY
Houston, TX
Norway, ME
Louisville, KY
Minneapolis, MN
Minneapolis, MN
Canada
King of Prussia, PA
Brunswick, ME
Pittsfield, ME
Pittsfield, ME
Saco, ME
Waterford, ME
South Portland, ME
Raymond, ME
Kittery, ME
Greenwich, CT
Canada
North Berwick, ME
Roxbury, ME
Searsmont, ME
South Berwick, ME
Canada
Rumford, ME
Rumford, ME
Skowhegan, ME
Portland, ME
Canton, ME
Stamford, CT
South Berwick, ME
Yarmouth, ME
Woodstock, ME
Newry, ME
Carrabassett Valley, ME
Newry, ME
Topsham, ME
Carrabassett Valley, ME
Canada
Canada
Guilford, ME
South Portland, ME
Vermont
Jay, ME
Bucksport, ME
Bucksport, ME
Jay, ME
Jay, ME
Jay, ME
Pittsfield, ME
Denver, CO
Newry, ME
York, ME
Wesbrook, ME
Maine Electric Power Company, Transmission Service,
provided under the ISO-NE OATT
Boralex Industries, Inc.
Bayside Power LP
Emera Energy Inc
Fort Fairfield, ME
New Brunswick
Canada
New York State Eelectric & Gas Corporation Transmission Service to Public Power Municipals,
provided under the NYISO OATT
Bath Electric, Gas & Water Systems
Village of Castile
Village of Endicott
Village of Greene
Village of Groton N.Y., Village Offices
Village of Hamilton
Village of Rouses Point
Village of Sherburne
Village of Silver Springs
Delaware County Electric Cooperative, Inc.
Oneida-Madison Electric Cooperative, Inc.
Otsego Electric Cooperative, Inc.
Steuben Rural Electric Cooperative, Inc.
Village of Marathon
Village of Watkins Glen
Village of Penn Yan
Bath, NY
Castile, NY
Endicott, NY
Greene, NY
Groton, NY
Hamilton, NY
Rouses Point, NY
Sherburne, NY
Silver Springs, NY
Delhi, NY
Bouckville, NY
Hartwick, NY
Bath, NY
Marathon, NY
Watkins Glen, NY
Penn Yan, NY
New York State Electric & Gas Corporation Transmission Service (December 2014 - February 2015),
provided under the NYISO OATT
Brookfield Energy Marketing LP
Gatineau, Quebec
Bruce Power Inc
Triverton, Ontario
Canadian Wood Products-Montreal Inc.
Montreal, QC
Cargill Power Markets LLC
Minnetoka, MN
Centre Lane Trading Ltd.
Toronto, ON
Consolidated Edison Energy Inc.
Valhalla, NY
Direct Energy Business Marketing LLC
Woodbridge, NJ
Dynasty Power Inc.
Calgary, AB
DTE Energy Trading Inc
Ann Arbor, MI
Exelon Generation Company LLC
Baltimore, MD
Great Bay Energy IV LLC
San Juan, PR
HQ Energy Services (US)
Montreal, QC
Iberdrola Renewables LLC
Portland, OR
Macquarie Energy LLC
Houston, TX
Mag Energy Solutions Inc.
Montreal, QC
New York Power Authority
White Plains, NY
Noble Americas Gas & Power Corp
Stamford, CT
Ontario Power Generation Energy Trading Inc.
Toronto, ON
Peninsula Power LLC
Denver, CO
Powerex Corporation
Vancouver, BC
PSEG Energy Resource & Trade LLC
Newark, NJ
Pure Energy Inc
Valley, NE
Rainbow Energy Marketing Corp
Bismark, ND
Rochester Gas & Electric
Rochester, NY
Royal Bank of Canada
Toronto, ON
Saracen Power Partners LP
Houston, TX
Shell Energy North America (US) L.P.
Houston, TX
TEC Energy Inc
St-Lambert, QC
TransAlta Energy Marketing (U.S.) Inc.
Calgary, AB
TrailStone Power LLC
Austin, TX
XO Energy NY LP
Landenberg, PA
Rochester Gas and Electric Corporation Transmission Service,
provided under the NYISO OATT
New York State Electric and Gas
Village of Angelica
Village of Spencerport
Rochester, NY
Angelica, NY
Spencerport,NY
Rochester Gas and Electric Corporation Wholesale Power
New York Independent System Operator
PJM
Rensselaer, NY
Valley Forge, PA
Rochester Gas and Electric Corporation Interconnection Contracts
Casella Waste Systems, Inc. (Hyland Landfill Project)
Bio-Energy Partners, L.L.C.
Constellation Generation Group, LLC
Allegany Generating Station LLC
Angelica, NY
Cleveland, OH
Baltimore, MD
East Aurora, NY
New York State Eelectric & Gas Corporation Wholesale Power
New York Independent System Operator
Rensselaer, NY
PJM
ISO-NE
Valley Forge, PA
Holyoke, MA
New York State Eelectric & Gas Corporation Interconnection Contracts
Central Hudson Gas & Electric Corp.
Consolidated Edison Company of New York, Inc.
Niagara Mohawk Power Corporation
Oneida Madison Electric Cooperative, Inc.
Nine Mile Point Nuclear Station, LLC
Mission Energy Westside, Inc.
Penelec, A First Energy Co.
Bath Fairview Taps
Lockport Energy Associates, L.P.
Homer City Generation, L.P.
Howard Wind, LLC
Somerset Operating Company, LLC
Airtricity Munnsville Wind Farm, LLC
Cayuga Operating Company LLC
Saranac Power Partners, L.P.
Seneca Energy II, LLC
Madison WindPower, LLC
Seneca Energy II, LLC (Ontario County Landfill)
Sheldon Energy LLC
Canandiagua Wind Power Partners, LLC (Canandaigua and Canandaigua II)
Casella Waste Systems, Inc. (Clinton County Landfill)
Stony Creek Energy LLC (Stony Creek Wind)
Noble Wethersfield Windpark, LLC
Consolidated Hydro New York, Inc. (Walden)
Indeck Energy Services of Silver Springs, Inc.
Boralex Chateaugay, Inc.
Marsh Hill Energy LLC
Hydro Development Group, Inc. (Goodyear Lake Hydro)
Standard Binghamton LLC
Broome Energy Resources, LLC
Stephentown Regulation Services LLC
Poughkeepsie, NY
New York, NY
Syracuse, NY
Bouckville, NY
Baltimore, MD
Dublin, OH
Akron, OH
Bath, NY
Lockport, NY
Homer City, PA
New York, NY
Barker, NY
Munnsville, NY
Lansing, NY
Plattsburgh, NY
Stanley, NY
Bethedsa, MD
Oakfield, NY
Chicago, IL
Canandaigua, NY
Angelica, NY
Chicago, IL
Wethersfield, NY
Walden, NY
Silver Springs, NY
Chateaugay, NY
Chicago, IL
Andover, MA
Binghamton, NY
Ware, MA
Tyngsboro, MA
Exhibit F-2
The recipients of service over United Illuminating’s transmission facilities take regional network service, local
network service, and local point-to-point service under the ISO-NE Tariff and are ISO-NE customers, including
those customers taking service over United Illuminating’s HQI entitlement.
The following entities are unbundled wholesale transmission customers of United Illuminating:
Transmission Customers
ISO-NE (Billing Agent for New England Transmission Customers)
Brookfield Energy Marketing, Inc.
H.Q. Energy Services (US) Inc.
Cargill Power Markets, LLC
TRANSCO (CMEEC)
Eversource (Connecticut Light & Power)
NRG Power Marketing LLC
PSEG New Haven LLC
PSEG Energy Resources & Trade LLC
Dominion Energy Marketing
Milford Power Co. LLC
Waterbury Generation LLC
Emera Energy Services Subsidiary No. 5 LLC
Kleen Energy Systems
GenConn Devon LLC
GenConn Middletown LLC
Town of Wallingford, CT DPU Electric Division
Location
New England
Monroe, NH & Sandy Pond, MA
Monroe, NH & Sandy Pond, MA
Monroe, NH & Sandy Pond, MA
Municipalities in CT
Various, CT
Various, CT
New Haven, CT
Bridgeport & New Haven, CT
Waterford, CT
Milford, CT
Waterbury, CT
Bridgeport, CT
Middletown, CT
Milford, CT
Middletown, CT
Wallingford, CT
Phase I/II
Regional
Local
Local
Network Network point-to- HVDC
Schedule
Service
(1)
(2)
Service
point
(3)
(RNS)
20-A
X
(1)
Schedule 21-UI customers, who are also RNS customer, who pay UI based on load ratio share for UI localized facilities.
(2)
UI does not have local point-to-point transmission customers under Schedule 21-UI.
(3)
Customers taking service over United Illuminating's HQ entitlement in 2014.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
The following entities are wholesale generators that are connected to the United Illuminating transmission or
distribution system or have executed interconnection agreements but are not yet connected:
Wholesale Generators (Transmission Connected)
Emera Energy Services Subsidiary No. 5 LLC (Bridgeport Energy)
PSEG New Haven LLC (NHHS 2-5)
PSEG Power Connecticut LLC (BHS 3)
PSEG Energy Resources & Trade LLC (BHS 4 & NHHS 1)
Energy Capital Partners (formally known as RESCO)
Wholesale Generators (Distribution Connected)
McCallum Enterprises LP
Dominion Bridgeport Fuel Cell Park
Location
Bridgeport, CT
New Haven, CT
Bridgeport, CT
Bridgeport and New Haven, CT
Bridgeport, CT
Location
Derby, CT
Bridgeport, CT
EXHIBIT I
MERGER AGREEMENT
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by
and
among
UIL HOLDINGS CORPORATION,
IBERDROLA USA, INC.
and
GREEN MERGER SUB, INC.
Dated as of February 25, 2015
SC1:3782886.7
DC\3667332.21
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION ...............................................6 Section 1.1 Section 1.2 Certain Definitions .......................................................................................6 Certain Interpretations ...............................................................................21 ARTICLE II MERGER .................................................................................................................23 Section 2.1 Section 2.2 Section 2.3 Section 2.4 Section 2.5 Section 2.6 The Merger.................................................................................................23 Charter Documents; Directors and Officers of Surviving
Corporation ................................................................................................23 Cancellation and Conversion of Stock.......................................................24 Treatment of Stock Plans ...........................................................................27 Directors of Green and Blue ......................................................................28 Adjustments ...............................................................................................29 ARTICLE III CLOSING ...............................................................................................................29 Section 3.1 The Closing ................................................................................................29 ARTICLE IV MUTUAL REPRESENTATIONS AND WARRANTIES OF THE
PARTIES ...........................................................................................................................29 Section 4.1 Section 4.2 Section 4.3 Section 4.4 Section 4.5 Section 4.6 Section 4.7 Section 4.8 Section 4.9 Section 4.10 Section 4.11 Section 4.12 Section 4.13 Section 4.14 Section 4.15 Section 4.16 Section 4.17 Section 4.18 Section 4.19 Organization and Qualification ..................................................................30 No Conflicts; Approvals and Consents ......................................................30 Subsidiaries and Joint Ventures .................................................................30 Absence of Certain Changes or Events ......................................................31 No Undisclosed Liabilities.........................................................................31 Legal Proceedings ......................................................................................32 Information Supplied .................................................................................32 Permits; Compliance with Laws and Orders .............................................32 Taxes ..........................................................................................................32 Employee Benefit Plans; ERISA ...............................................................34 Labor Matters .............................................................................................36 Environmental Matters...............................................................................37 Insurance ....................................................................................................37 Energy Price Risk Management.................................................................38 Material Contracts ......................................................................................38 Brokers .......................................................................................................40 Real Property .............................................................................................40 Intellectual Property ...................................................................................42 Anti-Corruption; Anti-Money Laundering ................................................42 ii
SC1:3782886.7
DC\3667332.21
ARTICLE V INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF BLUE
AND GREEN.....................................................................................................................43 Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Section 5.9 Section 5.10 Section 5.11 Section 5.12 Section 5.13 Section 5.14 Section 5.15 Section 5.16 Blue Capital Stock .....................................................................................44 Authority of Blue .......................................................................................45 Blue Required Statutory Approvals ...........................................................46 Blue SEC Reports, Financial Statements and Utility Reports ...................46 Vote Required by Blue...............................................................................49 Opinion of Financial Advisors to Blue ......................................................49 Anti-Takeover Provisions Inapplicable to Blue .........................................49 Green Capital Stock ...................................................................................49 Authority of Green .....................................................................................50 Green Required Statutory Approvals .........................................................50 Financial Statements and Utility Reports of Green ...................................51 Shared Assets and Services ........................................................................54 Employee Benefit Plans of Green ..............................................................54 Anti-Takeover Provisions Inapplicable to Green ......................................54 Organization and Qualification of Merger Sub .........................................54 No Conflicts with Respect to Merger Sub; Approvals and Consents
of Merger Sub ............................................................................................55 Section 5.17 Green Renewables Contracts .....................................................................55 Section 5.18 Ownership of Shares ..................................................................................55 Section 5.19 Available Funds .........................................................................................55 ARTICLE VI COVENANTS AND AGREEMENTS OF THE PARTIES...................................56 Section 6.1 Section 6.2 Section 6.3 Section 6.4 Section 6.5 Section 6.6 Section 6.7 Section 6.8 Section 6.9 Section 6.10 Section 6.11 Section 6.12 Section 6.13 Section 6.14 Section 6.15 Section 6.16 Section 6.17 Section 6.18 Section 6.19 Blue No Solicitation...................................................................................56 Green No Solicitation ................................................................................60 Preparation of the Proxy Statement and Form S-4; Provision of
Green Financial Statements; Shareholder Meetings ..................................60 Conduct of Green Business Pending Closing ............................................62 Conduct of Blue Business Pending Closing ..............................................65 Employee Benefits .....................................................................................69 Notification ................................................................................................71 Access ........................................................................................................71 Regulatory Approvals; Reasonable Best Efforts .......................................72 State Anti-Takeover Statutes .....................................................................74 Public Announcements ..............................................................................74 Listing Application ....................................................................................74 Directors and Officers ................................................................................74 Further Assistance ......................................................................................76 Transaction Litigation ................................................................................77 Confidentiality Agreement.........................................................................77 Agreements Concerning Green and Merger Sub .......................................77 Section 16 Matters .....................................................................................78 Governance; Charitable and Community Support. ....................................78 iii
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Section 6.20 Dividends ...................................................................................................78 ARTICLE VII ADDITIONAL AGREEMENTS ..........................................................................79 Section 7.1 Section 7.2 Nonsurvival ................................................................................................79 No Other Representations ..........................................................................79 ARTICLE VIII CONDITIONS TO CLOSING.............................................................................80 Section 8.1 Section 8.2 Section 8.3 Conditions to Each Party’s Obligation to Effect the Merger .....................80 Conditions to Obligations of Green and Merger Sub ................................81 Conditions to Obligations of Blue .............................................................82 ARTICLE IX TERMINATION .....................................................................................................83 Section 9.1 Section 9.2 Termination ................................................................................................83 Effect of Termination .................................................................................84 ARTICLE X FEES AND EXPENSES ..........................................................................................84 Section 10.1 General .......................................................................................................84 Section 10.2 Expenses ....................................................................................................86 ARTICLE XI GENERAL PROVISIONS .....................................................................................86 Section 11.1 Section 11.2 Section 11.3 Section 11.4 Section 11.5 Section 11.6 Section 11.7 Governing Law; Consent to Jurisdiction; Specific Performance ...............86 Entire Agreement .......................................................................................87 Waivers and Consents ................................................................................87 Notices .......................................................................................................87 Assignments, Successors and No Third-Party Rights................................89 Severability ................................................................................................89 Counterparts ...............................................................................................89 EXHIBITS
Exhibit A
Exhibit B
Exhibit C
Public Announcement.
Amended Green Charter Documents.
Stockholder Agreement Term Sheet.
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this “Agreement”), dated as of February 25,
2015, is by and among UIL Holdings Corporation, a Connecticut corporation (“Blue”), Iberdrola
USA, Inc., a New York corporation (“Green”), and Green Merger Sub, Inc., a Connecticut
corporation and a direct wholly-owned subsidiary of Green (“Merger Sub”). Each of Blue,
Green and Merger Sub is referred to herein as a “Party” and together as the “Parties”.
RECITALS
WHEREAS, Green owns one hundred percent (100%) of the issued and
outstanding equity interests of (i) Iberdrola USA Group, LLC, a Delaware limited liability
company (“Green Group”), (ii) Iberdrola USA Networks, Inc., a Maine corporation (“Green
Networks”), and (iii) Iberdrola Renewables Holdings, Inc., a Delaware corporation (“Green
Renewables”, and together with Green Group and Green Networks, the “Green Companies”);
WHEREAS, the board of directors of Blue (the “Blue Board”) has (i) adopted the
Agreement and approved and determined that it is in the best interests of Blue for Blue to
consummate the merger of Blue with and into Merger Sub (the “Merger”), with Merger Sub
surviving the Merger as wholly-owned subsidiary of Green, and the other transactions
contemplated hereby and (ii) resolved, subject to Section 6.1, to recommend that Blue’s
shareholders approve the Agreement and submit the Agreement to the shareholders of Blue for
their approval, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, pursuant to the Merger, each issued share of Blue Common Stock
(as defined herein), other than those shares of Blue Common Stock held by Blue (as treasury
shares or otherwise) shall be converted into the right to receive one share of Green Common
Stock (as defined herein) and $10.50 in cash;
WHEREAS, Green’s board of directors and Merger Sub’s board of directors have
each unanimously adopted this Agreement and approved the Merger, the issuance of Green
Common Stock in the Merger and the other transactions contemplated hereby and determined
that it is in the best interests of Green and Merger Sub, respectively, to consummate the Merger
and the other transactions contemplated hereby; and
WHEREAS, for U.S. federal income tax purposes, the Parties intend that the
Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code and
the regulations promulgated thereunder, and that this Agreement be, and is adopted as, a “plan of
reorganization” for purposes of Sections 354 and 361 of the Code and the regulations
promulgated thereunder and Treasury Regulation Section 1.368-2(g).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, on the terms and
subject to the conditions of this Agreement, the Parties hereby agree as follows:
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Certain Definitions. For all purposes of and under this
Agreement, the following capitalized terms shall have the following respective meanings:
“2005 Act” means the Public Utility Holding Company Act of 2005, including all
regulations promulgated thereunder.
“Acceptable Confidentiality Agreement” means an agreement that is executed, delivered
and effective after the execution, delivery and effectiveness of this Agreement, and which
contains customary provisions that require any counter-party(ies) thereto (and any of its (their)
representatives named therein) that receive material non-public information of or with respect to
Blue or its Subsidiaries to keep such information confidential; provided that such confidentiality
provisions are no less restrictive in the aggregate to such counter-party(ies) (and any of its (their)
representatives named therein), and shall contain such other terms that are, in the aggregate, no
less favorable to Blue than the terms of the Confidentiality Agreement (it being understood and
agreed that such confidentiality agreement need not contain any standstill or similar provision so
long as concurrently with entering into such confidentiality agreement, Blue agrees to amend the
Confidentiality Agreement so that the standstill provisions applicable to Green are no more
restrictive to Green than those contained in the Acceptable Confidentiality Agreement).
Notwithstanding the foregoing, an “Acceptable Confidentiality Agreement” shall not include any
provision calling for any exclusive right to negotiate with such party or having the effect of
prohibiting Blue from satisfying its obligations hereunder.
“Act” means the Connecticut Business Corporation Act.
“Affiliate” means, with respect to any Person, any other Person which directly or
indirectly controls, is controlled by or is under common control with such Person. For purposes
of the immediately preceding sentence, the term “control” (including, with correlative meanings,
the terms “controlling,” “controlled by” and “under common control with”), as used with respect
to any Person, means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through ownership of voting
securities, by Contract or otherwise.
“Anti-Corruption Laws” means Laws relating to anti-bribery or anti-corruption
(governmental or commercial), including laws that prohibit the corrupt payment, offer, promise,
or authorization, acceptance, or agreement to accept the payment or transfer of anything of value
(including gifts or entertainment), directly or indirectly, to any Government Official, foreign
government employee or commercial entity or to anyone to obtain or retain business or other
improper benefit or advantage, including the U.S. Foreign Corrupt Practices Act (15 U.S.C.
§§78dd-1 et seq.), the U.K. Bribery Act of 2010, and all national and international laws enacted
to implement the OECD Convention on Combating Bribery of Foreign Officials in International
Business Transactions.
“Average Blue Stock Price” means the average of the volume weighted averages of the
trading prices of Blue Common Stock on the NYSE (as reported by Bloomberg L.P. or, if not
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reported therein, in another authoritative source mutually selected by the Parties) on each of the
ten (10) consecutive trading days ending on (and including) the trading day that immediately
precedes the Closing Date.
“Beneficial Ownership” (and its correlative terms) shall have the meaning provided in
Rule 13d-3 under the Exchange Act.
“Blue Common Stock” means common stock, of no par value, of Blue.
“Blue Deferred Compensation Plans” means the employee and director deferred
compensation plans maintained or sponsored by Blue or any of its Subsidiaries.
“Blue Employee Benefit Plans” means any Plan entered into, established, maintained,
sponsored, contributed to, or required to be contributed to, by Blue or any of its Subsidiaries with
or for the benefit of any current or former employee or director or other service provider of Blue
or any of its Subsidiaries and existing on the date of this Agreement or at any time subsequent
thereto and, in the case of a Plan that is subject to Part 3 of Title I of ERISA, Section 412 of the
Code or Title IV of ERISA, at any time during the six-year period preceding the date of this
Agreement with respect to which Blue or any of its Subsidiaries has or would reasonably be
expected to have any present or future actual or contingent liabilities.
“Blue Material Adverse Effect” means any (i) Change, individually or in the aggregate
with any other Changes, that has had or would reasonably be expected to have a material adverse
effect on the business, assets, liabilities, condition (financial or otherwise) or results of
operations of Blue and its Subsidiaries, taken as a whole or (ii) Change that would prevent,
materially impair or materially delay the ability of Blue to consummate the Merger and the other
Transactions; provided, however, that no Change (by itself or when aggregated or taken together
with any and all other Changes) directly or indirectly resulting from, attributable to or arising out
of any of the following shall be deemed to be, contribute towards or constitute a “Blue Material
Adverse Effect,” and no Change (by itself or when aggregated or taken together with any and all
other such Changes) directly or indirectly resulting from, attributable to or arising out of any of
the following shall be taken into account when determining whether a “Blue Material Adverse
Effect” has occurred or may, would or could occur (in the case of clauses (i) through (vii), to the
extent such Changes do not disproportionately and adversely affect Blue and its Subsidiaries,
taken as a whole, in any material respect relative to other companies operating in any industry or
industries and geographies in which Blue operates):
(i)
general economic conditions (or changes in such conditions) in the United States
(or within the State of Connecticut or the Commonwealth of Massachusetts) or
any other country or region in the world, or conditions in the global economy
generally;
(ii)
conditions (or changes in such conditions) in the securities markets, capital
markets, credit markets, currency markets or other financial markets in the United
States or any other country or region in the world, including (A) changes in
interest rates in the United States or any other country or region in the world and
changes in exchange rates for the currencies of any countries, and (B) any
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suspension of trading in securities (whether equity, debt, derivative or hybrid
securities) generally on any securities exchange or over-the-counter market
operating in the United States or any other country or region in the world;
(iii)
conditions (or changes in such conditions) in the industries in which Blue and its
Subsidiaries conduct business;
(iv)
Changes in international, national or regional wholesale or retail markets for
electric power, capacity or fuel or related products;
(v)
Changes in national or regional electric transmission or distribution systems;
(vi)
political conditions (or changes in such conditions) in the United States (or within
the State of Connecticut or the Commonwealth of Massachusetts) or any other
country or region in the world or acts of war, sabotage or terrorism (including any
escalation or general worsening of any such acts of war, sabotage or terrorism) in
the United States (or within the State of Connecticut or the Commonwealth of
Massachusetts) or any other country or region in the world;
(vii)
earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or
other natural disasters, weather conditions and other force majeure events in the
United States or any other country or region in the world;
(viii) changes in Law (or the interpretation thereof) or changes in GAAP or other
accounting standards (or the interpretation thereof), in each case after the date of
this Agreement;
(ix)
any change in the credit rating of Blue (except that the underlying cause of any
such change may, to the extent not otherwise excluded by clauses (i) through
(viii) above or (x) through (xiii) below, be considered and taken into account in
determining whether there has been a Blue Material Adverse Effect);
(x)
the entry into, pendency of, actions contemplated by, or the performance of
obligations required by this Agreement or consented to by Green or Merger Sub,
including any loss or threatened loss of, or adverse change or threatened adverse
change in, the relationship of Blue or any of its Subsidiaries with its customers,
employees, regulators, financing sources, labor unions or suppliers; provided,
however, that the exceptions in this clause (x) shall not apply to Blue’s
representations and warranties in Section 4.2, Section 4.10(e), Section 4.11 or
Section 5.3, or, to the extent related to breaches of Section 4.2, Section 4.10(e),
Section 4.11 or Section 5.3, Section 8.2(a);
(xi)
any written proposal or commitment made by Green or its Affiliates, or by Blue
or its Affiliates, to any Governmental Authority or imposed by any Governmental
Authority, in each case, in accordance with this Agreement and in order to obtain
the Blue Required Statutory Approval or Green Required Statutory Approval;
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(xii)
the failure of Blue to meet any internal or published projections, forecasts or
revenues predictions (except that the underlying cause of any such failure may, to
the extent not otherwise excluded by clauses (i) through (xi) above, or (xiii)
below, be considered and taken into account in determining whether there has
been a Blue Material Adverse Effect); or
(xiii) a decline in the price or trading volume of Blue Common Stock on the NYSE on
or after the date of this Agreement (except that the underlying cause of any such
decline may, to the extent not otherwise excluded by clauses (i) through (xii)
above, be considered and taken into account in determining whether there has
been a Blue Material Adverse Effect).
“Blue Parties” means, collectively, Blue, its Subsidiaries and its Joint Ventures, and each
of them individually is a “Blue Party”.
“Blue Stock Plans” means the Blue 2008 Stock and Incentive Compensation Plan and the
Blue Deferred Compensation Plans.
“Business Day” means any day that is not a Saturday, Sunday or other day on which the
commercial banks in New York City, New York or Madrid, Spain are authorized or required by
Law to close.
“Change” means a change, effect, event, circumstance or development.
“Charter Documents” means, with respect to any entity at any time, in each case as
amended, modified and supplemented at that time, (i) the articles of association or certificate of
formation, incorporation, partnership or organization (or the equivalent organizational
documents) of that entity, (ii) the bylaws, partnership agreement or limited liability company
agreement or regulations (or the equivalent governing documents) of that entity, and (iii) each
document setting forth the designation, amount and relative rights, limitations and preferences of
any class or series of that entity’s Equity Securities or of any rights in respect of that entity’s
Equity Securities.
“Code” means the Internal Revenue Code of 1986, as amended.
“Confidentiality Agreement” means the Confidentiality Agreement between Blue and
Green Parent, dated November 20, 2014.
“Contract” means any legally binding agreement, contract, lease, instrument, note,
license, arrangement, undertaking or other commitment of any nature.
“Controlled Group Liability” means any and all liabilities (i) under Title IV of ERISA,
(ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, and (iv) as a
result of a failure to comply with the continuation coverage requirements of Section 601 et seq.
of ERISA and Section 4980B of the Code.
“Derivative Product” means any swap, cap, floor, collar, futures contract, forward
contract, option or any other derivative financial instrument, Contract, based on any commodity,
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security, instrument, rate or index of any kind or nature whatsoever, whether tangible or
intangible, including electricity, natural gas, fuel oil, coal, emissions allowances and offsets, and
other commodities, currencies, interest rates and indices.
“Disclosure Schedule” means, if the Representing Party is Blue, the Blue Disclosure
Schedule, and if the Representing Party is Green, the Green Disclosure Schedule.
“Employee Benefit Plans” means Blue Employee Benefit Plans when used with respect
to a Blue Party and means Green Employee Benefit Plans when used with respect to a Green
Party.
“Environmental Claim” means any and all administrative, regulatory or judicial actions,
suits, orders, demands, demand letters, directives, claims, liens, investigations, proceedings or
notices of noncompliance, liability or violation (written or oral) by any Person (including any
Governmental Authority) alleging potential liability (including potential responsibility or
liability for enforcement, investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from circumstances forming the basis of any
actual or alleged noncompliance with, violation of, or liability under, any Environmental Law or
Environmental Permit.
“Environmental Laws” means any federal, state, local, foreign or international Law
regulating or protecting public or employee health and safety (including in the workplace), or
regulating or protecting natural resources, wildlife, threatened or endangered species or the
environment (including ambient air, surface water (including water management and runoff),
groundwater, land surface or subsurface strata), regulating greenhouse gases, or regulating the
distribution, labeling, registration, use, treatment, storage, disposal, recycling, removal, transport
or handling of Materials of Environmental Concern, including, but not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. §s 9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §s 5101 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. §s 6901 et seq.), the Clean Water Act (33 U.S.C. §s
1251 et seq.), the Clean Air Act (42 U.S.C. §s 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. §s 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §s
136 et seq.), those portions of the Occupational Safety and Health Act (29 U.S.C. §s 651 et seq.)
that address Materials of Environmental Concern, and the Oil Pollution Act of 1990 (33 U.S.C.
§s 2701 et seq.) and the regulations promulgated pursuant thereto and any counterpart or similar
local or state Laws.
“Environmental Permits” means Permits issued pursuant to applicable Environmental
Law.
“Equity Securities” of any Person means, as applicable (i) any and all of its shares of
capital stock, membership interests or other equity interests or share capital, (ii) any warrants,
Contracts or other rights or options directly or indirectly to subscribe for or to purchase any
capital stock, membership interests or other equity interests or share capital of such Person,
(iii) all securities or instruments, directly or indirectly, exchangeable for or convertible or
exercisable into, any of the foregoing or with any profit participation features with respect to
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such Person, or (iv) any share appreciation rights, phantom share rights or other similar rights
with respect to such Person or its business.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means all employers (whether or not incorporated) that would be
treated together with Green or any of its Subsidiaries as a “single employer” within the meaning
of Section 414 of the Code.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FERC” means the Federal Energy Regulatory Commission.
“Final Order” means action by the relevant Governmental Authority that has not been
reversed, stayed, enjoined, set aside, annulled or suspended and is legally binding and effective.
“GAAP” means generally accepted accounting principles for financial reporting in the
United States consistently applied through the periods involved.
“Government Official” means (i) any official, officer, employee or representative of, or
any person acting in an official capacity for or on behalf of, any Governmental Authority, (ii)
any political party or party official or candidate for political office, or (iii) any official, officer,
employee, or any person acting in an official capacity for or on behalf of, any company,
business, enterprise or other entity owned (in whole or in substantial part) controlled by or
affiliated with a Governmental Authority.
“Governmental Authority” means shall mean (i) any government, (ii) any governmental
or regulatory entity, body, department, commission, subdivision, board, bureau, administrative
agency or instrumentality, (iii) any court, tribunal, judicial body, or an arbitrator or arbitration
panel, (iv) any non-governmental self-regulatory agency or securities exchange, or (v) the North
American Electric Reliability Corporation, in each of (i) through (iv) whether supranational,
national, federal, state, county, municipal, provincial, and whether domestic or foreign.
“Green Common Stock” means ordinary shares, par value $0.01 per share, of Green.
“Green Employee Benefit Plans” means any Plan entered into, established, maintained,
sponsored, contributed to or required to be contributed to by Green or any of its Subsidiaries
with or for the benefit of any current or former employee or director or other service provider of
Green or any of its Subsidiaries and existing on the date of this Agreement or at any time
subsequent thereto and, in the case of a Plan that is subject to Part 3 of Title I of ERISA, Section
412 of the Code or Title IV of ERISA, at any time during the six-year period preceding the date
of this Agreement with respect to which Green or any of its Subsidiaries has or would reasonably
be expected to have any present or future actual or contingent liabilities.
“Green Material Adverse Effect” means any (i) Change, individually or in the aggregate
with any other Changes, that has had or would reasonably be expected to have a material adverse
effect on the business, assets, liabilities, condition (financial or otherwise) or results of
operations of Green and its Subsidiaries, taken as a whole or (ii) Change that would prevent,
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materially impair or materially delay the ability of the Green or Merger Sub to consummate the
Merger and the other Transactions; provided, however, that no Change (by itself or when
aggregated or taken together with any and all other Changes) directly or indirectly resulting
from, attributable to or arising out of any of the following shall be deemed to be or constitute a
“Green Material Adverse Effect,” and no Change (by itself or when aggregated or taken together
with any and all other such Changes) directly or indirectly resulting from, attributable to or
arising out of any of the following shall be taken into account when determining whether a
“Green Material Adverse Effect” has occurred or may, would or could occur (in the case of
clauses (i) through (vii), to the extent such Changes do not disproportionately and adversely
affect Green and its Subsidiaries, taken as a whole, in any material respect relative to other
companies operating in any industry or industries and geographies in which Green and its
Subsidiaries operate):
(i)
general economic conditions (or changes in such conditions) in the United
States (or within the State of New York or the State of Maine) or any other
country or region in the world, or conditions in the global economy
generally;
(ii)
conditions (or changes in such conditions) in the securities markets,
capital markets, credit markets, currency markets or other financial
markets in the United States or any other country or region in the world,
including (A) changes in interest rates in the United States or any other
country or region in the world and changes in exchange rates for the
currencies of any countries, and (B) any suspension of trading in securities
(whether equity, debt, derivative or hybrid securities) generally on any
securities exchange or over-the-counter market operating in the United
States or any other country or region in the world;
(iii)
conditions (or changes in such conditions) in the industries in which the
Green and its Subsidiaries conduct business;
(iv)
Changes in international, national or regional wholesale or retail markets
for electric power, capacity or fuel or related products;
(v)
Changes in national or regional electric transmission or distribution
systems;
(vi)
political conditions (or changes in such conditions) in the United States (or
within the State of New York or the State of Maine) or any other country
or region in the world or acts of war, sabotage or terrorism (including any
escalation or general worsening of any such acts of war, sabotage or
terrorism) in the United States (or within the State of New York or the
State of Maine) or any other country or region in the world;
(vii)
earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires
or other natural disasters, weather conditions and other force majeure
events in the United States or any other country or region in the world;
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(viii) changes in Law (or the interpretation thereof) or changes in GAAP or
other accounting standards (or the interpretation thereof), in each case
after the date of this Agreement;
(ix)
any change in the credit rating of Green (except that the underlying cause
of any such change may, to the extent not otherwise excluded by clauses (i)
through (viii) above or (x) through (xiii) below, be considered and taken
into account in determining whether there has been a Green Material
Adverse Effect);
(x)
the failure of Green or its Subsidiaries to meet any internal or published
projections, forecasts or revenues predictions (except that the underlying
cause of any such failure may, to the extent not otherwise excluded by
clauses (i) through (ix) above or (xi) through (xiii) below, be considered
and taken into account in determining whether there has been a Green
Material Adverse Effect);
(xi)
the entry into, pendency of, actions contemplated by, or the performance
of obligations required by this Agreement or consented to by Blue,
including any loss or threatened loss of, or adverse change or threatened
adverse change in, the relationship of Green or any of its Subsidiaries with
its customers, employees, regulators, financing sources, labor unions or
suppliers; provided, however, that the exceptions in this clause (xi) shall
not apply to Green’s representations and warranties in Section 4.2, Section
4.10(e), Section 4.11 or Section 5.10, or, to the extent related to breaches
of Section 4.2, Section 4.10(e), Section 4.11 or Section 5.10, Section
8.3(a);
(xii)
any written proposal or commitment made by Green or its Affiliates, or by
Blue or its Affiliates, to any Governmental Authority or imposed by any
Governmental Authority, in each case, in accordance with this Agreement
and in order to obtain the Blue Required Statutory Approval or Green
Required Statutory Approval; or
(xiii) the failure of Green or its Subsidiaries to meet any internal or published
projections, forecasts or revenues predictions (except that the underlying
cause of any such failure may, to the extent not otherwise excluded by
clauses (i) through (xii) above, be considered and taken into account in
determining whether there has been a Green Material Adverse Effect).
“Green Parent” means Iberdrola, S.A.
“Green Parties” means, collectively, Green, its Subsidiaries and its Joint Ventures, and
each of them individually is a “Green Party”.
“Hazardous Materials” means (a) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, and polychlorinated biphenyls and (b) any chemical, material, substance or waste that
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is prohibited, limited or regulated by any Governmental Authority in relation to the protection of
human health and the environment.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
“IFRS” means International Financial Reporting Standards promulgated by the
International Accounting Standards Board consistently applied through the periods involved.
“Indebtedness” means, without duplication, all indebtedness, determined in accordance
with GAAP, including (i) borrowed money (other than intercompany indebtedness), whether
current or funded, secured or unsecured, and all obligations evidenced by bonds, debentures,
notes or similar instruments, (ii) capital lease obligations, (iii) obligations evidenced by letters of
credit, bankers’ acceptances or similar facilities to the extent drawn upon by the counterparty
thereto, (iv) all obligations for the deferred purchase price of property or services (including all
earn-outs, conditional sale agreements or other title retention agreements with respect to
property), other than trade payables and receivables in the ordinary course of business consistent
with customary trade practices, (v) all indebtedness secured by a purchase money mortgage or
other Liens to secure all or part of the purchase price of property subject to such mortgage or
Lien, (vi) all obligations pursuant to or evidenced by hedging agreements or interest rate or
currency obligations, including swaps, hedges or similar arrangements, and (vii) any guarantee
(whether or not secured by Liens) of or other assumption of liability for, or grant of an
encumbrance or provision of collateral to secure, any of the foregoing.
“Intellectual Property” means all of the following whether arising under the Laws of the
United States or of any other jurisdiction: (a) patents, patent applications (including patents
issued thereon) and statutory invention registrations, including reissues, divisions, continuations,
continuations in part, extensions and reexaminations thereof, and all rights therein provided by
international treaties or conventions, (b) Trademarks, (c) copyrights (including copyrights in
computer programs, software, computer code, documentation, drawings, specifications and data),
moral rights, mask work rights, in each case, whether or not registered, and registrations and
applications for registration thereof, and all rights therein provided by international treaties or
conventions, (d) confidential and trade secret information, including confidential information
regarding inventions, processes, formulae, models, methodologies, proprietary rights,
technology, improvements, know-how, technical and business information, (e) all other
intellectual and industrial property rights, whether or not subject to statutory registration or
protection, and (f) the right to sue and collect damages for any past infringement of any of the
foregoing.
“Joint Venture” of a Person shall mean any Person that is not a Subsidiary of such first
Person, in which such first Person or one or more of its Subsidiaries owns directly or indirectly
any Equity Securities, other than Equity Securities held for passive investment purposes that are
less than 5% of each class of the outstanding voting securities or voting capital stock of such
second Person.
“Knowledge” means (i) with respect to Blue, as to any matter in question, the actual
knowledge of any of the individuals listed on Section 1.1(a) of Blue Disclosure Schedule, and
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(ii) with respect to Green, as to any matter in question, the actual knowledge of any of the
individuals listed on Section 1.1(a) of Green Disclosure Schedule.
“Laws” means all applicable laws (including common law), statutes, treaties, codes,
ordinances, decrees, rules, regulations, directives or other legal requirements issued, enacted,
adopted, promulgated or implemented by any Governmental Authority, binding or affecting the
Person referred to in the context in which such word is used; and “Law” means any one of them.
“Liability” means any liability, cost, expense, debt or obligation of any kind, character, or
description, and whether known or unknown, accrued, matured, absolute, determined,
determinable, contingent or otherwise, and regardless of when asserted or by whom.
“Lien” means any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, option, right of first or last offer, preemptive right or other restriction of similar
nature (including any restriction on the transfer of any security or other asset, any restriction on
the possession, exercise or transfer of any other attribute of ownership of any asset).
“Material Adverse Effect” means a Blue Material Adverse Effect when used with respect
to a Blue Party and means a Green Material Adverse Effect when used with respect to a Green
Party.
“Materials of Environmental Concern” means any chemicals, materials, greenhouse
gases, substances, pollutants, contaminants or items in any form, whether solid, liquid, gaseous,
semisolid, or any combination thereof, whether waste materials, raw materials, chemicals,
finished products, by-products, or any other materials or articles, which are regulated under
Environmental Laws, or which are listed, defined or otherwise designated as hazardous, toxic,
dangerous, infectious or radioactive under Environmental Laws, including explosive substances,
asbestos or asbestos-containing material, polychlorinated biphenyls, benzene, butadiene, radon
gas, urea formaldehyde foam insulation, infectious or medical wastes, lead-containing paints or
coatings, and any petroleum, petroleum hydrocarbons, crude oil petroleum derivatives,
petroleum products, or by-products of petroleum refining.
“NYSE” means the New York Stock Exchange.
“Permitted Liens” means any of the following: (i) Liens for Taxes, assessments,
governmental charges and utility charges or levies either not yet due or payable or which are
being contested in good faith by appropriate proceedings and for which appropriate reserves
have been established in accordance with GAAP, (ii) vendors’, mechanics’, carriers’,
workmen’s, warehouseman’s, repairmen’s, materialmen’s, construction or similar Liens arising
or incurred in the ordinary course of business relating to obligations which are not overdue for a
period of more than 90 days or that are being contested in good faith and by appropriate
proceedings, (iii) pledges, deposits or other Liens securing the performance of bids, trade
contracts, leases or statutory obligations (including workers’ compensation, unemployment
insurance or other social security legislation), (iv) Liens the existence of which are specifically
disclosed in notes to consolidated financial statements, (v) all easements, covenants, permits,
servitudes, licenses and rights of way and other similar restrictions, zoning, entitlements,
exceptions, restrictions, imperfections of title and charges that would not, individually or in the
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aggregate, reasonably be expected to materially and adversely interfere with the present use of
the assets of the affected Person and its Subsidiaries, taken as a whole, (vi) minor survey
exceptions and matters as to real property of the affected Person and its Subsidiaries which
would be disclosed by an accurate survey of such real property and do not materially impair the
occupancy or current use of such real property, (vii) statutory Liens incurred or pledges, financial
assurances, bonds or deposits made in favor of a Governmental Authority to secure the
performance of obligations of the affected Person or any of its Subsidiaries under Environmental
Laws to which any assets of the affected Person or any such Subsidiaries are subject, (viii) Liens
arising under any lines of credit or other credit facilities or arrangements in effect on the date of
this Agreement (or any replacement facilities thereto permitted pursuant to this Agreement), (ix)
Liens described in Section 1.1(b) of the Disclosure Schedule and (x) with respect to the Material
Owned Real Property, any matters disclosed in true and complete title reports and title searches
made available by the applicable Party prior to the date of this Agreement.
“Person” means any individual, firm, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization, government or agency or
subdivision thereof or any other entity.
“Personal Information” means, in addition to any information defined or described by a
Person, any of its Subsidiaries or Joint Ventures as “personal information” in any privacy notice
or other public-facing statement by or on behalf of such Person, its Subsidiaries or Joint
Ventures, all information identifying an individual or regarding an identified or identifiable
individual (such as name, address, telephone number, email address, financial account number,
government-issued identifier, and any other data used or intended to be used to identify, contact
or precisely locate a person).
“Plan” means any employment, bonus, incentive compensation, deferred compensation,
long term incentive, pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health, medical, accident, disability, workmen’s
compensation or other insurance, retention, severance, separation, termination, change of control
or other benefit plan, agreement, practice, policy, program, scheme or arrangement of any kind,
whether written or oral, including any “employee benefit plan” within the meaning of Section
3(3) of ERISA.
“Post-Closing Laws” means any Law for which no notification, filing or registration,
consent, approval, declaration, Permit or authorization to, by or from any Governmental
Authority is necessary or required to be made prior to the Closing by Blue, Green or any of their
Affiliates in connection with the execution and delivery or the performance of this Agreement.
“Power Act” means the Federal Power Act, as amended, and including all regulations
promulgated thereunder.
“Privacy Rules and Policies” means any privacy policies and any other terms applicable
to the collection, retention, use, disclosure and distribution of Personal Information from
individuals, and any laws related to the collection, use, access to, transmission, disclosure,
alteration or handling of Personal Information.
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“Release” means any spill, effluent, emission, leaking, pumping, pouring, emptying,
escaping, dumping, injection, deposit, disposal, discharge, dispersal, leaching, abandoning,
adding, or migration into the environment.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Significant Subsidiary” shall have the meaning set forth in Rule 1.02(w) of Regulation
S-X promulgated pursuant to the Exchange Act.
“Subsidiary” means, with respect to any Person, any entity in which such Person owns,
directly or indirectly, capital stock or other interests representing more than 50% of the aggregate
equity interest in such entity.
“Tax Returns” means all returns, declarations, reports, statements and other documents
(including any information return, claim for refund, amended return or declaration of estimated
Taxes) filed or required to be filed with any Governmental Authority in respect of, any and all
Taxes, including any and all attachments, amendments and supplements thereto.
“Taxes” means all federal, state, local or foreign taxes, charges, fees, levies, imposts,
duties or other assessments of a similar nature, including income, gross receipts, sales, use, ad
valorem, value-added, business, transfer, registration, goods and services, environmental (under
Section 59A of the Code), accumulated earnings, personal holding company, excess profits,
franchise, profits, license, withholding, payroll, employment, unemployment, social security,
workers’ compensation, estimated, alternative minimum, add on minimum, intangible, escheat or
unclaimed property, capital stock, net worth, excise, severance, stamp, occupation, premium,
property, disability, Equity Securities or windfall profits taxes, customs duties or other taxes,
assessments and similar governmental charges of any kind whatsoever, together with any interest
and any penalties, additions to tax, fines or additional amounts imposed by any Governmental
Authority.
“Trade Secrets” means confidential business information, trade secrets and know-how,
including processes, schematics, business methods, formulae, drawings, prototypes, models,
designs, unpatentable discoveries and inventions.
“Trademarks” means trademarks, service marks, trade names, service names, trade dress,
logos and other identifiers of source, including all goodwill associated therewith, and any and all
common law rights, and registrations and applications for registration thereof, all rights therein
provided by international treaties or conventions, and all renewals of any of the foregoing and
Internet domain names.
“Transactions” means the transactions contemplated by this Agreement (including the
Merger).
The terms listed below are defined in the Sections set forth opposite each such defined term.
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2005 Act .......................................................................................................................... Section 1.1
Acceptable Confidentiality Agreement........................................................................... Section 1.1
Acquisition Proposal ................................................................................................ Section 6.1(j)(i)
Act ................................................................................................................................... Section 1.1
Adverse Recommendation Change ............................................................................. Section 6.1(c)
Affiliate ........................................................................................................................... Section 1.1
Agreement .......................................................................................................................... Preamble
Anti-Corruption Laws ..................................................................................................... Section 1.1
Average Blue Stock Price ............................................................................................... Section 1.1
Beneficial Ownership...................................................................................................... Section 1.1
Blue .................................................................................................................................... Preamble
Blue 2014 Draft Form 10-K .............................................................................................. Article IV
Blue Board ........................................................................................................................... Recitals
Blue Common Stock ....................................................................................................... Section 1.1
Blue Contacts ............................................................................................................ Section 6.14(b)
Blue Deferred Compensation Plans ................................................................................ Section 1.1
Blue Disclosure Schedule ................................................................................................. Article IV
Blue Employee Benefit Plans ......................................................................................... Section 1.1
Blue Equity Right ....................................................................................................... Section 2.4(b)
Blue ESPP ................................................................................................................... Section 2.4(d)
Blue Financial Statements........................................................................................... Section 5.4(c)
Blue Material Adverse Effect ......................................................................................... Section 1.1
Blue Material Contract .............................................................................................. Section 4.15(a)
Blue Parties ..................................................................................................................... Section 1.1
Blue Party........................................................................................................................ Section 1.1
Blue Performance Award ............................................................................................ Section 2.4(c)
Blue Required Statutory Approvals ................................................................................ Section 5.3
Blue Restricted Shares ................................................................................................ Section 2.4(a)
Blue SEC Reports ....................................................................................................... Section 5.4(a)
Blue Stock Awards ..................................................................................................... Section 2.4(b)
Blue Stock Plans ............................................................................................................. Section 1.1
Blue Voting Debt ........................................................................................................ Section 5.1(f)
Board Recommendation.............................................................................................. Section 6.1(c)
Book Entry Shares ................................................................................................ Section 2.3(b)(iii)
Broker Agreements ....................................................................................................... Section 4.16
Burdensome Effect...................................................................................................... Section 6.9(b)
Business Day ................................................................................................................... Section 1.1
Cash Consideration ................................................................................................ Section 2.3(a)(ii)
Certificate of Merger................................................................................................... Section 2.1(b)
Certificates ............................................................................................................ Section 2.3(b)(iii)
CFIUS ............................................................................................................................. Section 5.3
Change ............................................................................................................................ Section 1.1
Charter Documents ......................................................................................................... Section 1.1
Closing ............................................................................................................................ Section 3.1
Closing Date.................................................................................................................... Section 3.1
Code ................................................................................................................................ Section 1.1
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Confidentiality Agreement.............................................................................................. Section 1.1
Continuing Employee ................................................................................................. Section 6.6(a)
Contract ........................................................................................................................... Section 1.1
Controlled Group Liability ............................................................................................. Section 1.1
D&O Insurance ......................................................................................................... Section 6.13(b)
Derivative Product .......................................................................................................... Section 1.1
Disclosure Schedule ........................................................................................................ Section 1.1
Easement ................................................................................................................... Section 4.17(c)
Effective Time ............................................................................................................ Section 2.1(b)
Employee Benefit Plans .................................................................................................. Section 1.1
Environmental Claim ...................................................................................................... Section 1.1
Environmental Laws ....................................................................................................... Section 1.1
Environmental Permits.................................................................................................... Section 1.1
Equity Exchange Factor .............................................................................................. Section 2.4(a)
Equity Securities ............................................................................................................. Section 1.1
ERISA ............................................................................................................................. Section 1.1
ERISA Affiliate .............................................................................................................. Section 1.1
Exchange Act .................................................................................................................. Section 1.1
Exchange Agent ...................................................................................................... Section 2.3(b)(i)
Exchange Fund....................................................................................................... Section 2.3(b)(ii)
Exon-Florio ..................................................................................................................... Section 5.3
Expenses ....................................................................................................................... Section 10.2
FERC............................................................................................................................... Section 1.1
Final Order ...................................................................................................................... Section 1.1
Form S-4 ..................................................................................................................... Section 6.3(a)
GAAP.............................................................................................................................. Section 1.1
Government Official ....................................................................................................... Section 1.1
Governmental Authority ................................................................................................. Section 1.1
Green .................................................................................................................................. Preamble
Green Business Combination .......................................................................................... Section 6.2
Green Common Stock ..................................................................................................... Section 1.1
Green Companies ................................................................................................................. Recitals
Green Contacts .......................................................................................................... Section 6.14(b)
Green Disclosure Schedule ............................................................................................... Article IV
Green Employee Benefit Plans ....................................................................................... Section 1.1
Green Equity Right ..................................................................................................... Section 2.4(b)
Green Financial Statements ...................................................................................... Section 5.11(e)
Green Group......................................................................................................................... Recitals
Green IFRS Financial Statements ............................................................................. Section 5.11(a)
Green Material Adverse Effect ....................................................................................... Section 1.1
Green Material Contract ........................................................................................... Section 4.15(a)
Green Networks ................................................................................................................... Recitals
Green Networks Financial Statements ...................................................................... Section 5.11(e)
Green Parent.................................................................................................................... Section 1.1
Green Parties ................................................................................................................... Section 1.1
Green Party ..................................................................................................................... Section 1.1
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Green Reconciliation Financial Statements .............................................................. Section 5.11(c)
Green Renewables ............................................................................................................... Recitals
Green Renewables Contracts ........................................................................................ Section 5.17
Green Required Statutory Approvals ............................................................................ Section 5.10
Green Voting Debt ...................................................................................................... Section 5.8(c)
Hazardous Materials ....................................................................................................... Section 1.1
HSR Act .......................................................................................................................... Section 1.1
IFRS ................................................................................................................................ Section 1.1
Indebtedness .................................................................................................................... Section 1.1
Indemnified Parties ................................................................................................... Section 6.13(a)
Intellectual Property ........................................................................................................ Section 1.1
Joint Venture ................................................................................................................... Section 1.1
Knowledge ...................................................................................................................... Section 1.1
Law ................................................................................................................................. Section 1.1
Laws ................................................................................................................................ Section 1.1
Liability ........................................................................................................................... Section 1.1
Lien ................................................................................................................................. Section 1.1
Mark-to-Market Value .............................................................................................. Section 4.14(c)
Material Adverse Effect .................................................................................................. Section 1.1
Material Easement Real Property ............................................................................. Section 4.17(a)
Material Leased Real Property.................................................................................. Section 4.17(a)
Material Owned Real Property ................................................................................. Section 4.17(a)
Material Real Property .............................................................................................. Section 4.17(a)
Materials of Environmental Concern .............................................................................. Section 1.1
Merger .................................................................................................................................. Recitals
Merger Consideration ............................................................................................ Section 2.3(a)(ii)
Merger Sub......................................................................................................................... Preamble
NYSE .............................................................................................................................. Section 1.1
Options ........................................................................................................................ Section 5.1(c)
Outside Date................................................................................................................ Section 9.1(c)
Parties................................................................................................................................. Preamble
Party ................................................................................................................................... Preamble
Permits ............................................................................................................................ Section 4.8
Permitted Liens ............................................................................................................... Section 1.1
Person.............................................................................................................................. Section 1.1
Personal Information ....................................................................................................... Section 1.1
Plan ................................................................................................................................. Section 1.1
Post-Closing Laws .......................................................................................................... Section 1.1
Power Act........................................................................................................................ Section 1.1
Privacy Rules and Policies .............................................................................................. Section 1.1
Proxy Statement .......................................................................................................... Section 6.3(a)
Real Property Lease ............................................................................................ Section 6.4(b)(xiv)
Release ............................................................................................................................ Section 1.1
Representatives ........................................................................................................... Section 6.1(a)
Representing Party ............................................................................................................ Article IV
Representing Party Material Contract ....................................................................... Section 4.15(a)
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Representing Party Personnel ................................................................................... Section 4.10(e)
Restraints..................................................................................................................... Section 8.1(b)
Risk Management Guidelines ................................................................................... Section 4.14(a)
SEC ................................................................................................................................. Section 1.1
Securities Act .................................................................................................................. Section 1.1
Shared Services Agreement ...................................................................................... Section 6.17(e)
Shareholder Approval ..................................................................................................... Section 5.5
Shareholder Meeting ................................................................................................... Section 6.3(a)
Significant Subsidiary ..................................................................................................... Section 1.1
SOX............................................................................................................................. Section 5.4(a)
Stock Consideration ............................................................................................... Section 2.3(a)(ii)
Subsidiary ....................................................................................................................... Section 1.1
Superior Proposal .................................................................................................... Section 6.1(j)(ii)
Surviving Corporation ................................................................................................ Section 2.1(a)
Takeover Notice Period .............................................................................................. Section 6.1(d)
Tax Returns ..................................................................................................................... Section 1.1
Taxes ............................................................................................................................... Section 1.1
Termination Fee .................................................................................................... Section 10.1(d)(i)
Trade Secrets ................................................................................................................... Section 1.1
Trademarks ..................................................................................................................... Section 1.1
Transaction Litigation ................................................................................................... Section 6.15
Transactions .................................................................................................................... Section 1.1
Transition Committee ............................................................................................... Section 6.14(b)
Section 1.2
Certain Interpretations.
(a)
Unless otherwise indicated, all references herein to Articles, Sections,
Annexes, Exhibits or Schedules shall be deemed to refer to Articles, Sections, Annexes,
Exhibits or Schedules of or to this Agreement, as applicable.
(b)
The words “hereof,” “herein,” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(c)
The terms defined in the singular have a comparable meaning when used
in the plural, and vice versa.
(d)
References herein to any gender include the other gender.
(e)
Unless otherwise indicated, the words “include,” “includes” and
“including,” when used herein, shall be deemed in each case to be followed by the words
“without limitation”.
(f)
The table of contents and headings set forth in this Agreement are for
convenience of reference purposes only and shall not affect or be deemed to affect in any way
the meaning or interpretation of this Agreement or any term or provision hereof.
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(g)
Unless otherwise indicated, all references herein to the Subsidiaries of a
Person shall be deemed to include all direct and indirect Subsidiaries of such Person unless
otherwise indicated or the context otherwise requires.
(h)
Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.
(i)
References to “$” and “dollars” are to the currency of the United States of
America.
(j)
Any dollar or percentage thresholds set forth herein shall not be used as a
benchmark for the determination of what is or is not “material”, a “Blue Material Adverse
Effect” or a “Green Material Adverse Effect” under this Agreement.
(k)
phrase “and/or”.
The term “or” is not exclusive and has the meaning represented by the
(l)
When used herein, the word “extent” and the phrase “to the extent” shall
mean the degree to which a subject or other thing extends, and such word or phrase shall not
simply mean “if”.
(m)
When used herein, the phrase “made available” shall mean provided by
Blue or Green, as applicable, (i) via e-mail to the other Party or its Representatives, (ii) in a
virtual dataroom established in connection with the Transactions or (iii) or at the offices of a
Party or its Affiliates, in each of clauses (i), (ii) and (iii), as of 4:00 p.m., Eastern Time, on
February 25, 2015.
(n)
Each representation or warranty in Article IV or Article V made by a
Representing Party relating to a Joint Venture of such Representing Party that is neither operated
nor managed solely by such Representing Party or a Subsidiary of such Representing Party shall
be deemed made only to the Knowledge of such Representing Party.
(o)
The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the application of any Law,
holding or rule of construction providing that ambiguities in an agreement or other document
will be construed against the Party drafting such agreement or document.
(p)
The section headings and any table of contents contained in this
Agreement are for reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(q)
The language used in this Agreement shall be deemed to be the language
the Parties have chosen to express their mutual intent, and no rule of strict construction will be
applied against any Party.
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ARTICLE II
MERGER
Section 2.1
The Merger.
(a)
The Merger. Subject to the terms and conditions of this Agreement, which
shall constitute an agreement and plan of merger for all purposes of the Act, and in accordance
with the Act, at the Effective Time Blue shall merge with and into Merger Sub, and the separate
corporate existence of Blue shall thereupon cease. From and after the Effective Time and in
accordance with the Act, Merger Sub shall continue as the surviving corporation in the Merger
(the “Surviving Corporation”) and a wholly-owned subsidiary of Green.
(b)
Filing Certificate of Merger; Effective Time. Upon the terms and subject
to the conditions set forth in this Agreement, on the Closing Date, Blue, Green and Merger Sub
shall cause an appropriate certificate of merger (the “Certificate of Merger”), meeting the
requirements of Section 33-819 of the Act, to be properly executed and filed with the Secretary
of State of the State of Connecticut in accordance with such section and otherwise make all other
filings or recordings as required by the Act in connection with the Merger. The Merger shall
become effective upon the filing and acceptance of the Certificate of Merger (or at such later
date and time as Blue and Green shall agree and shall set forth in the Certificate of Merger) (the
“Effective Time”).
(c)
Effects. The Merger shall have the effects set forth in this Agreement and
Section 33-820 of the Act.
Section 2.2
Charter Documents; Directors and Officers of Surviving
Corporation.
(a)
Name of the Surviving Corporation.
Corporation shall be “UIL Holdings Corporation”.
The name of the Surviving
(b)
Certificate of Incorporation of the Surviving Corporation. The certificate
of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter amended as provided by
Law.
(c)
Bylaws of Surviving Corporation. The bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by Law, by the certificate of incorporation of the Surviving
Corporation, and by the bylaws of the Surviving Corporation.
(d)
Directors of Surviving Corporation. From and after the Effective Time,
the initial directors of the Surviving Corporation shall be the directors of Merger Sub
immediately prior to the Effective Time until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation, or removal in accordance with the
Surviving Corporation’s certificate of incorporation and bylaws.
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(e)
Officers of Surviving Corporation. From and after the Effective Time, the
officers of Blue immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, each such officer to serve in such capacity until his or her earlier death, resignation
or removal or until his or her successor is duly elected or appointed.
Section 2.3
Cancellation and Conversion of Stock.
(a)
Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any further action on the part of the holder of any Blue Common Stock, any Merger
Sub common stock or any Green Common Stock:
(i)
Cancellation of Blue Common Stock. Each issued share of Blue
Common Stock that is owned by Blue (as a treasury share or otherwise, other than
any shares owned on behalf of third parties) immediately prior to the Effective
Time shall automatically be canceled and shall cease to exist, and no
consideration shall be delivered or deliverable hereunder in connection with such
cancellation.
(ii)
Conversion of Remaining Blue Common Stock. Each issued and
outstanding share of Blue Common Stock (other than the issued shares of Blue
Common Stock referenced in Section 2.3(a)(i)) shall be converted into the right to
receive (x) one (1) validly issued share of Green Common Stock, credited as fully
paid, which, when issued, ranks pari passu in all respects with all of the shares of
Green Common Stock then in issue (the “Stock Consideration”) and (y) $10.50 in
cash (the “Cash Consideration” and, together with the Stock Consideration, the
“Merger Consideration”).
(iii) Conversion of Merger Sub Common Stock. Each issued and
outstanding share of common stock of Merger Sub shall be converted into one (1)
validly issued, fully paid and nonassessable share of common stock, of no par
value, of the Surviving Corporation.
(b)
Surrender and Exchange of Shares.
(i)
Following the date of this Agreement and in any event prior to the
Effective Time, Blue shall select a bank or trust company, reasonably acceptable
to Green (such approval not to be unreasonably withheld or delayed), to act as
exchange agent in connection with the Merger (together with any other bank or
trust company also so selected, the “Exchange Agent”) for the purpose of
delivering or causing to be delivered to each holder of Blue Common Stock the
shares of Green Common Stock and the Cash Consideration that such holder shall
become entitled to receive with respect to such holder’s shares of Blue Common
Stock pursuant to this Section 2.3. The Exchange Agent shall act as agent for
each holder of shares of Blue Common Stock in connection therewith.
(ii)
Immediately prior to the filing of the Certificate of Merger as
contemplated by Section 2.1(b), at the direction of Green, there shall be deposited,
with the Exchange Agent, from time to time, that amount of immediately
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available cash (such cash hereinafter referred to as the “Exchange Fund”) and
number of shares of Green Common Stock as are deliverable pursuant to Section
2.3(a), and which, unless Green shall otherwise determine, shall be deposited with
the Exchange Agent through the facilities of The Depository Trust Company.
The Exchange Agent shall invest the Exchange Fund as directed by Green;
provided that such investments shall be in obligations of or guaranteed by the
United States of America. Any interest and other income resulting from such
investment shall become a part of the Exchange Fund, and any amounts in excess
of the amounts payable under Section 2.3(a)(ii) shall be promptly returned to the
Surviving Corporation. To the extent that there are any losses with respect to any
such investments, or the Exchange Fund diminishes for any reason below the
level required for the Exchange Agent to make prompt cash payment under
Section 2.3(a)(ii), Green shall promptly replace or restore the cash in the
Exchange Fund so as to ensure that the Exchange Fund is at all times maintained
at a level sufficient for the Exchange Agent to make such payments under Section
2.3(a)(ii).
(iii) Promptly after the Effective Time (and in any event within three
(3) business days thereafter), the Surviving Corporation shall cause to be mailed
by the Exchange Agent to each record holder, immediately prior to the Effective
Time, of shares of Blue Common Stock that are represented by book entry (“Book
Entry Shares”) or represented by certificates (“Certificates”), a form of letter of
transmittal in customary form (as Green shall reasonably specify after
consultation with Blue), which shall specify that delivery shall be effected, and
risk of loss and title to Book Entry Shares or Certificates held by such holder
representing such shares of Blue Common Stock shall pass, only upon actual and
proper delivery of Book Entry Shares or Certificates (or satisfaction of the
replacement requirements in lieu of the Certificates, as provided in Section
2.3(b)(viii)) to the Exchange Agent.
(iv)
Each holder of shares of Blue Common Stock that are represented
by Book Entry Shares or Certificates shall be entitled to receive in exchange for
such holder’s shares of Blue Common Stock that are represented by Book Entry
Shares or Certificates (or satisfaction of the replacement requirements in lieu of a
Certificate, as provided in Section 2.3(b)(viii)), upon surrender to the Exchange
Agent of a Book Entry Share or Certificate, together with a letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may reasonably be required pursuant to such
instructions, the number of shares of Green Common Stock (which shall be in
uncertificated book-entry form unless a physical certificate is requested) and the
Cash Consideration deliverable in respect of such holder’s shares of Blue
Common Stock represented by such holder’s properly surrendered Book Entry
Shares or Certificates (or satisfaction of the replacement requirements in lieu of
the Certificates, as provided in Section 2.3(b)(viii)) in accordance with Section
2.3(a), and Book Entry Shares or Certificates so surrendered shall forthwith be
canceled, and Green’s register of members shall be updated accordingly.
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(v)
If delivery of shares of Green Common Stock and the Cash
Consideration in respect of shares of Blue Common Stock represented by a Book
Entry Share or Certificate is directed by the person in whose name the
surrendered Book Entry Share or Certificate is registered to be made to a person
other than the person in whose name the surrendered Book Entry Share or
Certificate is registered, it shall be a condition of delivery that the Book Entry
Share or Certificate so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such payment
or delivery shall have paid to the Exchange Agent any transfer and other Taxes
required by reason of the delivery of the shares of Green Common Stock and the
Cash Consideration to a person other than the registered holder of the Book Entry
Share or Certificate surrendered or shall have established to the satisfaction of the
Exchange Agent that such Tax either has been paid or is not applicable. Until so
surrendered, each Book Entry Share and Certificate shall, after the Effective
Time, represent for all purposes only the right to receive upon such surrender the
applicable shares of Green Common Stock and the Cash Consideration, but shall
not entitle its holder or any other person to any rights as a stockholder of Green or
shareholder of Blue.
(vi)
At the Effective Time, the stock transfer books of Blue shall be
closed and thereafter there shall be no further registration of transfers of shares of
Blue Common Stock that were outstanding prior to the Effective Time. After the
Effective Time, Book Entry Shares and Certificates presented to the Surviving
Corporation for transfer shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in this Section 2.3.
The shares of Green Common Stock issued upon the surrender for exchange of
Book Entry Shares and Certificates and the payment of the Cash Consideration in
accordance with the terms of this Article II shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to the shares of Blue Common
Stock formerly represented by such Book Entry Shares and Certificates.
(vii) No dividends or other distributions with respect to Green Common
Stock deliverable with respect to the shares of Blue Common Stock shall be paid
to the holder of any unsurrendered Book Entry Shares or Certificates until after
those Book Entry Shares or Certificates are surrendered as provided in this
Section 2.3. After surrender, there shall be delivered and/or paid to the holder of
the Green Common Stock delivered in exchange therefor, without interest, (i) (A)
at the time of surrender, the dividends or other distributions payable with respect
to those shares of Green Common Stock with a record date on or after the date of
the Effective Time and a payment date on or prior to the date of this surrender and
not previously paid, and (B) at the appropriate payment date, the dividends or
other distributions payable with respect to those shares of Green Common Stock
with a record date on or after the date of the Effective Time but with a payment
date subsequent to surrender and (ii) at the time of payment and delivery of such
shares of Green Common Stock by the Exchange Agent pursuant to Section
2.3(b)(v), all dividends or other distributions with a record date prior to the
Effective Time, that have been declared by Blue with respect to the Blue
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Common Stock in accordance with Section 6.5(b)(iv) hereof in all respects as
well as with the other terms of this Agreement, but that have not been paid on
such Blue Common Stock.
(viii) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if requested by Green or the
Exchange Agent, the posting by the holder of a bond in customary form and
amount as indemnity against any claim that may be made with respect to the
Certificate and compliance with such other reasonable replacement requirements
established by the Exchange Agent, the Exchange Agent shall deliver in exchange
for the lost, stolen or destroyed Certificate the applicable shares of Green
Common Stock and the Cash Consideration deliverable in respect of the shares of
Blue Common Stock represented by the Certificate pursuant to this Section 2.3.
(ix)
Notwithstanding anything in this Agreement to the contrary, each
of Green, Merger Sub, Blue, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise payable
to any former holder of shares of Blue Common Stock or Blue Stock Awards
pursuant to this Agreement any amounts as may be required to be deducted and
withheld with respect to the making of this payment under the Code or under any
provision of any Tax Law. Blue, the Surviving Corporation and its Subsidiaries
shall cooperate with Green in coordinating the deduction and withholding of any
Taxes required to be deducted and withheld under applicable Tax Law, including
payroll Taxes relating to payments made in respect of Blue Stock Awards. To the
extent that amounts are so withheld and paid over to the appropriate
Governmental Authority, Green, Merger Sub, Blue, the Surviving Corporation or
the Exchange Agent, as the case may be, shall be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to this
Agreement to any former holder of shares of Blue Common Stock or Blue Stock
Awards, sold this consideration for an amount of cash equal to the fair market
value of the consideration at the time of the deemed sale and paid these cash
proceeds to the appropriate Governmental Authority.
(c)
No Appraisal Rights. There are no appraisal rights available to holders of
Blue Common Stock under the Act in connection with the Merger.
Section 2.4
Treatment of Stock Plans.
(a)
Each award of restricted Blue Common Stock granted under the Blue
Stock Plans that is outstanding and unvested or otherwise subject to forfeiture or other
restrictions as of immediately prior to the Effective Time (the “Blue Restricted Shares”), other
than those Blue Restricted Shares that vest by their terms upon the consummation of the Merger
(which, for the avoidance of doubt, at the Effective Time shall be converted into only the right to
receive the Merger Consideration), shall be converted into the right to receive the number of
validly-issued restricted shares of Green Common Stock equal to the product (rounded up to the
nearest whole number) of the number of such Blue Restricted Shares multiplied by the Equity
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Exchange Factor, provided, however, that any restricted shares of Green Common Stock
received in respect of such Blue Restricted Shares shall be subject to the same terms and
conditions (including vesting and forfeiture restrictions) as were applicable to the corresponding
Blue Restricted Shares immediately prior to the Effective Time. For the purposes of this
Agreement, the “Equity Exchange Factor” shall be the sum of one (1) plus a fraction, the
numerator of which is the Cash Consideration and the denominator of which is the Average Blue
Stock Price minus the Cash Consideration.
(b)
Each award of restricted stock units, performance shares, stock units,
phantom stock units or other similar rights or awards granted or deferred under a Blue Stock Plan
and relating to shares of Blue Common Stock (any such award, a “Blue Equity Right” and such
awards together with the Blue Restricted Shares, the “Blue Stock Awards”) that is outstanding
immediately prior to the Effective Time shall cease to relate to or represent a right to receive
shares of Blue Common Stock and shall be converted, at the Effective Time, into an award of
restricted stock units, performance shares, stock units, phantom stock units or other similar rights
or awards, as applicable, relating to shares of Green Common Stock (a “Green Equity Right”) of
the same type and on the same terms and conditions as were applicable to the corresponding
Blue Equity Right, except as adjusted hereby. The number of shares of Green Common Stock
covered by each such Green Equity Right shall be equal in number to the product (rounded up to
the nearest whole number) of the number of shares of Blue Common Stock subject to the
corresponding Blue Equity Right multiplied by the Equity Exchange Factor.
(c)
With respect to any Blue Stock Award that is, immediately prior to the
Effective Time, subject to any performance-based vesting or other performance conditions (a
“Blue Performance Award”), determination of performance shall be made pursuant to the terms
of such Blue Performance Award.
(d)
Blue shall take all actions necessary to provide that as of the Effective
Time, no participant in the Blue Holdings Corporation 2012 Non-Qualified Employee Stock
Purchase Plan (the “Blue ESPP”) will have any right under such plan to purchase or otherwise
acquire any shares of Blue Common Stock thereunder and that no further payroll deductions will
be made under the Blue ESPP. The Blue ESPP shall terminate as of the Effective Time.
(e)
Prior to the Effective Time, Blue shall take all necessary actions for the
adjustment of Blue Stock Awards under this Section 2.4 within its power and consistent with the
terms of the Blue Stock Awards; provided that such actions shall expressly be conditioned upon
the consummation of the Merger and shall be of no effect if this Agreement is terminated. Green
shall reserve for issuance a number of shares of Green Common Stock at least equal to the
number of shares of Green Common Stock that will be subject to Green Equity Rights as a result
of the actions contemplated by this Section 2.4.
Section 2.5 Directors of Green and Blue. As of the Closing, the board of
directors of Green shall consist of up to twelve (12) directors of which three (3) shall be directors
who were members of the Blue Board immediately prior to the Closing selected by Green and
the remainder shall be other directors selected by Green. As of the Closing, at least six (6)
directors of Green shall be independent of Green and Green Parent within the meaning of the
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rules of the NYSE. From and after the Closing, Green will comply with any applicable Law
with respect to the composition of its board of directors.
Section 2.6 Adjustments. Without limiting the effect of Section 6.4 and
Section 6.5, if, between the date of this Agreement and the Effective Time, the outstanding
shares of Green Common Stock (as contemplated to be adjusted by Section 6.17(c)) or Blue
Common Stock shall have been changed into a different number of shares or a different class, by
reason of any stock dividend or any subdivision, reclassification, split, combination,
consolidation or exchange of shares, or any similar event shall have occurred, then any number
or amount contained in this Agreement (including any exchange ratio) which is based upon the
number of shares of Green Common Stock or shares of Blue Common Stock, as the case may be,
will be appropriately adjusted to provide to Green Parent and the holders of Blue Common Stock
the same economic effect as contemplated by this Agreement prior to such event; provided,
however, that nothing in this Section 2.6 shall be construed to permit or authorize any Party to
take, or authorize, any action that is not otherwise authorized or permitted to undertake pursuant
to this Agreement.
ARTICLE III
CLOSING
Section 3.1 The Closing. The consummation of the Merger shall take place at
a closing (the “Closing”) to take place at 10:00 a.m. (Eastern Time) at the offices of Latham &
Watkins LLP, 885 Third Avenue, New York, NY 10022 on the second (2nd) Business Day after
the satisfaction of the last to be satisfied of the conditions set forth in Article VIII (other than
those conditions that, by their nature, are to be satisfied at the Closing, but subject to the
satisfaction (or waiver by the Party entitled to waive, if permitted by applicable Law) of those
conditions), or at such other location, date and time as Green and Blue shall mutually agree upon
in writing. The date upon which the Closing shall actually occur pursuant hereto is referred to
herein as the “Closing Date”.
ARTICLE IV
MUTUAL REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Except (i) in the case of any representation and warranty made by Blue, (x) as
disclosed in the schedule delivered by Blue to Green on the date of this Agreement (the “Blue
Disclosure Schedule”), or (y) as disclosed in any Blue SEC Report filed with or furnished to the
SEC by Blue between January 1, 2014 and the date hereof or as disclosed in the draft Form 10-K
for the fiscal year ended December 31, 2014 made available to Green on February 20, 2015 (the
“Blue 2014 Draft Form 10-K”) (other than in any “risk factor” disclosure or any other forward
looking statements set forth therein), and (ii) in the case of any representation or warranty made
by Green, as disclosed in the schedule delivered by Green to Blue on the date of this Agreement
(the “Green Disclosure Schedule”) (it being agreed that disclosure of any item in any section or
subsection of a Disclosure Schedule shall be deemed to be disclosure with respect to any other
section or subsection of such Disclosure Schedule to which the relevance of such item is
reasonably apparent on its face), Blue hereby represents and warrants to Green and Merger Sub,
and Green hereby represents and warrants to Blue (each of Blue and Green, in its capacity as the
Party making the representations and warranties, the “Representing Party”) as follows:
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Section 4.1 Organization and Qualification. The Representing Party is duly
organized, validly existing and in good standing under the Laws of the state of its organization
and has full power and authority to conduct its business as and to the extent now conducted and
to own, use and lease its assets and properties. The Representing Party is duly qualified, licensed
or admitted to do business and is in good standing (with respect to jurisdictions that recognize
the concept of “good standing”) in each jurisdiction in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such qualification, licensing
or admission necessary, except for such failures to be so qualified, licensed or admitted and in
good standing (with respect to jurisdictions that recognize the concept of “good standing”) that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Representing Party.
Section 4.2 No Conflicts; Approvals and Consents. The execution and
delivery of this Agreement by the Representing Party does not, and the performance by the
Representing Party of its obligations hereunder and the consummation of the Transactions will
not, conflict with, result in a violation or breach of, constitute (with or without notice or lapse of
time or both) a default under, result in or give to any Person any right of payment or
reimbursement, termination, revocation, cancellation, modification or acceleration of, or result in
the creation or imposition of any Lien upon any of the assets or properties of the Representing
Party or any of its Subsidiaries or Joint Ventures under, any of the terms, conditions or
provisions of (A) the respective Charter Documents of the Representing Party or any of its
Subsidiaries or Joint Ventures, or (B) subject to the taking of the actions described in Section 5.3
by Blue and the taking of the actions described in Section 5.10 by Green and, in the case of Blue,
the obtaining of the Shareholder Approval, (x) any Laws applicable to the Representing Party or
any of its Subsidiaries or Joint Ventures or any of their respective assets or properties, other than
any Post-Closing Laws, or (y) any Contract, Permit or other instrument to which the
Representing Party or any of its Subsidiaries or Joint Ventures is a party or by which the
Representing Party or any of its Subsidiaries or Joint Ventures or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and (y) such items that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Representing Party.
Section 4.3
Subsidiaries and Joint Ventures.
(a)
Section 4.3(a) of the Disclosure Schedule sets forth a list of all the
Representing Party’s Subsidiaries and Joint Ventures, including (i) the name of each such entity
and its form and jurisdiction of organization, (ii) a brief description of the principal line or lines
of business conducted by each such entity, and (iii) all Equity Securities held by any Person
(including the Representing Party) in each such entity. Except (1) as set forth on Section 4.3(a)
of the Disclosure Schedule or (2) for Equity Securities acquired after the date of this Agreement
without violating any covenant or agreement set forth herein, none of the Representing Party nor
any of its Subsidiaries or Joint Ventures directly or indirectly owns any Equity Securities in any
Person.
(b)
Each of the Representing Party’s Subsidiaries and Joint Ventures is a legal
entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of
its organization (to the extent the “good standing” concept is applicable). Each of the
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Representing Party’s Subsidiaries and Joint Ventures has the requisite power and authority to
carry on its respective business as it is presently being conducted and to own, lease or operate its
respective properties and assets. Each of the Representing Party and its Subsidiaries and Joint
Ventures is duly qualified to do business and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities make such qualification
necessary (to the extent the “good standing” concept is applicable), except where the failure to be
so qualified or in good standing, would not have, individually or in the aggregate, a Material
Adverse Effect with respect to the Representing Party.
(c)
The Charter Documents of the Representing Party’s Significant
Subsidiaries are in full force and effect, and the Representing Party’s Significant Subsidiaries are
in compliance with the provisions of their respective Charter Documents in all material respects.
(d)
All of the outstanding Equity Securities of the Representing Party’s
Significant Subsidiaries (and to the Knowledge of the Representing Party, its other Subsidiaries)
and Joint Ventures, (i) are duly authorized, validly issued and fully paid and nonassessable, and
(ii) are owned, directly or indirectly, by the Representing Party, free and clear of all Liens (other
than Permitted Liens).
(e)
There are no outstanding Contracts obligating the Representing Party or
any of its Subsidiaries to acquire Equity Securities of any Person. Neither the Representing
Party nor any of its Subsidiaries is a party to any Contract that obligates the Representing Party
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Equity Securities
of the Representing Party or any of its Subsidiaries or Joint Ventures.
Section 4.4 Absence of Certain Changes or Events. Since December 31,
2014 through the date hereof, each of the Representing Party and its Subsidiaries has conducted
its respective businesses in the ordinary course of business in a manner consistent with past
practice and there has not been any change, event or development that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse Effect with
respect to the Representing Party. Since December 31, 2014 through and including the date of
this Agreement, no action has been taken with respect to the Representing Party or any of its
Subsidiaries which, if taken after the date of this Agreement and prior to the Closing would, in
respect of Blue, constitute a violation of Section 6.5(b)(i)-(vii), (xi) or (xv) or, in respect of
Green, constitute a violation of Section 6.4(b)(i)-(vi), (ix), (xiii) or (xvii).
Section 4.5 No Undisclosed Liabilities. Neither the Representing Party nor
any of its Subsidiaries has any Liabilities, other than (a) Liabilities reflected or otherwise
reserved against in the Blue Financial Statements (if the Representing Party is Blue) or Green
Financial Statements (if the Representing Party is Green), (b) Liabilities arising, permitted or
contemplated under this Agreement or incurred in connection with the Transactions, (c)
Liabilities incurred since September 30, 2014 in the ordinary course of business consistent with
past practice that have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect with respect to the Representing Party and (d)
Liabilities that have not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to the Representing Party.
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Section 4.6 Legal Proceedings. Except for Environmental Claims, which are
the subject of Section 4.12, as of the date of this Agreement, (i) there are no pending or, to the
Knowledge of the Representing Party, threatened, actions, suits, arbitrations or proceedings by or
before any Governmental Authority relating to or affecting the Representing Party or any of its
Subsidiaries or Joint Ventures or any of their respective assets and properties, nor to the
Knowledge of the Representing Party are there any Governmental Authority investigations,
inquiries or audits pending or threatened against, relating to or affecting, the Representing Party
or any of its Subsidiaries or Joint Ventures or any of their respective assets and properties, that,
in each case, individually or in the aggregate, have had or would reasonably be expected to have
a Material Adverse Effect with respect to the Representing Party, and (ii) none of the
Representing Party nor any of its Subsidiaries or Joint Ventures or any of their respective assets
is subject to any order of any Governmental Authority that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect with respect to the
Representing Party.
Section 4.7 Information Supplied. None of the information supplied or to be
supplied by the Representing Party for inclusion or incorporation by reference in the Proxy
Statement or the Form S-4 will, at the date it is first mailed to Blue’s shareholders or on any
other date of filing with the SEC, or at the time of the Shareholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
are made, not misleading; provided, however, that with respect to projected financial
information, if any, provided by or on behalf of the Representing Party, the Representing Party
represents only that such information was prepared in good faith by management of the
Representing Party on the basis of assumptions believed by such management to be reasonable
as of the time made.
Section 4.8 Permits; Compliance with Laws and Orders. The Representing
Party, together with its Subsidiaries and Joint Ventures, holds all permits, licenses, certificates,
notices, franchises, authorizations, approvals and similar consents from Governmental
Authorities (“Permits”) necessary or required for the lawful conduct of their respective
businesses, except for failures to hold such Permits that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Material Adverse Effect with respect to
the Representing Party. The Representing Party and its Subsidiaries and Joint Ventures are, and
since January 1, 2012 have been, in compliance with the terms of their Permits, except failures
so to comply that, individually or in the aggregate, have not had, and would not reasonably be
expected to have a Material Adverse Effect with respect to the Representing Party. The
Representing Party and its Subsidiaries and Joint Ventures are not, and since January 1, 2012
have not been, in violation of or default under any Law or order of any Governmental Authority,
except for such violations or defaults that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect with respect to the
Representing Party. The above provisions of this Section 4.8 do not relate to matters with
respect to Environmental Permits and Environmental Laws, such matters being the subject of
Section 4.12.
Section 4.9
Taxes.
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(a)
Each of the Representing Party and its Subsidiaries has timely filed, or has
caused to be timely filed on its behalf, all income and other material Tax Returns required to be
filed by it, and all such Tax Returns are true, complete and accurate. To the Knowledge of the
Representing Party, all material Taxes due and owing by the Representing Party and its
Subsidiaries (whether or not shown on any Tax Return) have been timely paid.
(b)
The most recent financial statements contained in the Blue SEC Reports
filed prior to the date of this Agreement reflect, in accordance with GAAP, an adequate reserve
for all Taxes payable by Blue and its Subsidiaries for all taxable periods through the date of such
financial statements, and since such date, neither Blue nor any of its Subsidiaries has incurred
any material liability for Taxes outside the ordinary course of business.
(c)
There is no audit, examination, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any income or other material Taxes or
income or other material Tax Return of the Representing Party or its Subsidiaries, and, to the
Knowledge of the Representing Party, neither the Representing Party nor any of its Subsidiaries
has received in the last two (2) years written notice of any claim made by a Governmental
Authority in a jurisdiction where the Representing Party or any of its Subsidiaries, as applicable,
does not file a Tax Return, that the Representing Party or such Subsidiary is or may be subject to
taxation by that jurisdiction. No deficiency with respect to any Taxes has been proposed,
asserted or assessed against the Representing Party or any of its Subsidiaries, and no requests for
waivers of the time to assess any Taxes are pending.
(d)
There are no outstanding written agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any income or other
material Taxes or deficiencies against the Representing Party or any of its Subsidiaries, and no
power of attorney granted by either the Representing Party or any of its Subsidiaries with respect
to any income or other material Taxes is currently in force.
(e)
Neither the Representing Party nor any of its Subsidiaries is a party to any
agreement providing for the allocation, indemnification or sharing of Taxes imposed on or with
respect to any individual or other Person (other than (i) such agreements with customers,
vendors, lessors or the like entered into in the ordinary course of business, and (ii) agreements
with or among the Representing Party or any of its Subsidiaries), and neither the Representing
Party nor any of its Subsidiaries (1) has been a member of an affiliated group (or similar state,
local or foreign filing group) filing a consolidated U.S. federal income Tax Return (or similar
state, local or foreign Tax Return) other than the group the common parent of which is the
Representing Party or a Subsidiary of the Representing Party, or (2) has any liability for the
Taxes of any Person (other than the Representing Party or any of its Subsidiaries) (x) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), or
(y) as a transferee or successor, or otherwise.
(f)
There are no material Liens for Taxes (other than Permitted Liens) on the
assets of the Representing Party and its Subsidiaries.
(g)
Neither the Representing Party nor any of its Subsidiaries (i) has requested
or received any ruling related to Taxes from any Governmental Authority, or signed any binding
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agreement relating to Taxes with any Governmental Authority (including any advance pricing
agreement) that reasonably could be expected to have a material impact on the Tax liability of
the Representing Party or any of its Subsidiaries in a taxable period (or portion thereof) ending
after the Closing Date, or (ii) is currently the beneficiary of any Tax holiday or other Tax
reduction or incentive arrangement with any Governmental Authority that is material in nature.
(h)
Neither the Representing Party nor any of its Subsidiaries has been a
“controlled corporation” or a “distributing corporation” in any distribution that was purported or
intended to be governed by Section 355 of the Code (or any similar provision of state, local or
foreign Law) occurring during the two-year period ending on the date hereof.
(i)
Neither the Representing Party nor any of its Subsidiaries has engaged in
any “reportable transaction” within the meaning of Section 6011 of the Code and the Treasury
Regulations promulgated thereunder during any open Tax periods.
(j)
Neither the Representing Party nor any of its Subsidiaries will be required
to include any material items of income in, or exclude any material item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the Closing Date as a
result of any (i) adjustment under Section 481 of the Code (or any similar provision of Tax Law)
or any other change in method of accounting occurring prior to Closing, (ii) closing agreement
described in Section 7121 of the Code (or any similar provision of Tax Law) entered into prior to
Closing, (iii) installment sale or open transaction disposition occurring prior to Closing, (iv) use
of the cash basis method of accounting prior to Closing, (v) election under Section 108(i) of the
Code, or (vi) prepaid amount received prior to Closing.
(k)
Neither the Representing Party nor any of its Subsidiaries has taken or
agreed to take any action, and is not aware of any fact or circumstance, that would prevent or
impede, or could reasonably be expected to prevent or impede, the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code.
Section 4.10 Employee Benefit Plans; ERISA.
(a)
Section 4.10(a) of the Disclosure Schedule sets forth an accurate and
complete list of each material Employee Benefit Plan. Each of the Representing Party’s
Employee Benefit Plans has been established, operated and administered in accordance with its
terms and is in compliance with ERISA, the Code and all other applicable Laws and all
contributions required to be made under the terms of any of the Representing Party’s Employee
Benefit Plans have been timely made or, if not yet due, have been properly reflected in the Blue
Financial Statements (if the Representing Party is Blue) or the Green Financial Statements (if the
Representing Party is Green), except, in each case, for instances of non-compliance that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Representing Party. Except for matters that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Representing Party, there are no pending, threatened
or anticipated claims by or on behalf of any of the Representing Party’s Employee Benefit Plans,
by any employee or beneficiary covered thereunder or otherwise involving any of the
Representing Party’s Employee Benefit Plans (other than routine claims for benefits).
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(b)
With respect to each material Employee Benefit Plan, the Representing
Party has made available to the other Party, to the extent applicable, accurate and complete
copies of (1) the Employee Benefit Plan document, including any material amendments thereto,
and all related trust documents, material insurance contracts or other funding vehicles, (2) a
written description of such Employee Benefit Plan if such plan is not set forth in a written
document, (3) the most recently prepared actuarial report, and (4) all material correspondence to
or from any Governmental Authority received in the last three years with respect to any
Employee Benefit Plan.
(c)
Except for matters that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect with respect to the
Representing Party, (i) each of the Representing Party’s Employee Benefit Plans intended to be
“qualified” within the meaning of Section 401(a) of the Code is so qualified and each trust
maintained thereunder is exempt from taxation under Section 501(a) of the Code, and (ii) with
respect to any Employee Benefit Plan, neither the Representing Party nor any of its Subsidiaries
has engaged in a transaction in connection with which the Representing Party or any of its
Subsidiaries reasonably could be subject to either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.
(d)
No event has occurred, and there exists no condition or set of
circumstances in connection with any of the Representing Party’s Employee Benefit Plans, that
has had or would reasonably be expected to have a Material Adverse Effect with respect to the
Representing Party.
(e)
Except as set forth in Section 4.10(e) of the Disclosure Schedule, none of
the execution and delivery of this Agreement, the performance by either party of its obligations
hereunder or the consummation of the Merger and the other transactions contemplated by this
Agreement (either alone or in conjunction with any other event, including any termination of
employment on or following the Effective Time) will (i) entitle any current or former employee,
officer, director, consultant or other individual service provider of the Representing Party
(collectively with respect to such Representing Party, the “Representing Party Personnel”) to any
additional compensation or benefit, (ii) accelerate the time of payment or vesting, or trigger any
payment or funding, of any compensation or benefit or trigger any other obligation under any
Employee Benefit Plan of the Representing Party, (iii) result in any breach or violation of, or
default under, or limit the Representing Party’s right to amend, modify or terminate, any
Employee Benefit Plan, (iv) result in any forgiveness or extension of indebtedness under or with
respect to any Employee Benefit Plan of the Representing Party, or (v) result in an entitlement of
any Representing Party Personnel to severance pay, unemployment compensation or any other
payment or benefit.
(f)
Except as, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect with respect to the Representing Party,
as of the date this representation is made or deemed made, there has been no amendment to,
announcement relating to, or change in employee participation or coverage under, any Employee
Benefit Plan of the Representing Party which would increase the expense of maintaining such
plan above the level of the expense incurred therefor for the most recent fiscal year.
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(g)
No amount or benefit that could be, or has been, received (whether in cash
or property or the vesting of property or the cancellation of indebtedness) by any Representing
Party Personnel who is a “disqualified individual” within the meaning of Section 280G of the
Code could be characterized as an “excess parachute payment” (as defined in Section 280G(b)(1)
of the Code) as a result of the consummation of the transactions contemplated by this
Agreement.
(h)
No Employee Benefit Plan of the Representing Party provides for the
gross-up of any Taxes imposed by Section 4999 of the Code that could apply in connection with
the transactions contemplated by this Agreement.
Section 4.11 Labor Matters. As of the date of this Agreement, there are no
disputes, grievances or arbitrations pending or, to the Knowledge of the Representing Party,
threatened between any of the Representing Party or any of its Subsidiaries or Joint Ventures, on
the one hand, and any trade union or other representatives of its employees, on the other hand,
and there is no charge or complaint pending or threatened in writing against the Representing
Party or any of its Subsidiaries before the National Labor Relations Board or any similar
Governmental Authority, except in each case as, individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect with respect to the
Representing Party, and, to the Knowledge of the Representing Party, as of the date of this
Agreement, there are no material organizational efforts presently being made involving any of
the employees of any of the Representing Party or any of its Subsidiaries or Joint Ventures.
Neither the Representing Party nor any of its Subsidiaries is subject to any requirement
(contractual or otherwise) to provide employee representation on its board of directors or similar
governing body or the board of directors or similar governing body of the other Party following
the Closing. The announcement or consummation of the transactions contemplated by this
Agreement will not require the consent of, or advance notification to, any works councils, unions
or similar labor organizations with respect to any employees of the Representing Party or its
Subsidiaries. From December 31, 2010 to the date of this Agreement, there has been no work
stoppage, strike, slowdown or lockout by or affecting employees of the Representing Party or
any of its Subsidiaries or Joint Ventures except in each case as, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse Effect with
respect to the Representing Party, and as of the date of this Agreement, there is not ongoing any
material work stoppage, strike, slowdown or lockout by or affecting employees of the
Representing Party or any of its Subsidiaries and, to the Knowledge of the Representing Party,
no such action has been threatened. Except as, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect with respect to the
Representing Party: (i) there are no litigations, lawsuits, claims, charges, complaints, arbitrations,
actions, investigations or proceedings pending or, to the Knowledge of the Representing Party,
threatened between or involving the Representing Party or any of its Subsidiaries or Joint
Ventures and any of their respective current or former employees, independent contractors,
applicants for employment or classes of the foregoing, (ii) the Representing Party and its
Subsidiaries and Joint Ventures are in compliance with all applicable Laws, Contracts and
policies respecting employment and employment practices, including, without limitation, all
legal requirements respecting terms and conditions of employment, equal opportunity, workplace
health and safety, wages and hours, child labor, immigration, discrimination, disability rights or
benefits, facility closures and layoffs, workers’ compensation, labor relations, employee leaves
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and unemployment insurance, and (iii) since January 1, 2010, none of the Representing Party or
any of its Subsidiaries or Joint Ventures has engaged in any “plant closing” or “mass layoff,” as
defined in the Worker Adjustment Retraining and Notification Act or any comparable state or
local Law, without complying with the notice requirements of such Laws.
Section 4.12 Environmental Matters.
(a)
Each of the Representing Party, its Subsidiaries and Joint Ventures has
been and is in compliance with, and has no Liability arising under, all applicable Environmental
Laws, except where the failure to be in such compliance with or any such liability arising under
applicable Environmental Laws, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect with respect to the Representing Party.
(b)
Each of the Representing Party, its Subsidiaries and Joint Ventures has
obtained all Environmental Permits necessary for the conduct of their operations as of the date of
this Agreement, as applicable, and all such Environmental Permits are validly issued, in full
force and effect, and the Representing Party, its Subsidiaries and Joint Ventures are in
compliance with all terms and conditions of the Environmental Permits, except where the failure
to obtain or comply with such Environmental Permits, or to maintain such Permits in good
standing or, where applicable, to timely file a renewal application, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect
with respect to the Representing Party.
(c)
There is no Environmental Claim pending (i) against the Representing
Party, or any of its Subsidiaries or Joint Ventures, (ii) against any Person whose liability for such
Environmental Claim has been retained or assumed either contractually or by operation of law by
the Representing Party or any of its Subsidiaries or Joint Ventures, or (iii) against any real or
personal property or operations that the Representing Party or any of its Subsidiaries or Joint
Ventures owns, leases or manages, in whole or in part, or, to the Knowledge of the Representing
Party, formerly owned, leased or managed, in whole or in part, except in each case, for such
Environmental Claims that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect with respect to the Representing Party.
(d)
There have not been any Releases of any Hazardous Material that would
be reasonably likely to form the basis of any Environmental Claim against the Representing
Party or any of its Subsidiaries or Joint Ventures, in each case, except for such Releases that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Representing Party.
Section 4.13 Insurance. Except for failures to maintain insurance or selfinsurance that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect with respect to the Representing Party, each of the
Representing Party and its Subsidiaries has been continuously insured with financially
responsible insurers or has self-insured, in each case in such amounts and with respect to such
risks and losses as are customary for companies in the United States conducting the business
conducted by the Representing Party and its Subsidiaries. Neither the Representing Party nor
any of its Subsidiaries has received any notice of any pending or threatened (or is otherwise
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aware of any fact or occurrence that would trigger) cancellation, nonrenewal, termination or
premium increase with respect to any insurance policy of the Representing Party or any of its
Subsidiaries, and all such insurance policies are in full force and effect, except with respect to
any cancellation, termination, nonrenewal or premium increase that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect
with respect to the Representing Party. Neither the Representing Party nor any of its
Subsidiaries has been refused any insurance with respect to its respective business or assets.
Section 4.14 Energy Price Risk Management.
(a)
The Representing Party has established risk parameters, limits and
guidelines in compliance with the risk management policy (including commodity risk policies)
approved by the board of directors of the Representing Party (the Representing Party’s “Risk
Management Guidelines”) and monitors compliance by the Representing Party and its
Subsidiaries with such energy price risk parameters, limits and guidelines. The Representing
Party has made available its Risk Management Guidelines prior to the date of this Agreement.
(b)
The Representing Party is in compliance in all material respects with its
Risk Management Guidelines. As of the date of this Agreement, except for exceptions approved
in accordance with the Representing Party’s Risk Management Guidelines, the Representing
Party and its Subsidiaries are operating in compliance with the Representing Party’s Risk
Management Guidelines in all material respects and all Derivative Products of the Representing
Party or any of its Subsidiaries were entered into in accordance with the Risk Management
Guidelines.
(c)
Section 4.14(c) of the Disclosure Schedule sets forth the Mark-to-Market
Value determined as of the close of business on December 31, 2014, which calculation fairly
presents, in all material respects, the Mark-to-Market Value as of such date. As used in this
Agreement, the term “Mark-to-Market Value” means, as of any date, the aggregate net amount
of any non-cash loss or gain (to the extent the cash impact resulting from such loss or gain has
not been realized) attributable to the change since the time the underlying transactions were
entered into (with any payments made or received at such time being taken into account in
determining such loss or gain) in fair value as of such date of the Derivative Products of the
Representing Party and its Subsidiaries or other derivative instruments referred to in Financial
Accounting Standards Accounting Standards Codification No. 815—Derivatives and Hedging of
the Representing Party and its Subsidiaries (ASC No. 815), in the case of Blue, or IAS 39 –
Financial Instruments: Recognition and Measurement, in the case of Green.
Section 4.15 Material Contracts.
(a)
For purposes of this Agreement, the term “Representing Party Material
Contract” shall mean any Contract to which the Representing Party or any of its Subsidiaries or
Joint Ventures (and, in respect of clause (ii) below, if the Representing Party is Green, any
Affiliates of Green to the extent it purports to bind Green or its Subsidiaries or Joint Ventures) is
a party or bound by as of the date hereof (and if the Representing Party is Green, a “Green
Material Contract”, and if the Representing Party is Blue, a “Blue Material Contract”):
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(i)
that is a “material contract” (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii)
that (1) purports to limit in any material respect either the type of
business in which the Representing Party or any of its Subsidiaries or Joint
Ventures (including those Contracts of the Blue Parties that purport to so limit the
Green Parties after the Effective Time) or any of their respective Affiliates may
engage or the manner or geographic area in which any of them may so engage in
any business, (2) would require the disposition of any material assets or line of
business of the Representing Party or any of its Subsidiaries or Joint Ventures
(including those Contracts of the Blue Parties that so require the Green Parties
after the Effective Time) or any of their respective Affiliates as a result of the
consummation of the Transactions, (3) is a material Contract that grants “most
favored nation” status that, following the Effective Time, would impose
obligations upon the Green Parties (including the Blue Parties), (4) prohibits or
limits, in any material respect, the right of the Representing Party or any of its
Subsidiaries or Joint Ventures (including those Contracts of the Blue Parties that
so prohibit or limit any Green Party after the Effective Time) to make, sell or
distribute any products or services or use, transfer, license or enforce any of their
respective Intellectual Property rights, (5) relates to the development, ownership,
licensing or use of any Intellectual Property that is material to the operation of the
Representing Party or any of its Subsidiaries or Joint Ventures, (6) relates to the
operation and maintenance of the information technology systems of the
Representing Party or any of its Subsidiaries or Joint Ventures that are material to
their respective operation, (7) is with a Governmental Authority (other than
ordinary course Contracts with Governmental Authorities), (8) grants any right of
first refusal or right of first offer or similar right or that limits or purports to limit
the ability of any Representing Party or any of its Subsidiaries or Joint Ventures
(or, after the Effective Time, any Green Party) to own, operate, lease, provide or
receive services, or sell, transfer, pledge, or otherwise dispose of any material
amount of its assets or its business, or (9) is approved by FERC as a special or
nonconforming Contract or service agreement that deviates from standard tariffs;
(iii) that (1) has an aggregate principal amount, or provides for an
aggregate obligation, in excess of $10,000,000 over the life of the Contract (but
excluding Contracts for the procurement of gas or electricity the obligations under
which are subject to review by, if the Representing Party is Blue, the Connecticut
Public Utilities Regulatory Authority or the Massachusetts Department of Public
Utilities or, if the Representing Party is Green, the New York Public Service
Commission or the Maine Public Utilities Commission), (2) evidences
Indebtedness in excess of $10,000,000, (3) guarantees any Indebtedness of a third
party that is not, if the Representing Party is Blue, a Blue Party, or if the
Representing Party is Green, a Green Party or (4) contains a covenant restricting
the payment of dividends;
(iv)
that involves the acquisition from another Person or disposition to
another Person of any asset (including any entity or business) material to the
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Representing Party or any of its Subsidiaries or Joint Ventures, taken as a whole;
or
(v)
that is a lease or sublease of real or personal property requiring
payments by or to the Representing Party or any of its Subsidiaries in excess of
$250,000 during any fiscal year.
(b)
None of the Representing Party, its Subsidiaries or Joint Ventures is in
material breach of or material default under the terms of any of its Representing Party Material
Contracts and no event has occurred that (with or without notice or lapse of time or both) would
result in a material breach or default under any of its Representing Party Material Contracts. To
the Knowledge of the Representing Party, no other party to its Representing Party Material
Contracts is in material breach of or material default under the terms of any such Representing
Party Material Contracts. This Agreement and the Transactions (including the Merger) will not
trigger the right by any party to its Representing Party Material Contracts to terminate any such
Representing Party Material Contract. Each of its Representing Party Material Contracts is a
valid and binding obligation of the Representing Party, its Subsidiaries or Joint Ventures which
is party thereto and, to the Knowledge of the Representing Party, of each other party thereto, and
is in full force and effect and enforceable against the Representing Party, its Subsidiaries or Joint
Ventures in accordance with its terms, except that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in
effect, relating to creditors’ rights generally and to general equitable principles, and except for
such failures to be valid and binding, in full force and effect or enforceable that, individually or
in the aggregate, do not, and would not reasonably be expected to, materially adversely impair
the conduct of the business of the Representing Party and its Subsidiaries, taken as a whole, as
presently conducted or materially impair or materially delay the consummation of the
Transactions.
(c)
Other than any Contract filed as an exhibit to the Blue SEC Reports prior
to the date of this Agreement and other than this Agreement, each Representing Party has made
available to the other party a true, complete and correct copy of each contract that is a “material
contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to which the
Representing Party or any of its Subsidiaries or Joint Ventures is a party or bound by as of the
date hereof.
Section 4.16 Brokers. Except as disclosed in Section 4.16 of the Disclosure
Schedule (the “Broker Agreements”), none of the Representing Party or any of its Subsidiaries or
Joint Ventures nor any of their respective shareholders, members, directors, officers, employees
or affiliates, has incurred or will incur on behalf of any of them any brokerage, finders’,
advisory, commission or similar fee in connection with the Transactions.
Section 4.17 Real Property.
(a)
Except in any such case as is not, individually or in the aggregate,
reasonably likely to materially adversely impair the conduct of the business of the Representing
Party and its Subsidiaries, taken as a whole, as presently conducted, the Representing Party or a
Subsidiary of the Representing Party has (i) valid title to all material real property owned in fee
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by the Representing Party or its Subsidiaries (the “Material Owned Real Property”), (ii) valid
title to the leasehold estate (as lessee) in all material real property and interests in real property
leased or subleased by the Representing Party or its Subsidiaries as lessee or sublessee (the
“Material Leased Real Property”), and (iii) valid title to the material real property easements
owned by the Representing Party or its Subsidiaries (the “Material Easement Real Property” and,
together with the Material Owned Real Property and Material Leased Real Property, the
“Material Real Property”), in each case free and clear of all Liens, except Permitted Liens.
(b)
Neither the Representing Party nor any of its Subsidiaries is obligated
under, or a party to, any option, right of first refusal or other contractual right or obligation to
sell, assign or dispose of any Material Owned Real Property, Material Leased Real Property or
Material Easement Real Property (or any portion thereof) that, if such sale, assignment or
disposition is consummated, would reasonably be expected, individually or in the aggregate, to
materially adversely impair the conduct of the business of the Representing Party and its
Subsidiaries, taken as a whole, as presently conducted.
(c)
Except in any such case as is not, individually or in the aggregate,
reasonably likely to materially adversely impair the conduct of the business of the Representing
Party and its Subsidiaries, taken as a whole, as presently conducted or materially impair the
consummation of the transactions contemplated by this Agreement, (i) each easement or
subeasement for Material Easement Real Property (each, an “Easement”) is in full force and
effect and is the valid and binding obligation of the Representing Party or its Subsidiaries,
enforceable against the Representing Party or its Subsidiaries in accordance with its terms, and to
the Knowledge of the Representing Party, the other party or parties thereto, subject to the effect
of applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or
hereafter in effect, relating to creditors’ rights generally and to general equitable principles, (ii)
no notices of default under any Easement have been received by the Representing Party or its
Subsidiaries that have not been resolved and (iii) to the Knowledge of the Representing Party, no
event has occurred which, with notice, lapse of time or both, would constitute a breach or default
under any Easement by the Representing Party or its Subsidiaries.
(d)
With respect to the Material Real Property, neither the Representing Party
nor any of its Subsidiaries has received any written notice of, nor to the Knowledge of the
Representing Party does there exist as of the date of this Agreement, any pending, threatened or
contemplated condemnation (other than condemnations in connection with municipal road
improvement projects, state highway improvement projects or other public transportation
projects) or similar proceedings, or any sale or other disposition of any Material Real Property or
any part thereof in lieu of condemnation that, individually or in the aggregate, could reasonably
be expected to materially adversely impair the conduct of the business of the Representing Party
and its Subsidiaries, taken as a whole, as presently conducted or materially impair the
consummation of the transactions contemplated by this Agreement. Except in any such case as
is not, individually or in the aggregate, reasonably likely to materially adversely impair the
conduct of the business of the Representing Party and its Subsidiaries, taken as a whole, as
presently conducted, the Representing Party and its Subsidiaries have lawful rights of use and
access to all land and other real property rights, subject to Permitted Liens, necessary to conduct
their businesses as presently conducted.
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Section 4.18 Intellectual Property.
(a)
Except as to matters that, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect with respect to the Representing
Party: (i) the Representing Party and its Subsidiaries own all right, title and interest in and to the
Trademarks and either own all right, title and interest in, or have sufficient rights to use, all
Intellectual Property used in its business as presently, or currently contemplated to be,
conducted, (ii) to the Knowledge of the Representing Party, the conduct of the Representing
Party and its Subsidiaries does not and has not since January 1, 2012 (or earlier, if not currently
resolved) infringed or otherwise violated the Intellectual Property rights of any third party, (iii)
there is no litigation, opposition, cancellation, proceeding, objection or claim pending, asserted
in writing or, to the Representing Party’s Knowledge, threatened against the Representing Party
or its Subsidiaries concerning the ownership, validity, registrability, enforceability, infringement
or use of, or licensed right to use, any Intellectual Property used by the Representing Party or its
Subsidiaries, (iv) to the Representing Party’s Knowledge, no Person is violating any Intellectual
Property right that the Representing Party or its Subsidiaries hold exclusively, and (v) the
Representing Party and its Subsidiaries have taken commercially reasonable measures to protect
the confidentiality of all Trade Secrets that are owned, used or held by the Representing Party or
its Subsidiaries.
(b)
Except as to matters that, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect with respect to the Representing
Party, to the Knowledge of the Representing Party: (i) the Representing Party and its
Subsidiaries have implemented and maintain reasonable backup, security and disaster recovery
and business continuity technology, policies and plans that are consistent with industry practices;
(ii) the Representing Party and its Subsidiaries take such industry standard measures and other
measures as are required by applicable Law and the policies of the Representing Party and its
Subsidiaries to ensure the confidentiality of customer financial and other confidential
information and that protect against the loss, theft and unauthorized access or disclosure of such
information; (iii) the Representing Party and its Subsidiaries are in compliance with the
Representing Party’s and its Subsidiaries’ privacy policies; (iv) none of the Representing Party
or any of its Subsidiaries has received any written claims, notices or complaints regarding the
Representing Party’s or its Subsidiaries’ information handling or security practices or the
disclosure, retention, misuse or security of any Personal Information, or alleging a violation of
any Person’s privacy, personal or confidentiality rights under any Person’s Privacy Rules and
Policies, or otherwise by any Person, including the U.S. Federal Trade Commission, any similar
foreign bodies, or any other Governmental Authority and (v) the Representing Party’s and its
Subsidiaries’ computers, computer software, firmware, middleware, servers, workstations,
routers, hubs, switches, data communications lines, and all other information technology systems
operate and perform in all material respects in accordance with their documentation and
functional specifications and otherwise as required by the Representing Party or its Subsidiaries
in connection with its business as presently conducted, and have not materially malfunctioned or
failed since January 1, 2012, and there have been no unauthorized intrusions or breaches of
security with respect to the such information technology systems.
Section 4.19 Anti-Corruption; Anti-Money Laundering.
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(a)
None of the Representing Party or any of its Affiliates, Subsidiaries or
Joint Ventures, or any of their respective Representatives, has since January 1, 2012, directly or
indirectly, made, offered, promised, authorized, accepted or agreed to accept, directly or
indirectly, any gift, payment, or transfer of any money or anything else of value, including any
bribe, rebate, kickback, payoff or other similar unlawful payment, or provided any benefit, to or
from anyone, intending that, in consequence, a relevant function or activity should be performed
improperly or to reward such improper performance, to any Government Official, (i) for the
purpose of (w) influencing any act or decision of that Government Official, (x) inducing that
Government Official to do or omit to do any act in violation of his lawful duty, (y) securing any
improper advantage, or (z) inducing that Government Official to use his or her influence with a
Governmental Authority, (1) to affect or influence any act or decision of any Governmental
Authority, or (2) to assist the Representing Party or any of its Affiliates, Subsidiaries or Joint
Ventures in obtaining or retaining business with, or directing business to, any Person, or (ii)
which would otherwise constitute or have the purpose or effect of public or commercial bribery,
acceptance of or acquiescence in extortion, kickbacks or other unlawful or improper means of
obtaining business or any improper advantage.
(b)
The Representing Party and its Affiliates, Subsidiaries and Joint Ventures
have maintained complete and accurate books and records with respect to payments to any
Government Official and any payment to or other expenses involving agents, consultants,
representatives, customers, employees and any other third parties acting on behalf of any Blue
Party, in each case, in accordance with Anti-Corruption Laws and GAAP.
(c)
None of the Representing Party or any of its Affiliates, Subsidiaries or
Joint Ventures has either (A) (x) conducted or initiated any review, audit, or internal
investigation, or (y) made a voluntary, directed, or involuntary disclosure to any Governmental
Authority responsible for enforcing Anti-Corruption Laws, in each case with respect to any
alleged act or omission arising under or relating to noncompliance with any Anti-Corruption
Laws, or (B) received any inquiry, notice, request or citation from any Person alleging
noncompliance with any Anti-Corruption Laws.
(d)
Each of the Representing Party and its Affiliates, Subsidiaries and Joint
Ventures is, and has been since January 1, 2012, in compliance with all applicable anti-money
laundering legislation, regulations, rules or orders relating thereto for all other applicable
jurisdictions, and maintains adequate internal controls to ensure such compliance.
ARTICLE V
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF BLUE AND GREEN
Except (i) in the case of any representation and warranty made by Blue, (x) as
disclosed in Blue Disclosure Schedule, or (y) as disclosed in any Blue SEC Report filed with or
furnished to the SEC by Blue between January 1, 2014 and the date hereof or as disclosed in the
Blue 2014 Draft Form 10-K (other than in any “risk factor” disclosure or any other forward
looking statements set forth therein), and (ii) in the case of any representation or warranty made
by Green, as disclosed in the Green Disclosure Schedule (it being agreed that disclosure of any
item in any section or subsection of a Disclosure Schedule shall be deemed to be disclosure with
respect to any other section or subsection of such Disclosure Schedule to which the relevant of
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such item is reasonably apparent on its face), Blue hereby represents and warrants to Green and
Merger Sub, in respect of Section 5.1 through Section 5.7, and Green hereby represents and
warrants to Blue, in respect of Section 5.8 through Section 5.19:
Section 5.1
(a)
Blue Capital Stock.
The authorized capital stock of Blue consists of:
(i)
125,000,000 shares of Blue Common Stock, of which 56,546,266
shares (excluding any unvested Blue Restricted Shares) were outstanding as of the
close of business on February 20, 2015; and
(ii)
1,000,000 shares of preferred stock of the par value of $100.00 per
share, 4,000,000 shares of preferred stock of the par value of $25.00 per share,
and 4,000,000 shares of preference stock of the par value of $25.00 per share, in
each case, none of which are outstanding as of the close of business on February
20, 2015.
(b)
As of the close of business on February 20, 2015:
(i)
no shares of Blue Common Stock were held in the treasury of
Blue,
(ii)
no shares of Blue Common Stock were subject to outstanding
Options granted under the Blue Stock Plans;
(iii) there were 340,131 Blue Restricted Shares outstanding under the
Blue Stock Plans;
(iv)
there were 166,181 shares of Blue Common Stock subject to stock
units or phantom stock units credited to the accounts of the participants in the
Blue Deferred Compensation Plans;
(v)
there were 511,860 shares of Blue Common Stock subject to
outstanding performance share awards under the Blue Stock Plans;
(vi)
there were no other shares of Blue Common Stock subject to
outstanding Blue Equity Rights; and
(vii) there were no additional shares of Blue Common Stock reserved
for issuance pursuant to the Blue Stock Plans. Since February 20, 2015, no shares
of Blue Common Stock have been issued and no awards have been granted under
the Blue Stock Plans.
(c)
Except as disclosed in Section 5.1(b), there are no outstanding
subscriptions, options, warrants, rights (including stock appreciation rights), preemptive rights or
other Contracts, commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument, Contracts or agreement
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(together, “Options”), obligating any Blue Party to (A) issue or sell any Equity Securities of any
Blue Party, (B) grant, extend or enter into any Option with respect thereto, (C) redeem or
otherwise acquire any such Equity Securities, or (D) provide any amount of funds to, or make
any material investment (in the form of a loan, capital contribution or otherwise) in, any Person
(including any of their respective Subsidiaries). Neither Blue nor any of its Subsidiaries has
granted registration rights to any Person.
(d)
There are no voting trusts, proxies or other commitments, understandings,
restrictions or arrangements to which Blue or any of its Subsidiaries is a party in favor of any
Person other than Blue or a Subsidiary wholly-owned, directly or indirectly, by Blue with respect
to the voting of or the right to participate in dividends or other earnings on any capital stock or
other equity interests of Blue or any Subsidiary of Blue.
(e)
Blue is a “holding company” as defined under Section 1262 of the 2005
Act.
(f)
No Indebtedness of Blue or any of its Subsidiaries having the right to vote
(or which is convertible into or exercisable for Equity Securities having the right to vote)
(collectively, “Blue Voting Debt”) on any matters on which the Blue shareholders may vote is
issued or outstanding nor are there any outstanding Options obligating Blue or any of its
Subsidiaries to issue or sell any Blue Voting Debt or to grant, extend or enter into any Option
with respect thereto.
(g)
None of the Blue Restricted Shares has been granted since February 20,
2015, except as expressly permitted by this Agreement. All grants of Blue Restricted Shares
were validly made and properly approved by the Blue Board (or a duly authorized committee or
subcommittee thereof) in compliance with all applicable Laws and recorded on the consolidated
financial statements of Blue in accordance with GAAP.
(h)
No Subsidiary of Blue, and no Joint Venture of Blue, owns any stock in
Blue.
Section 5.2 Authority of Blue. Blue has full corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and, subject to obtaining the
Shareholder Approval, to consummate the Transactions. The execution, delivery and
performance of this Agreement by Blue and the consummation by Blue of the Transactions have
been duly and validly adopted and unanimously approved by the Blue Board, the Blue Board has
adopted the Agreement and approved and determined that it is in the best interests of Blue for
Blue to consummate the Transactions (including the Merger) and resolved to recommend that
shareholders of Blue approve the Agreement and to submit the Agreement and the Transactions
(including the Merger) to the shareholders of Blue for their approval, and no other corporate
proceedings on the part of Blue or its shareholders are necessary or required to authorize the
execution, delivery and performance of this Agreement by Blue and the consummation by Blue
of the Transactions (including the Merger), other than obtaining the Shareholder Approval. This
Agreement has been duly and validly executed and delivered by Blue and, assuming this
Agreement constitutes the legal, valid and binding obligation of Green and Merger Sub,
constitutes a legal, valid and binding obligation of Blue enforceable against Blue in accordance
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with its terms, except that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating
to creditors’ rights generally and to general equitable principles. Blue does not have any “poison
pills”, shareholder rights plans or agreements or similar rights in place.
Section 5.3 Blue Required Statutory Approvals. Except for (A) compliance
with, and filings under, the HSR Act and the rules and regulations thereunder, (B) the filing with
and, to the extent required, the declaration of effectiveness by the SEC of (1) the Proxy
Statement, (2) the Form S-4, and (3) such reports under the Exchange Act as may be required in
connection with this Agreement and the Transactions, (C) such filings and approvals as may be
required under the rules and regulations of the NYSE, (D) compliance with and such filings as
may be required by the Act, (E) notices to and filings under, and compliance with all
requirements of the Committee on Foreign Investment in the United States (“CFIUS”), pursuant
to the Section 721 of the Defense Production Act of 1950 as amended by Section 5021 of the
Omnibus Trade and Competitiveness Act of 1988, and as amended by The Foreign Investment
National Security Act of 2007 (“Exon-Florio”), (F) approvals required by the Connecticut Public
Utilities Regulatory Authority and the Massachusetts Department of Public Utilities, (G)
approval required by the FERC, and (H) such other items set forth on Section 5.3 of the Blue
Disclosure Schedule (the items set forth above in clauses (A) through (H) collectively, the “Blue
Required Statutory Approvals”), no notification, filing or registration, consent, approval,
declaration, Permit or authorization to, by or from any Governmental Authority is necessary or
required in connection with the execution and delivery of this Agreement by Blue, the
performance by Blue of its obligations hereunder or the consummation of the Transactions
(including the Merger) by Blue, other than any Post-Closing Law and other than such items that
the failure to make or obtain, as the case may be, individually or in the aggregate, would not
reasonably be expected to have a Blue Material Adverse Effect.
Section 5.4
Blue SEC Reports, Financial Statements and Utility Reports.
(a)
Blue and its Subsidiaries have filed or furnished on a timely basis each
form, report, schedule, registration statement, registration exemption, if applicable, definitive
proxy statement and other document (together with all amendments thereof and supplements
thereto) required to be filed or furnished by Blue or any of its Subsidiaries pursuant to the
Securities Act or the Exchange Act with the SEC (the “Blue SEC Reports”) since January 1,
2012. As of their respective dates, after giving effect to any amendments or supplements thereto
prior to the date hereof, the Blue SEC Reports (A) complied in all material respects with the
requirements of the Securities Act and the Exchange Act, if applicable, as the case may be, and,
to the extent applicable, the Sarbanes-Oxley Act of 2002 (“SOX”), and (B) did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b)
Each of the principal executive officer of Blue and the principal financial
officer of Blue (or each former principal executive officer of Blue and each former principal
financial officer of Blue, as applicable) has made all certifications required by Rule 13a-14 or
15d-14 under the Exchange Act or Sections 302 and 906 of SOX and the rules and regulations of
the SEC promulgated thereunder with respect to the Blue SEC Reports. For purposes of the
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preceding sentence, “principal executive officer” and “principal financial officer” shall have the
meanings given to such terms in SOX. Since January 1, 2012, neither Blue nor any of its
Subsidiaries has arranged any outstanding “extensions of credit” to directors or executive
officers within the meaning of Section 402 of SOX.
(c)
Each of the audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case, the notes, if any, thereto)
included in the Blue SEC Reports (the “Blue Financial Statements”) complied as to form in all
material respects with the applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto in effect at the time of filing or furnishing the
applicable Blue SEC Report, was prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to unaudited statements as
permitted by the SEC on Form 8-K, Form 10-Q or any successor or like form under the
Exchange Act) and fairly present (subject, in the case of the unaudited interim financial
statements, to the absence of footnotes therein and to normal, recurring year-end audit
adjustments that were not or are not expected to be, individually or in the aggregate, material) in
all material respects the consolidated financial position of Blue and its consolidated subsidiaries
as of the respective dates thereof and the consolidated results of their operations, cash flows and
shareholders’ equity for the respective periods then ended.
(d)
All filings required to be made by Blue or any of its Subsidiaries since
January 1, 2012, under the 2005 Act, the Power Act, the Natural Gas Act of 1938, as amended,
and including all regulations promulgated thereunder, the Natural Gas Policy Act of 1978, as
amended, and including all regulations promulgated thereunder, and the Communications Act of
1934 have been filed, on a timely basis (taking into account all applicable grace periods), with
the SEC, the FERC, the Department of Energy or any other Governmental Authority, as the case
may be, including all forms, statements, reports, agreements (oral or written) and all documents,
exhibits, amendments and supplements appertaining thereto, including all rates, tariffs,
franchises, service agreements and related documents, and all such filings complied, as of their
respective dates, with all applicable requirements of the applicable statute and the rules and
regulations thereunder, except for filings the failure of which to make or the failure of which to
make in compliance with all applicable requirements of the applicable Laws, individually or in
the aggregate, have not had and would not reasonably be expected to have a Blue Material
Adverse Effect.
(e)
Section 5.4(e) of the Blue Disclosure Schedule sets forth, as of the date of
this Agreement, (i) all rate filings pending as of the date of this Agreement related to any Blue
Party before the FERC, the Connecticut Public Utilities Regulatory Authority or the
Massachusetts Department of Public Utilities and each other material proceeding pending as of
the date of this Agreement before the FERC, the Connecticut Public Utilities Regulatory
Authority or the Massachusetts Department of Public Utilities relating to any Blue Party (other
than those rate filings or other material proceedings of a general or industry-wide nature that
also affect other entities engaged in a business similar to that of Blue or its Subsidiaries) and
(ii) all tariffs (other than tariffs applicable to utilities generally in any jurisdiction in which any
Blue Party operates) filed with respect to, or applicable to, the services provided by any Blue
Party, and all agreements to provide service on non-tariff terms (and complete and correct copies
of all such tariffs and agreements have been provided to Green). All charges that have been
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made for service and all related fees have been charged in accordance with the terms and
conditions of valid and effective tariffs or valid and enforceable agreements for non-tariff
charges and are not subject to refund, except for failures to have made such charges or charged
such fees that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Blue Material Adverse Effect. Notwithstanding anything to the contrary in
this Agreement, any multi-party proceedings and tariffs identified in writing to Green on or
before March 11, 2015 that are required to be set forth in Section 5.4(e) of the Blue Disclosure
Schedule shall be deemed to have been disclosed in Section 5.4(e) of the Blue Disclosure
Schedule for purposes of this Section 5.4(e).
(f)
Each of the Blue Parties under the jurisdiction of the FERC, the
Connecticut Public Utilities Regulatory Authority or the Massachusetts Department of Public
Utilities, is legally entitled to provide services in all areas (i) where it currently provides service
to its customers, and (ii) as identified in their respective tariffs, service agreements and other
Contracts with its customers, except for failures to be so entitled that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Blue Material Adverse
Effect.
(g)
Blue has designed, established and maintains a system of internal control
over financial reporting (as defined in Rules 13a–15(f) and 15d–15(f) of the Exchange Act)
designed to provide reasonable assurances regarding the reliability of financial reporting as
required by Rules 13a–15 of the Exchange Act. Blue (i) has designed, established and maintains
disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) of the
Exchange Act) to provide reasonable assurance that all information required to be disclosed by
Blue in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and is
accumulated and communicated to Blue’s management as appropriate to allow timely decisions
regarding required disclosure and (ii) has disclosed, based on the most recent evaluation of its
chief executive officer and its chief financial officer prior to the date of this Agreement, to
Blue’s outside auditors and the audit committee of the Blue Board (x) any and all significant
deficiencies in the design or operation of its internal controls over financial reporting that are
reasonably likely to adversely affect Blue’s ability to record, process, summarize and report
financial information and has identified for Blue’s outside auditors and audit committee of the
Blue Board any material weaknesses in internal control over financial reporting and (y) any
fraud, whether or not material, that involves management or other employees who have a
significant role in Blue’s internal control over financial reporting. Except for matters resolved
prior to the date hereof, since January 1, 2013 through the date of this Agreement, to the
Knowledge of Blue, (A) neither Blue nor any of its Subsidiaries nor any of their respective
Representatives has received or otherwise had or obtained Knowledge of any material complaint,
allegation or claim (whether written or oral) from any source regarding the accounting, or
auditing practices, procedures, methodologies or methods of Blue or its Subsidiaries or their
respective internal accounting controls, including any material complaint, allegation, assertion or
claim that Blue or any of its Subsidiaries has engaged in questionable accounting, internal
accounting controls or auditing matters of Blue or any of its Subsidiaries, and no concerns
(whether written or oral) from any of the Blue Parties’ employees regarding questionable
accounting or auditing matters have been received by Blue or any of its Subsidiaries, and (B) no
attorney representing Blue or any of its Subsidiaries, whether or not employed by any such
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entity, has reported evidence of a material violation of securities Laws, breach of fiduciary duty
or similar violation by Blue, any of its Subsidiaries or any of their respective directors, officers
or employees to the General Counsel or Chief Executive Officer of Blue.
(h)
Blue is, and since January 1, 2012 has been, in compliance in all material
respects with (i) SOX, and (ii) the applicable listing standards and corporate governance rules
and regulations of the NYSE.
(i)
The most recent financial statements contained in the Blue 2014 Draft
Form 10-K reflect, in accordance with GAAP, an adequate reserve for all Taxes payable by Blue
and its Subsidiaries for all taxable periods through the date of such financial statements, and
since such date, neither Blue nor any of its Subsidiaries has incurred any material liability for
Taxes outside the ordinary course of business.
Section 5.5 Vote Required by Blue. The affirmative vote of the holders of
record of at least a majority of the shares of Blue Common Stock (the “Shareholder Approval”)
is the only vote of the holders of any class or series of the capital stock of Blue required to
approve this Agreement and the Transactions.
Section 5.6 Opinion of Financial Advisors to Blue. The Blue Board has
received the opinion, dated on or about the date of this Agreement, of Morgan Stanley & Co.
LLC, that, as of the date of such opinion and based on the assumptions, qualifications and
limitations contained therein, the Merger Consideration to be received by the holders of Blue
Common Stock is fair, from a financial point of view, to the holders of Blue Common Stock. A
copy of such opinion has been made available to Green or will be made available to Green
promptly after the date of this Agreement for informational purposes only.
Section 5.7 Anti-Takeover Provisions Inapplicable to Blue. Subject to the
accuracy of Section 5.18, the Transactions are not subject to any “moratorium,” “control share,”
“fair price,” “affiliate transactions,” “business combination” or other state antitakeover Laws.
Section 5.8
Green Capital Stock.
(a)
Green’s authorized and outstanding capital stock is as set forth in Section
5.8(a) of the Green Disclosure Schedule. All of Green’s issued and outstanding capital stock has
been duly authorized, validly issued, fully paid and nonassessable. The Equity Securities set
forth in Section 5.8(a) of the Green Disclosure Schedule constitute all of the issued and
outstanding Equity Securities of Green. All of the issued and outstanding capital stock of Green
is, and immediately prior to the Effective Time will be, owned by Green Parent.
(b)
There are no outstanding Options obligating any Green Party to (A) issue
or sell any Equity Securities of any Green Party, (B) grant, extend or enter into any Option with
respect thereto, (C) redeem or otherwise acquire any such Equity Securities, or (D) provide any
amount of funds to, or make any material investment (in the form of a loan, capital contribution
or otherwise) in, any Person (including any of their respective Subsidiaries). Neither Green nor
any of its Subsidiaries has granted registration rights to any Person.
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(c)
No Indebtedness of Green or any of its Subsidiaries having the right to
vote (or which are convertible into or exercisable for Equity Securities having the right to vote)
(collectively, “Green Voting Debt”) on any matters on which Green’s equityholders may vote are
issued or outstanding nor are there any outstanding Options obligating Green or any of its
Subsidiaries to issue or sell any Green Voting Debt or to grant, extend or enter into any Option
with respect thereto.
(d)
The authorized capital stock of Merger Sub consists solely of 1,000 shares
of common stock, no par value per share, all of which are outstanding and have been duly
authorized, validly issued, fully paid and nonassessable. All of the issued and outstanding capital
stock of Merger Sub is, and immediately prior to the Effective Time will be, owned by Green.
Merger Sub has not conducted any business prior to the date of this Agreement and has no, and
prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than
those incident to its formation and pursuant to this Agreement, the Merger and the other
Transactions.
Section 5.9
Authority of Green.
(a)
Each of Green and Merger Sub has full corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution, delivery and performance of this Agreement by Green and Merger
Sub and the consummation by Green and Merger Sub of the Transactions (including the Merger)
have been duly and validly approved by all necessary corporate action, and no approval or
consent of Green Parent or any Affiliate of Green Parent (other than Green, which approval or
consent has been obtained) is needed in respect of the execution, delivery and performance of
this Agreement by Green and Merger Sub and the consummation by Green and Merger Sub of
the Transactions (including the Merger). This Agreement has been duly and validly executed
and delivered by Green and Merger Sub and, assuming this Agreement constitutes the legal,
valid and binding obligation of Blue, constitutes a legal, valid and binding obligation of Green
and Merger Sub enforceable against Green and Merger Sub in accordance with its terms, except
that such enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws, now or hereafter in effect, relating to creditors’ rights
generally and to general equitable principles.
(b)
Prior to the Effective Time, Green will have, and will have procured, to
the extent applicable, that its Affiliates will have, taken all necessary action to permit Green to
issue the number of shares of Green Common Stock required to be issued pursuant to Article II.
The Green Common Stock, when issued pursuant to this Agreement or otherwise, will be validly
issued, fully paid and nonassessable, and no such issued shares of Green Common Stock will
have been issued in violation of any preemptive right of subscription or purchase in respect
thereof. Green Common Stock, when issued to holders of Blue Common Stock in connection
with the Transactions, will be registered under the Securities Act and Exchange Act and
registered or exempt from registration under any applicable state securities or “blue sky” Laws.
Section 5.10 Green Required Statutory Approvals.
Except for (A)
compliance with, and filings under, the HSR Act and the rules and regulations thereunder, (B)
the filing with and, to the extent required, the declaration of effectiveness by the SEC of (1) the
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Proxy Statement, (2) the Form S-4, and (3) such reports under the Exchange Act as may be
required in connection with this Agreement and the Transactions, (C) such filings and approvals
as may be required under the rules and regulations of the NYSE, (D) compliance with and such
filings as may be required by the Act, (E) notices to and filings under, and compliance with all
requirements of CFIUS, pursuant to Exon-Florio, (F) approvals required by the Connecticut
Public Utilities Regulatory Authority and the Massachusetts Department of Public Utilities, (G)
approval required by the FERC, and (H) such other items set forth on Section 5.10 of the Green
Disclosure Schedule (the items set forth above in clauses (A) through (H) collectively, the
“Green Required Statutory Approvals”), no notification, filing or registration, consent, approval,
declaration, Permit or authorization to, by or from any Governmental Authority is necessary or
required in connection with the execution and delivery of this Agreement by Green or Merger
Sub, the performance by Green or Merger Sub of its respective obligations hereunder or the
consummation of the Transactions (including the Merger) by Green or Merger Sub, other than
such items that the failure to make or obtain, as the case may be, individually or in the aggregate,
would not reasonably be expected to have a Green Material Adverse Effect.
Section 5.11 Financial Statements and Utility Reports of Green.
(a)
True, correct and complete copies of the audited consolidated statement of
financial position as of December 31, 2014 of Green and its Subsidiaries and the audited
consolidated statement of profit or loss for the year ended December 31, 2014 of Green and its
Subsidiaries, each as prepared in accordance with IFRS consistently applied (collectively
referred to as the “Green IFRS Financial Statements”) are set forth on Section 5.11(a) of the
Green Disclosure Schedule.
(b)
Each of the Green IFRS Financial Statements (i) has been prepared based
on the applicable books and records of Green and its Subsidiaries (except as may be indicated in
the notes thereto), (ii) has been prepared in accordance with IFRS consistently applied (except as
may be indicated in the notes thereto), and (iii) fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of Green and its Subsidiaries
as at the respective dates thereof and for the respective periods indicated therein, except as
otherwise noted therein. Except as disclosed in the Green IFRS Financial Statements, none of
Green nor any of its Subsidiaries maintains any “off-balance-sheet arrangement” within the
meaning of Item 303 of Regulation S-K of the SEC.
(c)
True, correct and complete copies of a reconciliation of the Green IFRS
Financial Statements to comparable statements prepared in accordance with GAAP, together
with a report of Green’s independent accountants thereon, are set forth on Section 5.11(c) of the
Green Disclosure Schedule (collectively referred to as the “Green Reconciliation Financial
Statements”).
(d)
The information provided by Green to its external auditors relating to the
Green Reconciliation Financial Statements and the information provided by Green’s external
auditors regarding the IFRS and GAAP rules applicable to the Green Reconciliation Financial
Statements are true and correct in all material respects. The pro forma GAAP statements
reflected in the Green Reconciliation Financial Statements will not differ in any material respect
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from the Green audited GAAP financial statements as of and for the year ended December 31,
2014 to be included in the Form S-4.
(e)
True, correct and complete copies of the audited consolidated statements
of income, consolidated statements of comprehensive income, consolidated balance sheets,
consolidated statements of cash flows and consolidated statements of changes in equity of Green
Networks for the years ended December 31, 2013 and December 31, 2012 (collectively referred
to as the “Green Networks Financial Statements” and, collectively with the Green IFRS
Financial Statements and the Green Reconciliation Financial Statements, the “Green Financial
Statements”) are set forth on Section 5.11(e) of the Green Disclosure Schedule.
(f)
Each of the Green Networks Financial Statements (i) has been prepared
based on the applicable books and records of Green Networks and its Subsidiaries (except as
may be indicated in the notes thereto), (ii) has been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto), and (iii) fairly presents, in
all material respects, the consolidated financial position, results of operations and cash flows of
Green Networks and its Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein. Except as disclosed in the Green
Networks Financial Statements, none of Green Networks nor any of its Subsidiaries maintains
any “off-balance-sheet arrangement” within the meaning of Item 303 of Regulation S-K of the
SEC.
(g)
All filings required to be made by Green or any of its Subsidiaries since
January 1, 2012 under the 2005 Act, the Power Act, the Natural Gas Act of 1938, as amended,
and including all regulations promulgated thereunder, the Natural Gas Policy Act of 1978, as
amended, and including all regulations promulgated thereunder, and the Communications Act of
1934 have been filed, on a timely basis (taking into account all applicable grace periods), with
the FERC, the Department of Energy or any other Governmental Authority, as the case may be,
including all forms, statements, reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, including all rates, tariffs, franchises, service
agreements and related documents, and all such filings complied, as of their respective dates,
with all applicable requirements of the applicable statute and the rules and regulations
thereunder, except for filings the failure of which to make or the failure of which to make in
compliance with all applicable requirements of the applicable Laws, individually or in the
aggregate, have not had and would not reasonably be expected to have a Green Material Adverse
Effect.
(h)
Section 5.11(h) of the Green Disclosure Schedule sets forth, as of the date
of this Agreement, (i) all rate filings pending as of the date of this Agreement related to any
Green Party before the FERC, the New York Public Service Commission or the Maine Public
Utilities Commission and each other material proceeding pending as of the date of this
Agreement before the FERC, the New York Public Service Commission or the Maine Public
Utilities Commission relating to any Green Party (other than those rate filings or other material
proceedings of a general or industry-wide nature that also affect other entities engaged in a
business similar to that of Green or its Subsidiaries), and (ii) all tariffs (other than tariffs
applicable to utilities generally in any jurisdiction in which any Green Party operates) filed with
respect to, or applicable to, the services provided by any Green Party, and all agreements to
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provide service on non-tariff terms (and complete and correct copies of all such tariffs and
agreements have been provided to Blue), and all charges that have been made for service and all
related fees have been charged in accordance with the terms and conditions of valid and effective
tariffs or valid and enforceable agreements for non-tariff charges and are not subject to refund,
except for failures to have made such charges or charged such fees that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Green Material Adverse
Effect.
(i)
Each of the Green Parties under the jurisdiction of the FERC, the New
York Public Service Commission or the Maine Public Utilities Commission is legally entitled to
provide services in all areas (i) where it currently provides service to its customers, and (ii) as
identified in their respective tariffs, service agreements and other Contracts with its customers,
except for failures to be so entitled that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Green Material Adverse Effect.
(j)
Green has designed, established and maintains a system of internal control
over financial reporting designed to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in
accordance with GAAP (or, in the case of the Green IFRS Financial Statements, IFRS) and
provide reasonable assurance that all transactions are executed in accordance in all material
respects with management’s general or specific authorization, all transactions are recorded as
necessary to permit the preparation of the Green Financial Statements in conformity with GAAP
(or, in the case of the Green IFRS Financial Statements, IFRS) and fraud is detected and
prevented. Except for matters resolved prior to the date hereof, since January 1, 2012 through
the date of this Agreement, to the Knowledge of Green, (A) neither Green nor any of its
Subsidiaries nor any of their respective Representatives has received or otherwise had or
obtained Knowledge of any material complaint, allegation or claim (whether written or oral)
from any source regarding the accounting or auditing practices, procedures, methodologies or
methods of Green or its Subsidiaries or their respective internal accounting controls, including
any material complaint, allegation, assertion or claim that Green or any of its Subsidiaries has
engaged in questionable accounting, internal accounting controls or auditing matters of Green or
any of its Subsidiaries, and no concerns (whether written or oral) from any of the Green Parties’
employees regarding questionable accounting or auditing matters have been received by Green
or any of its Subsidiaries, and (B) no attorney representing Green or any of its Subsidiaries,
whether or not employed by any such entity, has reported evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation by Green, any of its Subsidiaries or
any of their respective directors, officers or employees to the General Counsel or Chief
Executive Officer of Green.
(k)
Green has made available to Blue any management letters or other
material written communications (including with respect to proposed adjustments) from the
auditors to any of Green or any of its Subsidiaries, any officer of any of Green or any of its
Subsidiaries or the board of directors (or equivalent body) of any of Green or its Subsidiaries
since January 1, 2013, in any case regarding (A) any significant deficiencies in the design or
operation of its internal controls over financial reporting that are reasonably likely to adversely
affect, or to have adversely affected (in more than immaterial respects), Green’s ability to record,
process, summarize and report financial information or any material weaknesses in internal
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control over financial reporting or (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in Green’s internal control over
financial reporting.
(l)
The Green Financial Statements reflect, in accordance with GAAP (or, in
the case of the Green IFRS Financial Statements, IFRS), an adequate reserve for all Taxes
payable by Green and its Subsidiaries for all taxable periods through the date of such Green
Financial Statements, and since such date, neither Green nor any of its Subsidiaries has incurred
any material liability for Taxes outside the ordinary course of business.
Section 5.12 Shared Assets and Services. Section 5.12 of the Green
Disclosure Schedule contains a list of (i) all assets or properties of Green Parent or any of its
Subsidiaries or Joint Ventures (other than Green or any of its Subsidiaries or Joint Ventures) that
are used in the business of Green or any of its Subsidiaries or Joint Ventures, (ii) all services that
Green or any of its Subsidiaries or Joint Ventures provides to or receives from Green Parent or
any of its Subsidiaries or Joint Ventures (other than Green or any of its Subsidiaries or Joint
Ventures), and (iii) all Contracts to which Green or any of its Subsidiaries or Joint Ventures, on
the one hand, and Green Parent or any of its Subsidiaries or Joint Ventures (other than Green or
any of its Subsidiaries or Joint Ventures), on the other hand, are parties, except, in each case, for
any such assets, properties and Contracts that are not, individually or in the aggregate, material to
the conduct of the business of the Green Parties, taken as whole. The expenses and revenues
under each of the Contracts listed on Section 5.12 of the Green Disclosure Schedule are
accurately reflected in the Green IFRS Financial Statements included on Section 5.11(a) of the
Green Disclosure Schedule.
Section 5.13 Employee Benefit Plans of Green. No Green Employee Benefit
Plan is maintained outside the jurisdiction of the United States or covers any employee of Green
or any of its Subsidiaries who resides or works outside of the United States. No Controlled
Group Liability has been incurred by Green or its ERISA Affiliates that has not been satisfied in
full, and no condition exists that presents a risk to Green or its ERISA Affiliates of incurring any
such liability, except, in each case, as would not reasonably be expected to result, individually or
in the aggregate, in a Green Material Adverse Effect. No purpose of the transactions
contemplated by this Agreement is for any of Green Parent or its Affiliates to avoid Liability
arising out of Title IV of ERISA.
Section 5.14 Anti-Takeover Provisions Inapplicable to Green. The
Transactions are not subject to any “moratorium,” “control share,” “fair price,” “affiliate
transactions,” “business combination” or other state antitakeover Laws.
Section 5.15 Organization and Qualification of Merger Sub. Merger Sub is
duly organized, validly existing and in good standing under the Laws of the state of its
organization and has full power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties. Merger Sub is duly qualified,
licensed or admitted to do business and is in good standing (with respect to jurisdictions that
recognize the concept of “good standing”) in each jurisdiction in which the ownership, use or
leasing of its assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures to be so qualified,
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licensed or admitted and in good standing (with respect to jurisdictions that recognize the
concept of “good standing”) that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Green Material Adverse Effect.
Section 5.16 No Conflicts with Respect to Merger Sub; Approvals and
Consents of Merger Sub. The execution and delivery of this Agreement by Merger Sub does
not, and the performance by Merger Sub of its obligations hereunder and the consummation of
the Transactions will not, conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to any Person any right
of payment or reimbursement, termination, revocation, cancellation, modification or acceleration
of, or result in the creation or imposition of any Lien upon any of the assets or properties of
Merger Sub under, any of the terms, conditions or provisions of (A) the Charter Documents of
Merger Sub, or (B) subject to the taking of the actions described in Section 5.10, (x) any Laws
applicable to Merger Sub or any of its assets or properties, or (y) any Contract, Permit or other
instrument to which Merger Sub is a party or by which Merger Sub or any of its assets or
properties is bound, excluding from the foregoing clauses (x) - (y) such items that, individually
or in the aggregate, have not had and would not reasonably be expected to have a Green Material
Adverse Effect.
Section 5.17 Green Renewables Contracts. Section 5.17 of the Green
Disclosure Schedule contains a chart setting forth the project, expiration year and megawatt
volume for each contract that purports to bind any Green Party pursuant to which at least 10
megawatts of electric generation capacity of Green Renewables or any of its Subsidiaries or Joint
Ventures has been contracted to a counterparty (the “Green Renewables Contracts”), which list is
true, complete and correct in all material respects. Green has made available to Blue the annual
gross margin for each of the next ten years for the Green Renewables Contracts on an aggregate
basis. None of the Green Renewables Contracts contains a provision permitting the counterparty
to such contract to reduce the amount of capacity that such counterparty is obligated to pay for or
to reduce the capacity charge therefor pursuant to such contract or to terminate such contract for
any reason other than due to a material breach by Green Renewables. None of Green
Renewables nor any of its Affiliates is in material breach of or material default under the terms
of any Green Renewables Contract and as of the date hereof no event has occurred that (with or
without notice or lapse of time or both) would result in a material breach or default under any
Green Renewables Contract. To the Knowledge of Green, no other party to any Green
Renewables Contract is in material breach of or material default under the terms of any such
Green Renewables Contract, and no other party to the Green Renewables Contracts has
threatened to or is anticipated to reduce the amount of capacity that such counterparty is
obligated to pay for or to reduce the capacity charge therefor pursuant to such contract or to
terminate any Green Renewables Contract.
Section 5.18 Ownership of Shares. None of Green Parent, Green nor any of
their respective Subsidiaries Beneficially Owns any Blue Common Stock.
Section 5.19 Available Funds. Green and Merger Sub have access to, and as of
the Effective Time will have available to them, all funds necessary for the payment to the
Exchange Agent of the aggregate Cash Consideration, all other amounts to be paid pursuant to
Article II, and to satisfy all of their other obligations under this Agreement.
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ARTICLE VI
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 6.1
Blue No Solicitation.
(a)
Blue shall, and shall cause each of its Subsidiaries and its and their
respective officers, directors and employees to, and shall (and shall cause each of its Subsidiaries
to) direct and use reasonable best efforts to cause each of Blue’s and its Subsidiaries’ respective
investment bankers, accountants, attorneys, financial advisors and other advisors, agents and
representatives (collectively, and together with Blue’s and its Subsidiaries’ respective officers,
directors and employees, the “Representatives”) to (i) immediately cease and cause to be
terminated all existing discussions or negotiations with any Person conducted heretofore with
respect to, or that could reasonably be expected to lead to, any Acquisition Proposal, (ii) not
solicit, initiate, knowingly facilitate or knowingly encourage any inquiries, offers or the making
of any proposal (including by amending or granting any waiver or release under, or failing to
enforce, any standstill or similar Contract with respect to any class of capital stock of Blue or any
of its Subsidiaries (except to the extent permitted in accordance with the last sentence of this
Section 6.1(a))) with respect to, or that could reasonably be expected to lead to, any Acquisition
Proposal, (iii) not engage in or otherwise participate in any negotiations or discussions regarding,
or that could reasonably be expected to lead to, any Acquisition Proposal, (iv) not furnish any
nonpublic information regarding Blue or any of its Subsidiaries to any Person (other than Green
or Merger Sub) in connection with or in response to any Acquisition Proposal, and (v) not
approve, endorse or recommend any Acquisition Proposal except in connection with an Adverse
Recommendation Change permitted pursuant to Section 6.1(c). Notwithstanding anything to the
contrary in this Section 6.1(a), nothing in this Section 6.1(a) shall prohibit Blue, at any time prior
to obtaining the Shareholder Approval, from (x) furnishing nonpublic information regarding
Blue or its Subsidiaries to, or entering into or participating in discussions or negotiations with,
any Person in response to an unsolicited, written Acquisition Proposal that the Blue Board
concludes in good faith, after consultation with its financial advisors and outside counsel,
constitutes, or could reasonably be expected to result in, an Acquisition Proposal if (A) the Blue
Board concludes in good faith, after consultation with its financial advisors and outside legal
counsel, that the Acquisition Proposal is or could reasonably be expected to lead to a Superior
Proposal and that the failure to take such action could reasonably be expected to result in a
breach of its fiduciary duties under applicable Law, (B) Blue furnishes any nonpublic
information provided to the maker of such Acquisition Proposal only pursuant and subject to an
Acceptable Confidentiality Agreement, and (C) Blue promptly (and, in any event, within fortyeight (48) hours) makes available to Green any non-public information concerning Blue or its
Subsidiaries that Blue made available to such Person to the extent such information was not
previously provided to Green; provided that Blue shall not provide any commercially sensitive
non-public information to any competitor in connection with this Section 6.1, other than in
accordance with “clean room” or similar procedures designed to limit any adverse effect on the
sharing of information on Blue and its Subsidiaries, or (y) failing to enforce, or granting any
waiver or release under, any standstill or similar Contract with any Person to the extent the Blue
Board concludes in good faith, after consultation with its financial advisors and outside legal
counsel, that taking such action could reasonably be expected to result in a possible Superior
Proposal and that failing to take such action could reasonably be expected to result in a breach of
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its fiduciary duties under applicable Laws and to the extent such action is necessary to allow
such Person to make a confidential proposal to the Blue Board.
(b)
Blue shall promptly, and in no event later than twenty-four (24) hours
after its receipt (including receipt by any of its Subsidiaries or its or their respective
Representatives) of any Acquisition Proposal, or any request for nonpublic information relating
to Blue or any of its Subsidiaries in connection with an Acquisition Proposal, advise Green orally
and in writing of such Acquisition Proposal or request (including providing the identity of the
Person making or submitting such Acquisition Proposal or request), and, (i) if it is in writing, a
copy of such Acquisition Proposal and any related draft agreements or other documentation or
materials delivered in connection therewith, or (ii) if it is oral, a reasonably detailed summary,
including all material terms, thereof. Blue shall keep Green informed on a reasonably prompt
basis with respect to any change to the material terms of any such Acquisition Proposal (and in
no event later than twenty-four (24) hours following any such change).
(c)
Except as otherwise provided in Section 6.1(d) or Section 6.1(e), neither
the Blue Board nor any committee thereof may (i) (A) withhold, withdraw, change, qualify or
modify in a manner adverse to Green, or publicly propose to withhold, withdraw, change, qualify
or modify in a manner adverse to Green, the approval, recommendation or declaration of
advisability by the Blue Board or any such committee thereof of this Agreement and the
Transactions (the “Board Recommendation”), (B) recommend, adopt or approve, or propose
publicly to recommend, adopt or approve any Acquisition Proposal, (C) fail to include the Board
Recommendation in the Proxy Statement or (D) resolve, publicly propose or agree to do any of
the foregoing (any action described in this clause (i) being referred to as a “Adverse
Recommendation Change”), or (ii) (x) recommend, adopt or approve, or publicly propose to
recommend, adopt or approve, or, other than an Acceptable Confidentiality Agreement and
customary common interest agreement, allow Blue or any of its Subsidiaries to execute or enter
into, any letter of intent, memorandum of understanding, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or other similar
agreement constituting or related to, or that is intended to (or would reasonably be expected to)
lead to, any Acquisition Proposal or that would require Blue to abandon, terminate or fail to
consummate the Transactions, or (y) resolve, agree or propose to do any of the foregoing.
(d)
Notwithstanding anything in this Agreement to the contrary, the Blue
Board or any committee thereof may, at any time prior to receipt of the Shareholder Approval,
effect an Adverse Recommendation Change in respect of an Acquisition Proposal, if: (i) an
Acquisition Proposal is made to Blue, (ii) the Blue Board or applicable committee thereof
determines in good faith, after consultation with its financial advisors and outside legal counsel,
that such offer constitutes a Superior Proposal and that the failure to take such action could
reasonably be expected to result in a breach of its fiduciary duties under applicable Laws, (iii)
Blue provides Green five (5) Business Days’ prior written notice of its intention to take and the
rationale for such action, which notice shall include the information with respect to such
Superior Proposal that is specified in Section 6.1(b) (it being understood that each time any
material revision or amendment to the terms of the Acquisition Proposal determined to be a
Superior Proposal is made, the five (5) Business Day period shall be extended for additional
three (3) Business Days (for the first extension) or two (2) Business Days (for each subsequent
extension) after notification of such change to Green), and (iv) at the end of the applicable
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periods described in clause (iii) (the “Takeover Notice Period”), the Blue Board again makes the
determination in good faith, after consultation with its outside legal counsel and financial
advisors (and after taking into account any adjustments or modifications proposed by Green
during the Takeover Notice Period), that the Acquisition Proposal continues to be a Superior
Proposal. Blue agrees that during the Takeover Notice Period, Blue shall negotiate in good faith
with Green and its representatives, if requested by Green, regarding any adjustments or
modifications to the terms of this Agreement.
(e)
Notwithstanding anything in this Agreement to the contrary, the Blue
Board may, at any time prior to the receipt of the Shareholder Approval, effect an Adverse
Recommendation Change in response to any Change first occurring or becoming known to the
Blue Board after the execution of this Agreement that materially affects or could reasonably be
expected to materially affect (i) the business, assets, liabilities, condition (financial or otherwise)
or results of operations of Blue and its Subsidiaries, taken as a whole, or Green and its
Subsidiaries, taken as a whole or (ii) the shareholders of Blue (including the benefits of the
Merger to Blue or the shareholders of Blue), in either case that (A) is material, individually or in
the aggregate with any other such Changes first occurring or becoming known to the Blue Board
after the execution of this Agreement and (B) does not involve or relate to an Acquisition
Proposal if: (x) Blue provides Green five (5) Business Days’ prior written notice of its intention
to take such action, which notice shall include all material information with respect to any such
Changes and a reasonably detailed description of the Blue Board’s rationale for such action, and
(y) at the end of the five (5) Business Day period described in clause (x), the Blue Board
determines in good faith, after consultation with its financial advisors and outside legal counsel
(after taking into account any adjustments or modifications to the terms of this Agreement
proposed by Green during the period described in clause (x)), that the failure to take such action
could reasonably be expected to result in a breach of its fiduciary duties under applicable Laws.
During such five (5) Business Day period described in clause (x), Blue shall negotiate in good
faith with Green and its representatives, if requested by Green, regarding any adjustments or
modifications to the terms of this Agreement.
(f)
[Intentionally Omitted]
(g)
Nothing contained in this Section 6.1 or elsewhere in this Agreement shall
prohibit Blue or the Blue Board (or any committee thereof), directly or indirectly through its
Representatives, from disclosing to Blue’s shareholders a position contemplated by Rule 14e2(a) or Rule 14d-9 promulgated under the Exchange Act or making any disclosure to Blue’s
shareholders if the Blue Board has determined, after consultation with its outside legal counsel,
that the failure to do so could reasonably be expected to violate applicable Law; provided,
however, that any such disclosure that constitutes an Adverse Recommendation Change shall be
subject to the provisions of this Section 6.1 with respect thereto (it being understood and agreed
that any disclosure of a position in connection with a tender offer or exchange offer, other than a
“stop, look and listen” or similar communication of the type contemplated by Rule 14d-9(f)
promulgated under the Exchange Act or a recommendation on Schedule 14D-9 against such
tender offer or exchange offer made within ten (10) Business Days after the commencement
thereof and in any event at least two (2) Business Days prior to the Shareholder Meeting, shall be
deemed an Adverse Recommendation Change, unless the Blue Board expressly and concurrently
reaffirms the Board Recommendation).
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(h)
The Parties agree that an Adverse Recommendation Change effected in
accordance with Section 6.1(d) or Section 6.1(e) shall not in and of itself violate any other
provision of this Agreement.
(i)
In the event a breach of this Section 6.1 by any Representative of the Blue
Parties becomes Known to Blue, Blue shall use its best efforts both to promptly cure, to the
extent practicable, any prior breach and to cause such Representative to not commit any
additional breaches of this Section 6.1.
(j)
For purposes of this Agreement:
(i)
“Acquisition Proposal” shall mean any bona fide proposal or offer
from any Person relating to any (A) direct or indirect acquisition or purchase, in a
single transaction or a series of related transactions, of assets or businesses of
Blue or its Subsidiaries that, in the aggregate, constitute or generate 15% or more
of the consolidated net revenue or earnings before interest, taxes, depreciation and
amortization (on an estimated current replacement cost basis) for the preceding
twelve (12) months of Blue and its Subsidiaries, taken as a whole, (B) direct or
indirect acquisition or purchase of beneficial ownership of 15% or more of any
class of Equity Securities (by vote or value) of Blue or any of its Significant
Subsidiaries, (C) tender offer or exchange offer that if consummated would result
in any Person beneficially owning, directly or indirectly, 15% or more of any
class of Equity Securities (by vote or value) of Blue or any of its Significant
Subsidiaries, (D) merger, consolidation, business combination, asset purchase,
recapitalization, liquidation, dissolution, binding share exchange or similar
transaction involving Blue or any of its Significant Subsidiaries pursuant to which
any Person (or the stockholders of any Person) would own, directly or indirectly,
15% or more of the total voting power of the Equity Securities of Blue or any of
its Significant Subsidiaries or the surviving entity in a merger with Blue or any of
its Significant Subsidiaries or the resulting direct or indirect parent of Blue or
such surviving entity, or (E) any combination of the foregoing, in each case other
than the Transactions.
(ii)
“Superior Proposal” means a bona fide written Acquisition
Proposal that the Blue Board or committee thereof determines in good faith, after
consultation with its financial advisors and outside legal counsel (taking into
account (x) all relevant legal, financial, conditionality (including whether such
Acquisition Proposal is subject to a financing condition), regulatory and other
aspects of such Acquisition Proposal and the Merger and the other Transactions
deemed in good faith to be relevant by the Blue Board to the consummation of
such Acquisition Proposal, (y) the identity of the Person(s) making such
Acquisition Proposal, and (z) the likelihood of completion of such Acquisition
Proposal) would result in a transaction more favorable to Blue’s shareholders
from a financial point of view than the Merger and the other Transactions (taking
into account all of the terms of any proposal by Green to amend or modify the
terms of the Merger and the other Transactions in response to such proposal or
otherwise), except that the references to “15%” in the definition of “Acquisition
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Proposal” shall each be deemed to be a reference to “50%” and references to
“Blue or any of its Significant Subsidiaries” in clauses (B), (C) and (D) of the
definition of “Acquisition Proposal” shall be deemed to be references to “Blue”.
Section 6.2 Green No Solicitation. Green shall, and shall cause its Affiliates
and Subsidiaries and its and their respective officers, directors and employees to, and shall (and
shall cause each of its Affiliates and Subsidiaries to) direct and use reasonable best efforts to
cause Green’s Representatives (other than Green’s and its Affiliates’ and Subsidiaries’ respective
officers, directors and employees) to immediately cease and cause to be terminated all existing
discussions or negotiations with any Person conducted heretofore with respect to, or that could
reasonably be expected to lead to, any Green Business Combination. From the date of this
Agreement until the earlier of the Closing and the date of termination of this Agreement, Green
shall not, shall cause its Affiliates and Subsidiaries and its and their respective officers, directors
and employees not to, and shall (and shall cause each of its Affiliates and Subsidiaries to) direct
and use reasonable best efforts to cause Green’s Representatives (other than Green’s and its
Affiliates’ and Subsidiaries’ respective officers, directors and employees) not to, directly or
indirectly, (i) solicit, initiate, endorse, knowingly facilitate or knowingly encourage any Green
Business Combination or any inquiries, offers or the making of any proposal with respect to, or
that could reasonably be expected to lead to, any Green Business Combination, (ii) enter into any
letter of intent, memorandum of understanding, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other similar agreement
constituting or related to, or that is intended to effect, any Green Business Combination or that
would reasonably be expected to cause Green to abandon, terminate or fail to consummate the
Transactions, (iii) enter into, initiate, continue, engage in or otherwise participate in any way in
any discussions or negotiations regarding, or that could reasonably be expected to lead to, any
Green Business Combination, or (iv) agree or propose to do any of the foregoing. As used
herein, “Green Business Combination” shall mean (x) any acquisition or purchase, in a single
transaction or a series of transactions of all or any material part of the Green Companies
(regardless of whether such acquisition or purchase is by means of a sale of assets or a sale of
Equity Securities of one or more of the Green Companies or their Subsidiaries), other than the
Transactions or (y) any acquisition, purchase or corporate reorganization by the Green
Companies or their Affiliates that could reasonably be expected to prevent, materially delay or
materially impair the consummation of the Merger. Any act or omission by an Affiliate of Green
that would be a violation of this Section 6.2 if taken by Green shall be a breach by Green of this
Section 6.2.
Section 6.3 Preparation of the Proxy Statement and Form S-4; Provision
of Green Financial Statements; Shareholder Meetings.
(a)
As promptly as practicable after the date of this Agreement and in any
event within one hundred (100) days of the date of this Agreement, Green shall prepare, and
Green shall file with the SEC, a registration statement on Form S-4 to register the offer and sale
of the shares of Green Common Stock pursuant to the Merger (together with any supplements or
amendments thereto, the “Form S-4”). The Form S-4 will include a proxy statement prepared by
Blue and provided for inclusion in the Form S-4 not later than 30 days after the date of this
Agreement (together with any supplement or amendment thereto, the “Proxy Statement”)
relating to the meeting of Blue’s shareholders to be held for the purpose of obtaining the
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Shareholder Approval (such meeting, the “Shareholder Meeting”) in accordance and in
compliance with the Exchange Act and the rules and regulations thereunder. Each Party shall
use its reasonable best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after the filing of the Form S-4, and promptly thereafter mail the Proxy
Statement to Blue’s shareholders. Each of Green and Blue shall also use their respective
reasonable best efforts to satisfy prior to the effective date of the Form S-4 all necessary state
securities Law or “blue sky” notice requirements in connection with the Merger and the other
Transactions. Each of Green and Blue shall promptly supply to the other in writing, for inclusion
in the Proxy Statement and Form S-4, all information concerning its respective business required
under the Securities Act and the Exchange Act, and the rules and regulations thereunder, to be
included in the Proxy Statement and Form S-4; provided that neither Party shall use any such
information for any other purpose if doing so would violate or cause the violation of applicable
securities Laws. Each of Green and Blue shall furnish all information concerning itself as may
reasonably be required in connection with such actions and the preparation of the Form S-4.
Each Party agrees to correct promptly any information provided by it for use in the Form S-4 and
Proxy Statement if and to the extent that such information shall have become false or misleading
in any material respect or as otherwise required by applicable Law. Each of Green and Blue
shall notify the other promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy Statement or
Form S-4 or for additional information related to the Proxy Statement or Form S-4 and will
promptly supply the other Party with copies of all correspondence between it and its Affiliates or
their respective officers, employees, legal advisors or agents, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or Form S-4 or the Transactions.
Prior to filing or mailing the Proxy Statement or Form S-4 (or any amendment or supplement
thereto) or responding to any comments of the SEC with respect thereto, each of Green and Blue
shall liaise and cooperate with the other Party and provide it with a reasonable opportunity to
review and comment on such document or proposed response or compliance with any such
request. If at any time prior to the Shareholder Meeting (in the case of the Proxy Statement) or
the Closing (in the case of the Form S-4), any information relating to any Party or any of its
respective Affiliates, directors or officers, should be discovered by such Party which should be
set forth in an amendment or supplement to the Proxy Statement or Form S-4, so that such
document would not include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they are
made, not misleading, the Party which discovers such information shall promptly notify the other
Party and an appropriate amendment or supplement describing such information shall be
prepared, filed with the SEC and disseminated to the shareholders of Blue to the extent required
by Law. After all the comments received from the SEC have been cleared by the SEC staff and
all information required to be contained in the Proxy Statement or Form S-4 has been included
therein by Blue and Green, if applicable, and the Form S-4 has been declared effective, Blue
shall promptly file the definitive Proxy Statement with the SEC and cause the Proxy Statement to
be mailed (including by electronic delivery if permitted) as promptly as practicable, to its
shareholders of record, as of the record date established by the Blue Board pursuant to Section
6.3(b) and set forth in the Proxy Statement.
(b)
As promptly as practicable following the date on which the SEC shall
clear (whether orally or in writing) the Proxy Statement and declared the Form S-4 effective,
unless the Blue Board has effected an Adverse Recommendation Change, Blue shall take all
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action in accordance with the federal securities Laws, the Act, and Blue’s Charter Documents
necessary to establish a record date for, duly call, give notice of, convene and hold the
Shareholder Meeting as soon as reasonably practical for purposes of seeking the Shareholder
Approval and to solicit proxies pursuant to the Proxy Statement in connection therewith. Blue
may adjourn or postpone, and at the request of Green shall adjourn or postpone, the Shareholder
Meeting (i) to the extent necessary to ensure that any supplement or amendment to the Proxy
Statement that it determines in good faith is required by applicable Law to be disseminated to its
shareholders, or (ii) if there are insufficient shares of Blue Common Stock represented (either in
person or by proxy) to constitute a quorum necessary to conduct the business of the Shareholder
Meeting; provided, that any adjournment or postponement at the request of Green shall be for not
more than fifteen (15) days in the aggregate. Blue shall, through the Blue Board, make the
Board Recommendation to Blue’s shareholders and the Board Recommendation shall be set forth
in the Proxy Statement, except, in each case, to the extent that the Blue Board shall have made an
Adverse Recommendation Change as permitted by Section 6.1(d) or Section 6.1(e).
Section 6.4
Conduct of Green Business Pending Closing.
(a)
Except (i) as expressly permitted by this Agreement, (ii) as set forth in
Section 6.4(a) of the Green Disclosure Schedule, or (iii) as approved by Blue (which approval
will not be unreasonably withheld, conditioned or delayed), at all times during the period
commencing with the execution and delivery of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article IX and the Effective Time,
Green shall, and shall cause each of its Subsidiaries to, and Green shall exercise (and shall cause
its Subsidiaries to exercise) any available rights with respect to any of its Joint Venture to cause
each such Joint Venture to, (A) carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and (B) use its commercially reasonable
efforts, consistent with past practice, to keep available the services of its current officers, key
employees and consultants, and preserve its current relationships with customers, suppliers and
other Persons with whom it has significant business relations as is reasonably necessary to
preserve substantially intact its business organization.
(b)
Except (i) as expressly permitted by this Agreement, (ii) as set forth in
Section 6.4(b) of the Green Disclosure Schedule, or (iii) as approved in writing by Blue (which
approval will not be unreasonably withheld, conditioned or delayed), at all times during the
period commencing with the execution and delivery of this Agreement and continuing until the
earlier to occur of the termination of this Agreement pursuant to Article IX and the Effective
Time, Green shall not, and shall cause its Subsidiaries not to, do any of the following, and shall
exercise (and shall cause its Subsidiaries to exercise) any available rights with respect to its Joint
Ventures to cause each such Joint Ventures not to (it being understood and hereby agreed that if
any action is expressly permitted by any of the following subsections, such action shall be
expressly permitted under this Section 6.4):
(i)
amend its Charter Documents except to conform to Exhibit B;
(ii)
issue, sell, pledge, dispose of, grant, deliver, transfer, encumber, or
agree, authorize, or commit to the issue, sale pledge, disposition of, grant,
delivery, transfer, or encumbrance of, (in each case, whether through the issuance
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or granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise), any Equity Securities;
(iii) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, directly or indirectly, any shares of its Equity Securities;
(iv)
declare, set aside or pay any dividend or other distribution
(whether in cash, shares or property or any combination thereof) in respect of any
Equity Securities, or make any other actual, constructive or deemed distribution in
respect of its Equity Securities, except for cash dividends made by any direct or
indirect wholly-owned Subsidiary of Green to Green or one of its wholly-owned
Subsidiaries;
(v)
enter into any agreement with respect to the voting of its capital
stock;
(vi)
propose or adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;
(vii) (A) incur or assume any long-term or short-term debt for borrowed
monies or issue any debt securities in excess of $200,000,000 in the aggregate;
provided that any debt so incurred must be voluntarily pre-payable without
material premium, penalties or any other material costs, except for (1) debt
incurred in the ordinary course of business under letters of credit, lines of credit or
other credit facilities or arrangements in effect on the date of this Agreement, (2)
loans or advances between Green and any of its direct or indirect Subsidiaries, or
between any of its direct or indirect Subsidiaries and (3) any refinancing of longterm or short-term debt of Green or any of its Subsidiaries existing as of the date
of this Agreement, provided that if such refinancing is completed prior to
maturity, it shall be (i) on substantially similar terms or terms that are more
favorable to Green or such Subsidiaries and (ii) for the same or lesser principal
amount, (B) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person in excess of $40,000,000 in the aggregate, except with respect to
obligations of direct or indirect Subsidiaries of Green, (C) make any loans,
advances or capital contributions to or investments in any other Person (other than
Green or any of its direct or indirect Subsidiaries), except for business expense
advances in the ordinary course of business consistent with past practice to
employees of Green or any of its Subsidiaries, or (D) mortgage or pledge any of
its or its Subsidiaries’ assets, tangible or intangible, or create or suffer to exist any
Lien thereupon (other than Permitted Liens);
(viii) authorize or make capital expenditures which are, in the aggregate,
greater than 125% of the aggregate amount of capital expenditures scheduled to
be made in Green capital expenditure budget for the period indicated as set forth
in Section 6.4(b)(viii) of the Green Disclosure Schedule for the items previously
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budgeted except for (A) capital expenditures (1) to repair damage resulting from
insured casualty events or (2) to make emergency repairs or investments required
to maintain the safety and reliability of its assets or the continuity of its service in
accordance with good utility practices or (B) capital expenditures in response to
weather conditions or other emergencies;
(ix)
settle any pending or threatened legal proceeding if such settlement
exceeds $10,000,000 individually or $60,000,000 in the aggregate, except that (A)
the foregoing shall not restrict Green’s ability to enter into settlements (1) in the
ordinary course of business consistent with past practice or (2) in respect of any
regulatory proceedings (including appeals) that would not reasonably be expected
to have a Green Material Adverse Effect and (B) any amount that is reflected or
reserved against in the Green Financial Statements in respect of such legal
proceeding, or that is offset by insurance proceeds received in respect of such
legal proceeding, shall in each case not be counted towards the $10,000,000 or
$60,000,000 limitations set forth above;
(x)
except as may be required as a result of a change in applicable Law
or in GAAP, make any material change in any of the accounting principles,
policies, procedures or practices used by it or any annual Tax accounting period;
(xi)
except as may be required as a result of a change in applicable Law
or in GAAP, other than in the ordinary course of business consistent with past
practice, (A) make, revoke, change or rescind any material Tax election, (B) file
or amend any income or other material Tax Return or claim for refund except to
the extent otherwise required by Law, or (C) (1) enter into any closing agreement
affecting any material Tax liability or refund or (2) settle or compromise any
material Tax liability or refund;
(xii) take, or omit to take, any action that would prevent or impede, or
would reasonably be expected to prevent or impede, the Merger from qualifying
as a “reorganization” within the meaning of Section 368(a) of the Code;
(xiii) other than in the ordinary course of business consistent with past
practice, (A) acquire (by merger, consolidation or acquisition of stock or assets)
any other Person or any material equity interest therein or assets thereof in excess
of $20,000,000 individually or $60,000,000 in the aggregate, or (B) sell, transfer,
lease, license or otherwise dispose of any of its properties or assets, which are
material to the Green Parties, taken as a whole;
(xiv) other than in the ordinary course of business consistent with past
practice, enter into any Contract for the lease or purchase of real property or
modify the terms of any lease or sublease for Material Leased Real Property
(each, a “Real Property Lease”) of Green or any of its Subsidiaries;
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(xv) fail to use its commercially reasonable efforts to maintain, in full
force without interruption, its present insurance policies or comparable insurance
coverage;
(xvi) other than as required by any Governmental Authority or in the
ordinary course of business consistent with past practice, enter into, amend or
modify in any material respect any Green Material Contract;
(xvii) enter into, amend, extend, renew or modify any Contract or
transaction to which Green or any of its Subsidiaries or Joint Ventures, on the one
hand, and Green Parent or any of its Subsidiaries or Joint Ventures (other than
Green or any of its Subsidiaries or Joint Ventures), on the other hand, are parties,
on other than an arm’s length basis; or
(xviii) enter into a Contract, or otherwise resolve or agree in any legally
binding manner, to take any of the actions prohibited by this Section 6.4(b).
(c)
Prior to making any written or oral communications to the directors,
officers or employees of Blue or any of its Subsidiaries pertaining to compensation or benefit
matters that are affected by the transactions contemplated by this Agreement, Green shall
provide Blue with a copy of the intended communication, Blue shall have a reasonable period of
time to review and comment on the communication, and Green shall consider any such
comments in good faith.
(d)
Notwithstanding the foregoing, nothing in this Agreement is intended to
give Blue, directly or indirectly, the right to control or direct the business or operations of any
Green Party at any time prior to the Effective Time. Prior to the Effective Time, the Green
Parties shall exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over their own businesses and operations.
Section 6.5
Conduct of Blue Business Pending Closing.
(a)
Except (i) as expressly permitted by this Agreement, (ii) as set forth in
Section 6.5(a) of the Blue Disclosure Schedule, or (iii) as approved by Green (which approval
will not be unreasonably withheld, conditioned or delayed), at all times during the period
commencing with the execution and delivery of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article IX and the Effective Time,
Blue shall, and shall cause each of its Subsidiaries to, and Blue shall exercise (and shall cause its
Subsidiaries to exercise) any available rights with respect to its Joint Ventures to cause each such
Joint Venture to, (A) carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and (B) use its commercially reasonable
efforts, consistent with past practice, to keep available the services of its current officers, key
employees and consultants, and preserve its current relationships with customers, suppliers and
other Persons with whom it has significant business relations as is reasonably necessary to
preserve substantially intact its business organization.
(b)
Except (i) as expressly permitted by this Agreement, (ii) as set forth in
Section 6.5(b) of the Blue Disclosure Schedule, or (iii) as approved in writing by Green (which
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approval will not be unreasonably withheld, conditioned or delayed), at all times during the
period commencing with the execution and delivery of this Agreement and continuing until the
earlier to occur of the termination of this Agreement pursuant to Article IX and the Effective
Time, Blue shall not, and shall cause its Subsidiaries not to, do any of the following and shall
exercise (and shall cause its Subsidiaries to exercise) any available rights with respect to its Joint
Ventures to cause each such Joint Venture not to (it being understood and hereby agreed that if
any action is expressly permitted by any of the following subsections, such action shall be
expressly permitted under this Section 6.5):
(i)
amend its Charter Documents;
(ii)
issue, sell, pledge, dispose of, grant, deliver, transfer, encumber, or
agree, authorize, or commit to the issue, sale pledge, disposition of, grant,
delivery, transfer, or encumbrance of, (in each case, whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise), any Equity Securities;
(iii) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, directly or indirectly, any shares of its Equity Securities;
(iv)
declare, set aside or pay any dividend or other distribution
(whether in cash, shares or property or any combination thereof) in respect of any
Equity Securities, or make any other actual, constructive or deemed distribution in
respect of its Equity Securities, except for (A) cash dividends made by any direct
or indirect wholly-owned Subsidiary of Blue to Blue or one of its wholly-owned
Subsidiaries and (B) regular quarterly dividends in the same amounts as the
regular quarterly dividends paid in 2014 and with record dates and payment dates
consistent with the record date and payment date for each quarterly period ended
December 31, 2014;
(v)
enter into any agreement with respect to the voting of its capital
stock;
(vi)
propose or adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;
(vii) (A) incur or assume any long-term or short-term debt for borrowed
monies or issue any debt securities in excess of $50,000,000 in the aggregate;
provided that any debt so incurred must be voluntarily pre-payable without
material premium, penalties or any other material costs, except for (1) debt
incurred in the ordinary course of business under letters of credit, lines of credit or
other credit facilities or arrangements in effect on the date of this Agreement, (2)
loans or advances between Blue and any of its direct or indirect Subsidiaries, or
between any of its direct or indirect Subsidiaries and (3) any refinancing of longterm or short-term debt of Blue or any of its Subsidiaries existing as of the date of
this Agreement, provided that if such refinancing is completed prior to maturity, it
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shall be (i) on substantially similar terms or terms that are more favorable to Blue
or such Subsidiaries, (ii) for the same or lesser principal amount and (iii)
prepayable by Blue or such Subsidiaries without a premium or penalty amount
greater than the premium or penalty associated with the debt that is being
refinanced, (B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person in excess of $10,000,000 in the aggregate, except with respect to
obligations of direct or indirect Subsidiaries of Blue, (C) make any loans,
advances or capital contributions to or investments in any other Person (other than
Blue or any of its direct or indirect Subsidiaries), except for business expense
advances in the ordinary course of business consistent with past practice to
employees of Blue or any of its Subsidiaries, or (D) mortgage or pledge any of its
or its Subsidiaries’ assets, tangible or intangible, or create or suffer to exist any
Lien thereupon (other than Permitted Liens);
(viii) authorize or make capital expenditures which are, in the aggregate,
greater than 125% of the aggregate amount of capital expenditures scheduled to
be made in Blue’s capital expenditure budget for the period indicated as set forth
in Section 6.5(b)(viii) of the Blue Disclosure Schedule for the items previously
budgeted except for (A) capital expenditures (1) to repair damage resulting from
insured casualty events or (2) to make emergency repairs or investments required
to maintain the safety and reliability of its assets or the continuity of its service in
accordance with good utility practices or (B) capital expenditures in response to
weather conditions or other emergencies;
(ix)
(A) increase in any respect the compensation, bonus or fringe
benefits of any director, officer or employee of Blue or any of its Subsidiaries,
other than (1) as required by any collective bargaining agreement or Blue
Employee Benefit Plan or applicable Law, (2) increases in salaries, wages and
bonuses of any director, officer or employee made in the ordinary course of
business consistent with past practice, and (3) changes made in the ordinary
course of business consistent with past practice to group employee benefit plans
that do not discriminate in favor of executive level employees, or (B) enter into,
adopt, renew or amend any Blue Employee Benefit Plan (other than a renewal
occurring in accordance with the terms thereof) providing for the payment to any
director, officer or employee compensation or benefits contingent, or the terms of
which are materially altered, upon or in connection with the Merger;
(x)
other than as required by Law or any collective bargaining
agreement or pursuant to any Blue Employee Benefit Plan in existence on the date
hereof or entered into after the date hereof to the extent expressly permitted by the
terms of this Agreement, (A) pay any benefit not provided for under any Blue
Employee Benefit Plan, except for payments and benefits provided to nonexecutive level employees in the ordinary course of business consistent with past
practice, (B) take any action to fund or in any other way secure the payment of
compensation or benefits under any Blue Employee Benefit Plan, (C) except in
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executive level employees, exercise any discretion to accelerate the vesting or
payment of any compensation or benefit under any Blue Employee Benefit Plan,
(D) enter into or adopt any new employee benefit plan or arrangement or amend,
modify or terminate (except as may be required (i) to avoid the imposition of any
tax or penalty under Section 409A of the Code or (ii) by applicable Tax
qualification requirements) any existing Blue Employee Benefit Plan, except in
the case of this clause (D) in the ordinary course of business consistent with past
practice with respect to employee benefit plans that either do not apply to
executive level employees or that are broad based group benefit plans that do not
discriminate in favor of executive level employees, (E) enter into or amend
collective bargaining agreements with existing collective bargaining
representatives or newly certified bargaining units regarding mandatory subjects
of bargaining under applicable Law, in each case in a manner inconsistent with
past practice to the extent permitted by Law (F) grant the right to receive any
severance, termination or retention pay, or increases therein, except for severance
or termination pay that may be agreed to be provided in the ordinary course of
business consistent with past practice to terminating employees who are not
executive level employees in exchange for a release of claims or (G) pay any
benefit or grant, amend or modify any award, including in respect of stock options
or other equity-related award, in each case described in subclauses (A) through
(G) above for the benefit of any current or former director, officer or employee of
Blue or any of its Subsidiaries;
(xi)
settle any pending or threatened legal proceeding if such settlement
exceeds $2,500,000 individually or $15,000,000 in the aggregate, except that (A)
the foregoing shall not restrict Blue’s ability to enter into settlements (1) in the
ordinary course of business consistent with past practice or (2) in respect of any
regulatory proceedings (including appeals) that would not reasonably be expected
to have a Blue Material Adverse Effect and (B) any amount that is reflected or
reserved against in the Blue Financial Statements in respect of such legal
proceeding, or that is offset by insurance proceeds received in respect of such
legal proceeding, shall in each case not be counted towards the $2,500,000 or
$15,000,000 limitations set forth above;
(xii) except as may be required as a result of a change in applicable Law
or in GAAP, make any material change in any of the accounting principles,
policies, procedures or practices used by it or any annual Tax accounting period;
(xiii) except as may be required as a result of a change in applicable Law
or in GAAP, other than in the ordinary course of business consistent with past
practice, (A) make, revoke, change or rescind any material Tax election, (B) file
or amend any income or other material Tax Return or claim for refund except to
the extent otherwise required by Law, or (C) (1) enter into any closing agreement
affecting any material Tax liability or refund or (2) settle or compromise any
material Tax liability or refund;
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(xiv) take, or omit to take, any action that would prevent or impede, or
would reasonably be expected to prevent or impede, the Merger from qualifying
as a “reorganization” within the meaning of Section 368(a) of the Code;
(xv) other than in the ordinary course of business consistent with past
practice, (A) acquire (by merger, consolidation or acquisition of stock or assets)
any other Person or any material equity interest therein or assets thereof in excess
of $5,000,000 individually or $15,000,000 in the aggregate, or (B) sell, transfer,
lease, license or otherwise dispose of any of its properties or assets, which are
material to the Blue Parties, taken as a whole;
(xvi) other than in the ordinary course of business consistent with past
practice, enter into any Contract for the lease or purchase of real property or
modify the terms of any Real Property Lease of Blue or any of its Subsidiaries;
(xvii) fail to use its commercially reasonable efforts to maintain, in full
force without interruption, its present insurance policies or comparable insurance
coverage;
(xviii) other than (A) as required by any Governmental Authority, (B)
Contracts implementing any requirement of Law or the outcome of any regulatory
proceeding or (C) in the ordinary course of business consistent with past practice,
enter into, amend or modify in any material respect any Blue Material Contract;
or
(xix) enter into a Contract, or otherwise resolve or agree in any legally
binding manner, to take any of the actions prohibited by this Section 6.5(b).
(c)
Prior to making any written or oral communications to the directors,
officers or employees of Blue or any of its Subsidiaries pertaining to compensation or benefit
matters that are affected by the transactions contemplated by this Agreement, Blue shall provide
Green with a copy of the intended communication, Green shall have a reasonable period of time
to review and comment on the communication, and Blue shall consider any such comments in
good faith.
(d)
Notwithstanding the foregoing, nothing in this Agreement is intended to
give Green, directly or indirectly, the right to control or direct the business or operations of the
Blue Parties at any time prior to the Effective Time. Prior to the Effective Time, the Blue Parties
shall exercise, consistent with the terms and conditions of this Agreement, complete control and
supervision over their own businesses and operations.
Section 6.6
Employee Benefits.
(a)
Green agrees that each employee of Blue or its Subsidiaries at the
Effective Time shall, as of the Effective Time, be an employee of Green or its Subsidiaries and
each such employee who continues to remain employed with Green or its Subsidiaries (a
“Continuing Employee”) shall, during the period commencing at the Effective Time and ending
twelve (12) months after the Effective Time (and for so long as such Continuing Employee
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remains employed with Green or its Subsidiaries), be provided with (1) base salary or base wage
that is no less favorable than the base salary or base wage provided by Blue and its Subsidiaries
to each such Continuing Employee immediately prior to the Effective Time, (2) target annual
cash bonus and long-term incentive opportunities that are no less favorable in the aggregate than
the target annual cash bonus and long-term incentive opportunities provided by Blue and its
Subsidiaries to each such Continuing Employee immediately prior to the Effective Time (it being
understood that long-term incentive opportunities need not be provided in the form of equity or
equity-based grants), (3) defined contribution retirement, pension and vacation and other welfare
benefits that are no less favorable in the aggregate than those provided by Blue and its
Subsidiaries to such Continuing Employees immediately prior to the Effective Time and
(4) severance benefits that are no less favorable than the severance benefits provided by Blue and
its Subsidiaries to such Continuing Employees immediately prior to the Effective Time, subject
in each case to the execution by a severed employee of a standard release of claims; provided,
however, that the requirements of clauses (1) through (4) of this sentence shall not apply to
Continuing Employees who are covered by a collective bargaining agreement.
(b)
Green shall, or shall cause the Surviving Corporation or another of
Green’s Affiliates to, (1) cause any pre-existing conditions or limitations and eligibility waiting
periods under any group health plans of Green or its Affiliates to be waived with respect to the
Continuing Employees and their eligible dependents, (2) give each Continuing Employee credit
for the plan year in which the Effective Time occurs towards applicable deductibles and annual
out-of-pocket limits for medical expenses incurred prior to the Effective Time for which
payment has been made and (3) give each Continuing Employee service credit for such
Continuing Employee’s employment with Blue and its Subsidiaries for purposes of vesting,
benefit accrual and eligibility to participate under each applicable Green benefit plan that
corresponds to or replaces a Blue Employee Benefit Plan in which such Continuing Employee
participated prior to the Effective Time, as if such service had been performed with Green and its
Subsidiaries, except for benefit accrual under defined benefit pension plans, for purposes of
qualifying for subsidized early retirement benefits or to the extent it would result in a duplication
of benefits.
(c)
Green shall, or shall cause the Surviving Corporation or another of
Green’s Affiliates to, honor all employee benefit obligations to current and former employees
under the Blue Employee Benefit Plans, in each case subject to the terms and conditions of such
plans as they may be amended, modified or terminated from time to time in accordance with
their terms, provided, however, for the avoidance of doubt, that no such amendments,
modifications or terminations shall reduce or otherwise impact Green’s obligations pursuant to
Section 6.6(a) hereof.
(d)
Nothing contained in this Agreement is intended to (1) be treated as an
amendment of any particular Blue Employee Benefit Plan, (2) prevent Green, the Surviving
Corporation or any of their Affiliates from amending or terminating any of their benefit plans in
accordance with their terms, (3) prevent Green, the Surviving Corporation or any of their
Affiliates, after the Effective Time, from terminating the employment of any Continuing
Employee, or (4) create any third-party beneficiary rights in any employee of Blue or Green or
any of their respective Subsidiaries, any beneficiary or dependent thereof, or any collective
bargaining representative thereof, with respect to the compensation, terms and conditions of
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employment and/or benefits that may be provided to any employee of Blue and its Subsidiaries
by Blue or any Continuing Employee by Green, the Surviving Corporation or any of their
Affiliates or under any benefit plan which Green, the Surviving Corporation or any of their
Affiliates may maintain.
Section 6.7 Notification. Between the date of this Agreement and the Closing,
each of Green and Blue shall promptly notify the other Party if such Party becomes aware of any
event, fact or circumstance that would make the satisfaction of the conditions in Article VIII
impossible or unlikely. This Section 6.7 and any notification provided pursuant hereto shall not
modify or limit in any way the Parties rights or remedies under Article IV, Article V, Article
VIII or Article IX.
Section 6.8 Access. At all times during the period commencing with the
execution and delivery of this Agreement and continuing until the earlier to occur of the
termination of this Agreement pursuant to Article IX and the Effective Time, Blue shall afford
Green and its financial advisors, business consultants, legal counsel, accountants and other
agents and representatives reasonable access during normal business hours, upon reasonable
notice, to the properties, books and records and personnel of Blue and Green shall afford Blue
and its financial advisors, business consultants, legal counsel, accountants and other agents and
representatives reasonable access during normal business hours, upon reasonable notice, to the
books and records and personnel of Green; provided, however, that the Party providing access
may restrict or otherwise prohibit access to any documents or information to the extent that (i)
any applicable Law requires such Party to restrict or otherwise prohibit access to such documents
or information, (ii) access to such documents or information would give rise to a material risk of
waiving any attorney-client privilege other privilege applicable to such documents or
information (in which event the Parties shall negotiate in good faith to seek alternative means to
disclose such information as nearly as possible without affecting such attorney-client or such
other privilege, including entry into a joint defense agreement), or (iii) access to a Contract to
which such Party or any of its Subsidiaries is a Party or otherwise bound would violate or cause a
default under, or give a third party the right terminate or accelerate the rights under, such
Contract; provided, further, that such access shall be under the supervision of the designated
personnel or representatives of the Party providing access (provided that no such supervision
shall restrict or limit the scope and extent of rights of a Party pursuant to this Section 6.8);
provided, further, that, to the extent practicable, all requests for information made pursuant to
this Section 6.8 shall be directed to such Person or Persons as may be designated by the Party
providing access, and the Party seeking access shall use its commercially reasonable efforts not
to directly contact any other officer, director, employee, agent or representative of the Party
providing access without the prior approval of such designated Person(s); and provided further,
that no information or knowledge obtained by the Party requesting access in any investigation
conducted pursuant to the access contemplated by this Section 6.8 shall affect or be deemed to
modify any representation or warranty of the Party providing access set forth in this Agreement
or otherwise impair the rights and remedies available to the Party requesting access hereunder.
In the event that a Party does not provide access or information in reliance on the preceding
sentence, it shall use its reasonable best efforts to communicate the applicable information to the
Party requesting access in a way that would not violate the applicable Law or Contract or to
waive such a privilege. Any investigation conducted pursuant to the access contemplated by this
Section 6.8 shall be conducted in a manner that does not unreasonably interfere with the conduct
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of the business of the Party providing access or any of its Subsidiaries or create a risk of damage
or destruction to any property or assets of such Party or any of its Subsidiaries. Any access to
the properties of the Party providing access or any of its Subsidiaries shall be subject to such
Party’s reasonable security measures and insurance requirements and shall not include the right
to perform invasive testing without the such Party’s prior written consent (which consent shall
not be unreasonably withheld, conditioned or delayed). The terms and conditions of the
Confidentiality Agreement shall apply to any information obtained by any Party or any of its
financial advisors, business consultants, legal counsel, accountants and other agents and
representatives in connection with any investigation conducted pursuant to the access
contemplated by this Section 6.8. The Party providing access shall reimburse the Party seeking
access promptly for any reasonable out-of-pocket expenses incurred by the Party seeking access
in complying with any request by or on behalf of the Party seeking access in connection with this
Section 6.8.
Section 6.9
Regulatory Approvals; Reasonable Best Efforts.
(a)
Regulatory Approvals. Each Party shall cooperate and promptly prepare
and file all necessary documentation to effect all necessary applications, notices, petitions and
filings, and shall use reasonable best efforts to take or cause to be taken all actions, and do or
cause to be done all things in order to, (i) obtain all approvals and authorizations of all
Governmental Authorities necessary or advisable to consummate and make effective, in the most
expeditious manner reasonably practicable, the Merger and the other Transactions, including the
Blue Required Statutory Approvals and the Green Required Statutory Approvals, (ii) make all
registrations and filings, and thereafter, make any other required registrations, filings or
submissions, and pay any fees due in connection therewith, with any Governmental Authority
necessary in connection with the consummation of the transactions contemplated by this
Agreement, (iii) defend any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the transactions
contemplated by this Agreement, (iv) seek to have lifted or rescinded any injunction or
restraining order which may adversely affect the ability of the Parties to consummate the
transactions contemplated hereby, in each case until the issuance of a final, non-appealable order
with respect thereto, and (v) execute and deliver any additional agreements or instruments
reasonably necessary to consummate the transactions contemplated by this Agreement.
(b)
Reasonable Best Efforts. In furtherance of the obligations set forth in
Section 6.9(a), each of Green and Blue agrees that it will use its reasonable best efforts to take
(and to cause its Subsidiaries and Affiliates to take) promptly any and all steps reasonably
necessary, proper or advisable to obtain all approvals and authorizations of all Governmental
Authorities necessary or advisable to consummate and make effective the Merger and the other
Transactions, including the Blue Required Statutory Approvals and Green Required Statutory
Approvals so as to enable the Parties to close the Transactions as promptly as reasonably
practicable, including, if necessary, by proposing, negotiating, committing to and implementing,
by way of operational restriction, consent decree, hold separate order, divestiture, undertaking or
otherwise, all terms, conditions, liabilities, obligations, commitments, sanctions or undertakings
in respect of Blue, Green and their respective Affiliates; provided that neither Blue nor any of its
Subsidiaries shall agree to, or accept, any additional or different undertakings, agreements,
commitments or conditions in connection with the Transactions pursuant to any settlement,
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negotiation, litigated proceeding or otherwise with any Person with respect to obtaining the Blue
Required Statutory Approvals and/or the Green Required Statutory Approvals or any other
approvals or authorizations described in the foregoing sentence without the prior written consent
of Green. Without limiting the generality of the preceding sentences and subject thereto, Green
and Blue shall file as promptly as practicable a joint voluntary notice in respect of the
transactions contemplated hereby under Exon-Florio. Notwithstanding the obligations set forth
in Section 6.9(a) and this Section 6.9(b): (1) Green and Blue shall not be required, in connection
with obtaining any Blue Required Statutory Approvals or Green Required Statutory Approvals,
to agree or consent to or accept any terms, conditions, liabilities, obligations, commitments,
sanctions or undertakings as a condition to obtaining the Blue Required Statutory Approvals and
the Green Required Statutory Approvals that, individually or in the aggregate, and taking into
account any positive effects, would have, or be reasonably likely to have, a material and adverse
effect on the business, assets, liabilities, properties, condition (financial or otherwise) or results
of operations of a business that is 150% the size of, but otherwise identical to, Blue and its
Subsidiaries, taken as a whole (a “Burdensome Effect”). Nothing in Section 6.9(a) or this
Section 6.9(b) shall obligate Green or Blue or any of their respective Subsidiaries to take any
action or agree to any commitment that is not conditioned on the Closing.
(c)
Notwithstanding anything to the contrary in this Agreement, no Party,
directly or indirectly through one or more of its Affiliates, shall take any action, including
acquiring or making any investment in any person or any division or assets thereof, that would
reasonably be expected to prevent, materially impair or materially delay the ability of the Parties
to consummate the Merger and the other Transactions. Any act or omission by an Affiliate of
Green or Blue that would be a violation of this Section 6.9(c) if taken by Green or Blue shall be a
breach of this Section 6.9(c) by Green or Blue, respectively.
(d)
Unless prohibited by applicable Law or by the applicable Governmental
Authority, (i) to the extent reasonably practicable, neither Green nor Blue shall participate in or
attend any meeting, or engage in any substantive discussion with any Governmental Authority
(including any member of any Governmental Authority’s staff) in respect of this Agreement, the
Merger or the other Transactions (including with respect to any of the actions referred to in
Section 6.9(a) or, Section 6.9(b)) without providing prior notice of any such meeting or
discussion to the other, (ii) in the event a Party is prohibited by applicable Law or by the
applicable Governmental Authority from participating in or attending any such meeting or
engaging in any such discussion, the other Party shall keep such Party reasonably and promptly
apprised with respect thereto, (iii) the Parties shall cooperate in the filing of any substantive
memoranda, white papers, filings, correspondence or other written communications explaining
or defending this Agreement, the Merger or the other Transactions, articulating any regulatory or
competitive argument or responding to requests or objections made by any Governmental
Authority, and (iv) to the extent reasonably practicable, each Party shall provide the other Party
copies of all correspondence, filings and communications between it and its Subsidiaries and
Affiliates and their respective representatives, on the one hand, and any Governmental Authority
(including any member of any Governmental Authority’s staff), on the other hand, with respect
to this Agreement, the Merger or the other Transactions; provided that neither Party shall not be
under an obligation to disclose confidential information with respect to its Affiliates to the other
Party.
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Section 6.10 State Anti-Takeover Statutes. Without limiting anything contain
in this Agreement, each of Blue and Green shall (i) take all action within its power to ensure that
no state anti-takeover statute or similar statute or regulation is or becomes applicable to this
Agreement, the Merger or any of the other Transactions, and (ii) if any state anti-takeover statute
or similar statute or regulation becomes applicable to this Agreement, the Merger or any of the
other Transactions, take all action within its power to ensure that the Merger and the other
Transactions may be consummated as promptly as reasonably practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such statute or
regulation on the Merger and the other Transactions.
Section 6.11 Public Announcements. The mutual announcement of the
Agreement and the Transactions shall be as agreed by Blue and Green and substantially in the
form attached as Exhibit A to this Agreement. Green and Blue will consult with each other
before issuing, and will provide each other reasonable opportunity to review, comment upon and
concur with, any other press release or otherwise making any public statements with respect to
this Agreement or the Transactions, and shall not issue any such press release or make any such
written public statement prior obtaining the other Party’s written approval (which approval shall
not be unreasonably withheld, conditioned or delayed), except (a) as the Parties or their
respective Affiliates may be required, at the advice of counsel, to do by applicable Law, court
order or by obligations pursuant to any listing agreement with any national securities exchange
(in which case such party will, to the extent practicable, promptly inform the other Parties in
writing in advance of such compelled disclosure), (b) with respect to any Adverse
Recommendation Change, and (c) as is consistent with previous press releases, public
disclosures or public statements made jointly by the Parties or otherwise in a manner consistent
with this Section 6.11; provided, that, in each such case, to the extent practicable, the Party
intending to make such release shall use its reasonable best efforts consistent with applicable
Law to consult with the other Party in advance of such release with respect to the text thereof.
Section 6.12 Listing Application. Green shall prepare and submit to the NYSE
a listing application covering the Green Common Stock to be issued pursuant to this Agreement.
Each of Green and Blue shall furnish all information concerning itself as may reasonably be
required in connection with such actions and the preparation of the listing application; provided,
that neither Party shall use any such information for any other purpose without the prior written
consent of the other Party or if doing so would violate or cause a violation of United States other
applicable securities Laws. Green shall use its reasonable best efforts to cause the Green
Common Stock to be issued pursuant to this Agreement to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time.
Section 6.13 Directors and Officers.
(a)
From and after the Effective Time, each of Green and the Surviving
Corporation agrees that all rights to indemnification and exculpation now existing in favor of any
current or former director or officer, or individuals performing equivalent functions, of Blue or
any of its Subsidiaries with respect to their activities as such prior to the Closing Date, as
provided in Blue’s Charter Documents in effect on the date of this Agreement and under
Connecticut law, shall survive the Closing and each of Green and the Surviving Corporation
agrees that it will indemnify and hold harmless each present and former director and officer of
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Blue or any of its Subsidiaries (in each case, when acting in such capacity), determined as of the
Effective Time (the “Indemnified Parties”), against any costs or expenses (including reasonable
attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that Blue
would have been permitted under the Laws of the State of Connecticut and its certificate of
incorporation or by-laws in effect on the date of this Agreement to indemnify such Person (and
Green or the Surviving Corporation shall also advance expenses as incurred to the fullest extent
permitted under applicable Law; provided that the Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined that such Person is
not entitled to indemnification); and provided, further, that any determination required to be
made with respect to whether an officer’s or director’s conduct complies with the standards set
forth under the Laws of the State of Connecticut and Blue’s certificate of incorporation and bylaws shall be made by independent counsel selected by the Surviving Corporation.
(b)
Prior to the Effective Time, Blue shall and, if Blue is unable to, Green
shall cause the Surviving Corporation as of the Effective Time to obtain and fully pay for “tail”
insurance policies with a claims period of at least six years from and after the Effective Time
from an insurance carrier with the same or better credit rating as Blue’s current insurance carrier
with respect to directors’ and officers’ liability insurance and fiduciary liability insurance
(collectively, “D&O Insurance”) with benefits and levels of coverage at least as favorable as
Blue’s policies existing on the date of this Agreement with respect to matters existing or
occurring at or prior to the Effective Time (including in connection with this Agreement or the
Transactions); provided, however, that in no event shall Blue or Green expend for such policies a
premium amount in excess of 250% of the annual premiums currently paid by Blue for such
insurance. If Blue and the Surviving Corporation for any reason fail to obtain such “tail”
insurance policies as of the Effective Time, the Surviving Corporation shall, and Green shall
cause the Surviving Corporation to, maintain in effect for a period of not less than six (6) years
from and after the Effective Time the D&O Insurance in place as of the date of this Agreement
with benefits and levels of coverage at least as favorable as provided in Blue’s policies existing
as of the date of this Agreement, or the Surviving Corporation shall, and Green shall cause the
Surviving Corporation to, use reasonable best efforts to purchase comparable D&O Insurance for
such six (6)-year period with benefits and levels of coverage at least as favorable as provided in
Blue’s policies existing as of the date of this Agreement; provided, however, that in no event
shall Green or the Surviving Corporation be required to expend for such policies an annual
premium amount in excess of 250% of the annual premiums currently paid by Blue for such
insurance; and, provided further that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall obtain a policy with the greatest coverage available
for a cost not exceeding such amount.
(c)
If Green or the Surviving Corporation or any of their respective successors
or assigns (i) shall consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any individual, corporation or other
entity, then, and in each such case, proper provisions shall be made so that the successors and
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assigns of Green or the Surviving Corporation shall assume all of the obligations set forth in this
Section 6.13.
(d)
The provisions of this Section 6.13 are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party, his or her heirs, executors or administrators.
(e)
The rights of the Indemnified Parties under this Section 6.13 shall be in
addition to any rights such Indemnified Parties may have under the certificate of incorporation or
by-laws of Blue or any of its Subsidiaries, or under any applicable Contracts or Laws.
Section 6.14 Further Assistance.
(a)
From and after the date of this Agreement until the Closing, subject to the
conditions and limitations and upon the terms of this Agreement, each Party shall use reasonable
best efforts (subject to, and in accordance with, applicable Law) to take promptly, or cause to be
taken, all actions, and to do promptly, or cause to be done, and to assist and cooperate with the
other Parties in doing, all things necessary, proper or advisable under applicable Law to carry out
the intent and purposes of this Agreement, to fulfill and satisfy each condition within the control
of such Party and to consummate and make effective the Transactions. Without limiting the
generality of the foregoing, subject to the conditions and limitations and upon the terms of this
Agreement, each Party shall reasonably cooperate with the other Parties, shall execute and
deliver such further documents, certificates, agreements and instruments and shall take such
other actions as may be reasonably requested by the other Parties to evidence or reflect the
transactions contemplated by this Agreement (including the execution and delivery of all
documents, certificates, agreements and instruments reasonably necessary for all filings
hereunder).
(b)
As promptly as practicable after the date of this Agreement, Green and
Blue shall establish a transition committee (the “Transition Committee”) consisting of two (2)
representatives designated by each of Green and Blue. The activities of the Transition
Committee shall include the development of regulatory plans and proposals, the facilitation of
the transfer of information between the parties and other matters as the Transition Committee
deems appropriate. At all times after the date of this Agreement until the Effective Time (or the
earlier termination of this Agreement as provided in Article IX), there shall be two (2)
representatives of Green on the Transition Committee that shall be designated by Green as the
primary contact person for Blue at Green (the “Green Contact”) and two (2) representatives of
Blue on the Transition Committee that shall be designated by Blue as the primary contact person
for Green at Blue (the “Blue Contact”). In the event that either Green or Blue elects to request
that the other consent to any action or matter involving such Party or any of its Subsidiaries or
Joint Ventures as is contemplated by Section 6.4 or Section 6.5, as applicable, the Parties shall
make all such requests to the Green Contacts or the Blue Contacts, as applicable, and each Party
agrees that it will use its reasonable best efforts to cause its respective contact to respond as
promptly as practicable to any such request, taking into account the nature of the request, the
circumstances under which the request is made and the timing indicated in the request. The
Green Contacts shall initially be Ignacio Estella and Juan Romero (and may be changed by
Green from time to time by written notice from Green to Blue) and the Blue Contacts shall
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initially be Richard Nicholas and Linda Randell (and may be changed by Blue from time to time
by written notice from Blue to Green).
Section 6.15 Transaction Litigation. In the event that any shareholder
litigation related to this Agreement, the Merger or the other Transactions is brought, or to Blue’s
Knowledge, threatened, against Blue and/or the members of the Blue Board after the date of this
Agreement and prior to the Effective Time (the “Transaction Litigation”), Blue shall promptly
notify Green of any such Transaction Litigation and shall give Green the opportunity to
participate in the defense or settlement thereof. Blue shall not settle any Transaction Litigation
without Green’s prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed), except if such Transaction Litigation is settled solely for monetary
damages entirely paid for with proceeds of insurance (other than the deductible under any
insurance policy(ies) in effect as of the date of this Agreement).
Section 6.16 Confidentiality Agreement. The Confidentiality Agreement shall
continue and remain in full force and effect until the Closing, upon which such agreement shall
expire. In the event that this Agreement is terminated pursuant to the terms hereof prior to the
Closing, (a) the restrictions provided for in Section 6 of the Confidentiality Agreement shall
remain in effect until November 19, 2016, and (b) the other obligations and provisions of the
Confidentiality Agreement shall remain in effect for two (2) years from the date of such
termination.
Section 6.17 Agreements Concerning Green and Merger Sub.
(a)
During the period from the date of this Agreement through the Effective
Time, Merger Sub shall not engage in any activity or assume any liability of any nature except
for activities or liabilities related to or in furtherance of this Agreement or the Transactions.
(b)
Green hereby guarantees the due, prompt and faithful payment,
performance and discharge by Merger Sub of, and the compliance by Merger Sub with, all of the
covenants, agreements, obligations and undertakings of Merger Sub under this Agreement in
accordance with the terms of this Agreement, and covenants and agrees to take all actions
necessary or advisable within its power to ensure such performance and discharge by Merger
Sub hereunder. Green shall, immediately following execution of this Agreement, approve this
Agreement in its capacity as sole stockholder of Merger Sub in accordance with applicable Law
and the articles of incorporation and bylaws of Merger Sub.
(c)
Prior to the Closing Green shall issue additional shares of Green Common
Stock to Green Parent, such that immediately after the Closing, after giving effect to the Merger
and the other Transactions, Green Parent shall own an aggregate number of shares of Green
Common Stock equal to 81.50% of all issued and outstanding shares of Green Common Stock.
(d)
Prior to the Closing, Green shall amend its Charter Documents so that
from and after the Closing they conform with Exhibit B.
(e)
Prior to the Closing, Green shall enter into a shared services agreement
with Green Parent or one or more of its Affiliates regarding the provision of various corporate
and other shared services to Green and its Subsidiaries on arm’s length basis and on financial and
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other material terms no less favorable to Green than applicable agreements or arrangements in
respect of such corporate or other shared services existing as of the date of this Agreement and at
costs no greater than those incurred and reflected in the Green Financial Statements, as
applicable (the “Shared Services Agreement”), it being understood and agreed, for the avoidance
of doubt, that such costs are subject to ordinary course, market adjustments made on an arm’s
length basis. Prior to entering into such Shared Services Agreement, Green shall obtain the
approval of a committee comprised solely of its independent directors for such services
agreement and Green and such committee shall consult with Blue regarding the scope, nature
and terms of the services to be provided thereunder.
(f)
Prior to the Closing, Blue and Green shall negotiate in good faith and
Green will enter into a stockholder agreement with Green Parent containing the terms set forth
on Exhibit C hereto and such other terms as agreed by Blue, Green and Green Parent not
inconsistent with those set forth on Exhibit C hereto.
Section 6.18 Section 16 Matters. The Blue Board and the board of directors of
Green shall, prior to the Effective Time, each adopt resolutions consistent with the interpretive
guidelines of the SEC pursuant to Rule 16b-3(d) and Rule 16b-3(e) under the Exchange Act to
exempt for the purposes of Section 16 of the Exchange Act (i) the conversion of Blue Common
Stock into Green Common Stock, (ii) the conversion of Blue Stock Awards set forth in Section
2.4 and (iii) the acquisition of Green Common Stock pursuant to the terms of this Agreement by
officers and directors of Blue subject to the reporting requirements of Section 16(a) of the
Exchange Act or by employees of Blue who may become an officer or director of Green subject
to the reporting requirements of Section 16(a) of the Exchange Act. Each of Green and Blue
shall provide to counsel for the other Party for its review copies of such resolutions to be adopted
by its board of directors prior to such adoption and each Party shall provide the other Party with
such information as shall be reasonably necessary for the board of directors of such Party to set
forth the information required in the resolutions of such board of directors.
Section 6.19 Governance; Charitable and Community Support.
(a)
Green shall offer, and take actions necessary to cause, Blue’s current
Chief Executive Officer and at least two of Blue’s directors immediately prior to the Effective
Time to serve on the board of Green as of the Effective Time and Blue’s current Chief Executive
Officer to be elected the Chief Executive Officer of Green as of the Effective Time.
(b)
During the four (4)-year period immediately following the Effective Time,
Green shall provide, directly or indirectly, charitable contributions and traditional local
community support within the service areas of Blue and each of its Subsidiaries that are utilities
at levels substantially comparable to and no less than the levels of charitable contributions and
community support provided by Blue and such Subsidiaries within their service areas within the
four (4)-year period immediately prior to the date of this Agreement.
Section 6.20 Dividends. After the date of this Agreement, if Blue has not yet
declared a record date in the fiscal quarter of the Closing in respect of a dividend with respect to
shares of Blue Common Stock, Green shall declare the record date in respect of such dividend
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for shares of Green Common Stock in such quarter at the same time that Blue has historically
declared such dividend for such applicable quarter.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Nonsurvival. The representations, warranties, covenants and
agreements of the Parties contained in this Agreement shall not survive beyond the Effective
Time and there shall be no liability in respect thereof, whether such liability has accrued prior to
or after the Effective Time, on the part of any Party, its Affiliates or any of their respective
partners, members, officers, directors, agents or Representatives, except for those covenants and
agreements that by their terms apply or are to be performed in whole or in part after the Effective
Time.
Section 7.2 No Other Representations. EACH PARTY SPECIFICALLY
ACKNOWLEDGES AND AGREES THAT EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN ARTICLE IV OR ARTICLE V (AS MODIFIED BY THE
BLUE DISCLOSURE SCHEDULE OR THE GREEN DISCLOSURE SCHEDULE, AS
APPLICABLE), NONE OF THE PARTIES OR ANY OTHER PERSON MAKES, OR HAS
MADE, ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY
WITH RESPECT TO BLUE, GREEN OR THEIR RESPECTIVE SUBSIDIARIES OR THE
TRANSACTIONS.
EACH PARTY HEREBY DISCLAIMS, AND SPECIFICALLY
ACKNOWLEDGES AND AGREES TO THE DISCLAIMER OF, ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY A PARTY OR ANY OF
ITS AFFILIATES, OR ANY OF ITS OR THEIR RESPECTIVE STOCKHOLDERS,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, AND OF
ALL LIABILITY AND RESPONSIBILITY FOR ANY SUCH OTHER REPRESENTATION,
WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE,
COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO ANY PARTY OR
ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION,
INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE
PROVIDED TO ANY OF THEM). EACH PARTY ACKNOWLEDGES THAT IT HAS
CONDUCTED TO ITS SATISFACTION ITS OWN INDEPENDENT INVESTIGATION
AND, IN MAKING ITS DETERMINATION TO PROCEED WITH THE TRANSACTIONS,
EACH OF THE PARTIES HAS RELIED ON THE RESULTS OF ITS OWN INDEPENDENT
INVESTIGATION.
IN FURTHERANCE OF THE FOREGOING, AND NOT IN
LIMITATION THEREOF, EACH OF THE PARTIES SPECIFICALLY ACKNOWLEDGES
AND AGREES THAT NO PARTY MAKES, NOR HAS MADE, ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO ANY FINANCIAL
PROJECTION OR FORECAST DELIVERED TO THE OTHER PARTY OR ITS
AFFILIATES OR REPRESENTATIVES. EACH PARTY HEREBY WAIVES, ON BEHALF
OF ITSELF AND ITS AFFILIATES, FROM AND AFTER THE CLOSING, TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY AND ALL RIGHTS,
CLAIMS AND CAUSES OF ACTION IT MAY HAVE AGAINST THE OTHER, ITS
STOCKHOLDERS, AFFILIATES OR ANY OFFICER, DIRECTOR, MANAGER, MEMBER,
EMPLOYEE, AGENT, CONSULTANT OR REPRESENTATIVE OF ANY OF THE
FOREGOING AND AGREES NO RECOURSE SHALL BE SOUGHT OR GRANTED
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AGAINST ANY OF THEM, RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT (INCLUDING THE REPRESENTATIONS, WARRANTIES AND
COVENANTS CONTAINED HEREIN, AND ANY CERTIFICATE, INSTRUMENT,
OPINION OR OTHER DOCUMENTS DELIVERED HEREUNDER) AND THE
TRANSACTIONS, WHETHER ARISING UNDER OR BASED UPON ANY FEDERAL,
STATE, LOCAL OR FOREIGN LAW OR OTHERWISE (INCLUDING ANY RIGHT,
WHETHER ARISING AT LAW OR IN EQUITY, TO SEEK INDEMNIFICATION,
CONTRIBUTION, COST RECOVERY, DAMAGES, OR ANY OTHER RECOURSE OR
REMEDY, INCLUDING AS MAY ARISE UNDER COMMON LAW).
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Each Party’s Obligation to Effect the Merger.
The respective obligation of each Party to effect the Merger is subject to the satisfaction or
waiver by Blue and Green at or prior to the Closing of the following conditions:
(a)
Shareholder Approval.
The Shareholder Approval shall have been
obtained.
(b)
No Injunctions or Restraints. No (i) temporary restraining order or
preliminary or permanent injunction or other order by any Governmental Authority of competent
jurisdiction preventing consummation of the Merger, or (ii) applicable Law prohibiting,
materially restraining or making illegal the consummation of the Merger (collectively,
“Restraints”) shall be in effect.
(c)
Statutory Approvals. The Blue Required Statutory Approvals identified in
clauses (A), (F), (G) and (H) of the definition thereof and the Green Required Statutory
Approvals identified in clauses (A), (F), (G) and (H) of the definition thereof shall have been
obtained (including, in each case, the expiration or termination of the waiting periods (and any
extensions thereof) under the HSR Act applicable to the Merger and the Transactions) at or prior
to the Effective Time, and such approvals shall have become Final Orders.
(d)
Exon-Florio. Review by CFIUS shall have been concluded, and the
President of the United States of America shall not have taken action to block or prevent the
consummation of the Transactions and no requirements or conditions to mitigate any national
security concerns shall have been imposed.
(e)
Effectiveness of Form S-4; Listing of Green Common Stock on the NYSE.
(i)
The Form S-4 filed with the SEC by Green in connection with the
offer of the Green Common Stock to be delivered as consideration pursuant to the
Merger shall have become effective under the Securities Act, and no stop order
with respect thereto shall be in effect; and
(ii)
The Green Common Stock shall have been authorized for listing
on the NYSE, subject to official notice of issuance.
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Section 8.2 Conditions to Obligations of Green and Merger Sub. The
obligation of Green and Merger Sub to effect the Merger is further subject to satisfaction (or
waiver, in whole or in part, by Green and Merger Sub) of the following conditions:
(a)
Representations and Warranties.
(i)
Each of the representations and warranties of Blue set forth in this
Agreement (other than the representations and warranties contained in Section
4.1, Section 5.1(a) through Section 5.1(c), Section 5.1(f) and Section 5.2,
provided that, with respect to Section 5.1(b), Section 5.1(c) and Section 5.1(f),
this parenthetical shall apply solely to the extent such representations and
warranties relate to Blue and not any of its Subsidiaries) shall be true and correct
as of the date of this Agreement and as of the Closing as though made on and as
of the Closing (except that, in each case, representations and warranties that speak
as of a specified date shall have been true and correct only on such date) except
for such failures to be true and correct (when taken together and disregarding all
qualifications and exceptions contained therein as to “materiality”, “Material
Adverse Effect” or “Blue Material Adverse Effect”) that has not had, individually
or in the aggregate, a Blue Material Adverse Effect.
(ii)
The representations and warranties of Blue contained in Section
4.1, Section 5.1(a) through Section 5.1(c), Section 5.1(f) and Section 5.2
(provided that, with respect to Section 5.1(b), Section 5.1(c) and Section 5.1(f),
this Section 8.2(a)(ii) shall apply solely to the extent such representations and
warranties relate to Blue and not any of its Subsidiaries) shall be true and correct
in all respects (except de minimis errors) as of the date of this Agreement and as
of the Closing (except that, in each case, representations and warranties that speak
as of a specified date shall have been true and correct only on such date), except
such representations and warranties that are qualified by materiality, which shall
be true and correct as written.
(b)
Performance of Obligations of Blue. Blue shall have performed in all
material respects all obligations required to be performed by it under this Agreement at or prior
to the Closing.
(c)
No Blue Material Adverse Effect. There shall not have occurred after the
date of this Agreement a Blue Material Adverse Effect.
(d)
Closing Certificates. Green shall have received a certificate signed by an
executive officer of Blue, dated the Closing Date, to the effect that the conditions set forth in
Section 8.2(a), Section 8.2(b) and Section 8.2(c) have been satisfied.
(e)
Burdensome Effect. The Final Orders granting the Blue Required
Statutory Approvals identified in clauses (A), (F), (G) and (H) of the definition thereof and the
Green Required Statutory Approvals identified in clauses (A), (F), (G) and (H) in the definition
thereof shall not impose terms or conditions that, individually or in the aggregate, could
reasonably be expected to have a Burdensome Effect.
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(f)
Tax Opinion. Green shall have received an opinion of Latham & Watkins
LLP, dated the Closing Date and based on facts, representations and assumptions described in
such opinion, to the effect that the Merger will qualify as a “reorganization” within the meaning
of Section 368(a) of the Code. In rendering such opinion, Latham & Watkins LLP will be
entitled to receive and rely upon customary certificates and representations of officers of Green
and Blue.
Section 8.3 Conditions to Obligations of Blue. The obligation Blue to effect
the Merger is further subject to satisfaction or waiver by Blue of the following conditions:
(a)
Representations and Warranties.
(i)
Each of the representations and warranties of Green set forth in
this Agreement (other than the representations and warranties contained in
Section 4.1, Section 5.8 and Section 5.9 shall be true and correct as of the date of
this Agreement and as of the Closing as though made on and as of the Closing
(except that, in each case, representations and warranties that speak as of a
specified date shall have been true and correct only on such date) except for such
failures to be true and correct (when taken together and disregarding all
qualifications and exceptions contained therein as to “materiality”, “Material
Adverse Effect” or “Green Material Adverse Effect”) that has not had,
individually or in the aggregate, a Green Material Adverse Effect.
(ii)
The representations and warranties of Green contained in Section
4.1, Section 5.8 and Section 5.9 shall be true and correct in all respects (except de
minimis errors) as of the date of this Agreement and as of the Closing (except that,
in each case, representations and warranties that speak as of a specified date shall
have been true and correct only on such date), except such representations and
warranties that are qualified by materiality, which shall be true and correct as
written.
(b)
Performance of Obligations of Green and Merger Sub. Each of Green and
Merger Sub shall have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing.
(c)
No Green Material Adverse Effect. There shall not have occurred after
the date of this Agreement a Green Material Adverse Effect.
(d)
Closing Certificates. Blue shall have received a certificate signed by an
executive officer of Green, dated the Closing Date, to the effect that the conditions set forth in
Section 8.3(a), and Section 8.3(b) and Section 8.3(c) have been satisfied.
(e)
Burdensome Effect. The Final Orders granting the Blue Required
Statutory Approvals identified in clauses (A), (F), (G) and (H) of the definition thereof and the
Green Required Statutory Approvals identified in clauses (A), (F), (G) and (H) in the definition
thereof shall not impose terms or conditions that, individually or in the aggregate, could
reasonably be expected to have a Burdensome Effect.
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(f)
Tax Opinion. Blue shall have received an opinion of Sullivan &
Cromwell LLP, dated the Closing Date and based on facts, representations and assumptions
described in such opinion, to the effect that the Merger will qualify as a “reorganization” within
the meaning of Section 368(a) of the Code. In rendering such opinion, Sullivan & Cromwell
LLP will be entitled to receive and rely upon customary certificates and representations of
officers of Blue and Green.
ARTICLE IX
TERMINATION
Section 9.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the Shareholder Approval, this Agreement may be terminated
and the Merger and the other Transactions abandoned at any time prior to the Effective Time:
(a)
by mutual written agreement of Green and Blue;
(b)
by either Green or Blue in the event (i) any Governmental Authority has
denied either a Blue Required Statutory Approval or Green Required Statutory Approval and
such denial has become final and nonappealable; provided that the Party seeking to terminate this
Agreement pursuant to this Section 9.1(b)(i) shall have used its reasonable best efforts to contest,
appeal and change such denial, or (ii) any Law or Final Order permanently restraining, enjoining
or otherwise prohibiting the consummation of the Merger shall no longer be subject to rehearings
or appeals; provided that the Party seeking to terminate this Agreement pursuant to this Section
9.1(b)(ii) shall have used its reasonable best efforts to contest, appeal and remove such Law or
Final Order;
(c)
by either Green or Blue in the event that the Merger shall not have been
consummated by December 31, 2015 (the “Outside Date”), if the failure to consummate the
Transactions on or before the Outside Date is not caused by any breach of this Agreement by the
Party electing to terminate this Agreement pursuant to this Section 9.1(c); provided, that the
Outside Date may be extended at the election of either Green or Blue by up to two (2) successive
three (3)-month periods if (i) the conditions to the Closing set forth in Section 8.1(c) or Section
8.1(d) have not been satisfied, and (ii) all other conditions to the Closing set forth in Article VIII
have been satisfied or are capable of being satisfied at the Closing; and provided further that the
party seeking to terminate this Agreement pursuant to this Section 9.1(c) is not then in breach, in
any material respect, of any of its material covenants or agreements contained in this Agreement.
(d)
by Green in the event that the Blue Board has (i) failed (A) to make the
Board Recommendation, (B) to include the Board Recommendation in the Proxy Statement, or
(C) to publicly reaffirm the Board Recommendation within five (5) Business Days of receipt of a
written request from Green during the period following the receipt by Blue of a bona fide
Acquisition Proposal that has not been withdrawn and prior to the date on which Shareholder
Approval is received (provided, that Green shall be entitled to make such a written request for
reaffirmation only once with respect to each such Acquisition Proposal or material amendment
thereto) or (ii) effected an Adverse Recommendation Change, whether or not permitted by the
terms hereof;
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(e)
by Blue in the event that there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set forth in this Agreement
on the part of Green or Merger Sub, which breach, either individually or in the aggregate, would
result in, if occurring or continuing on the Closing Date, the failure of the conditions set forth in
Section 8.1 or Section 8.3, and which is not cured within forty five (45) days following written
notice to Green or by its nature or timing cannot be cured within such time period (provided that
Blue is not then in breach, in any material respect, of any of its material covenants or agreements
contained in this Agreement);
(f)
by Green in the event that there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set forth in this Agreement
on the part of Blue, which breach, either individually or in the aggregate, would result in, if
occurring or continuing on the Closing Date, the failure of the conditions set forth in Section 8.1
or Section 8.2, and which is not cured within forty five (45) days following written notice to
Blue or by its nature or timing cannot be cured within such time period (provided that none of
Green or Merger Sub is then in breach, in any material respect, of any of their respective material
covenants or agreements contained in this Agreement);
(g)
by either Green or Blue in the event that the Shareholder Approval is not
obtained at the Shareholder Meeting where such matter was presented to such shareholders for
approval and properly voted upon; or
(h)
by Blue prior to obtaining the Shareholder Approval if Blue effects an
Adverse Recommendation Change to accept an Acquisition Proposal in accordance with Section
6.1(d); provided, that Blue shall pay the Termination Fee pursuant to Section 10.1(d)(i)
concurrently with such termination.
The Party desiring to terminate this Agreement pursuant to this Section 9.1 shall give written
notice of such termination to the other Party, specifying the provision or provisions hereof
pursuant to which such termination is effected.
Section 9.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1, this Agreement shall become void and
have no effect, except that (a) the provisions of Article X, this Section 9.2 and Article XI shall
survive any such termination and abandonment, and (b) no such termination shall relieve the
breaching party from liability resulting from any knowing and intentional breach by that party of
this Agreement.
ARTICLE X
FEES AND EXPENSES
Section 10.1 General.
(a)
Except as provided in this Article X, all fees and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the Party incurring such
fees or expenses, whether or not the Merger is consummated.
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(b)
The Parties hereto acknowledge that the agreements contained in Section
10.1(d) and Section 10.2 are an integral part of the Transactions, and that without these
agreements, they would not enter into this Agreement; accordingly, if Blue fails to pay promptly
any amount payable by it pursuant to Section 10.1(d) or Section 10.2, or if Green fails to pay
promptly any amount payable by it pursuant to Section 10.2, as the case may be, then the Party
failing to make such prompt payment shall pay the other Party cumulative interest on the amount
of the payment due at the prime rate published in the Wall Street Journal plus three percent (3%)
accruing daily from the date such payment was due under this Agreement until the date of
payment.
(c)
The payment by Blue of the Termination Fee payable pursuant to Section
10.1(d) (and any Expenses payable to Green pursuant to Section 10.2) shall be the sole and
exclusive remedy of Green in the event of termination of this Agreement pursuant to the bases
specified in Section 10.1(d) (other than with respect to termination of this Agreement pursuant to
Section 9.1(f)). In the event of termination of this Agreement pursuant to Section 9.1(f)
(including in the event of termination of this Agreement pursuant to one or more other bases in
addition to Section 9.1(f)), Green may elect to receive the Termination Fee payable pursuant to
Section 10.1(d) (and any Expenses payable to Green pursuant to Section 10.2) or pursue its
remedies at law. On payment of the Termination Fee, Blue (and Blue’s Affiliates and its and
their respective current, former or future directors, officers, employees, shareholders and
Representatives) shall have no further liability or obligation relating to or arising out of this
Agreement or the Transactions.
(d)
Termination Fee. Notwithstanding anything to the contrary in this
Agreement, including Section 10.1 above, if:
(i)
(x) Green terminates this Agreement pursuant to Section 9.1(d) or
(y) Blue terminates this Agreement pursuant to Section 9.1(h), then, in each case,
Blue shall pay to Green in same-day funds promptly upon delivery of the written
notice of termination required by Section 9.1 an amount in cash equal to
$75,000,000 (the “Termination Fee”); or
(ii)
either Blue or Green terminates this Agreement pursuant to Section
9.1(b) or Section 9.1(c) (in each case, only if both (x) the condition set forth in
Section 8.1(e)(i) was satisfied and remained satisfied to provide Blue with
adequate time to hold a Shareholder Meeting prior to such termination and (y) the
Shareholder Approval has not been obtained), Section 9.1(f) or Section 9.1(g),
and, in any case, (A) prior to such termination, there has been an Acquisition
Proposal, which Acquisition Proposal has not been publicly withdrawn at least ten
(10) Business Days before the date of the Shareholder Meeting, and (B) within
twelve (12) months of such termination Blue shall have consummated or entered
into a definitive agreement to effect a transaction pursuant to an Acquisition
Proposal (substituting, in each of (A) and (B), “50%” for “15%” in the definition
of “Acquisition Proposal” and “Blue or any of its Significant Subsidiaries” for
“Blue” in clauses (B), (C) and (D) of the definition of “Acquisition Proposal”),
then Blue shall pay to Green the Termination Fee. Notwithstanding the
foregoing, any Expenses previously paid by Blue to Green pursuant to Section
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10.2 shall be credited toward, and offset against, the payment of the Termination
Fee.
(e)
If the Termination Fee is due under Section 10.1(d)(i), it will be paid by
wire transfer of same-day immediately available funds (A) in the case of a termination by Blue
pursuant to Section 9.1(h), on the date on which this Agreement is terminated, or (B) in the case
of a termination by Green pursuant to Section 9.1(d), as promptly as reasonably practicable
following the date of termination of this Agreement (and, in any event, within one (1) Business
Day thereof). If the Termination Fee is due under Section 10.1(d)(ii), it will be paid by wire
transfer of same-day immediately available funds on the date of the earlier of the consummation
of or the entry into a definitive agreement with respect to such Acquisition Proposal. In no event
shall Blue be required to pay the Termination Fee more than once.
Section 10.2 Expenses. If this Agreement is terminated pursuant to (i) Section
9.1(f) or Section 9.1(g), then Blue shall, promptly, but in no event later than one (1) Business
Day after the date of such termination and a written demand by Green therefor, or (ii) Section
9.1(e), then Green shall, promptly, but in no event later than one (1) Business Day after the date
of such termination and a written demand by Blue, in either case, pay to the party making such
demand, as applicable, all reasonable and documented out-of-pocket fees and expenses incurred
by Green and its Affiliates or Blue and its Affiliate, as applicable, in connection with this
Agreement or the Transactions (including with respect to obtaining financing), in an amount not
to exceed $15,000,000 (provided that Green or Blue, as applicable, provides reasonable
documentation therefor) (“Expenses”).
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Governing
Law;
Consent
to
Jurisdiction;
Specific
Performance.
(a)
This Agreement, and all claims or causes of action (whether at Law, in
contract or in tort) that may be based upon, arise out of or relate to this Agreement or the
negotiation, execution or performance hereof, shall be governed by and construed in accordance
with the Laws of the State of New York, without regard to the any choice or conflict of law
principles or rules (whether of the State of New York or any other jurisdiction) that would
mandate the application of the Laws of any jurisdiction other than the State of New York, except
that any matter relating to (i) the fiduciary obligations of the Blue Board shall be governed by the
Laws of the State of Connecticut, and (ii) the mechanics of the Merger shall be governed by the
Act.
(b)
Each Party agrees that all claims arising out of or in connection with this
Agreement (including the exhibits and annexes hereto and the disclosure schedules delivered in
connection herewith) shall be brought in New York state court sitting in New York County or, if
such state court does not have subject matter jurisdiction, the federal court sitting in New York
County, New York. In connection with any action or proceeding in any such court, each Party
(i) consents to the service of process or other papers in connection with such action or
proceeding in the manner provided in Section 11.4 or in such other manner as permitted by Law,
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(ii) submits with regard to any such action or proceeding, generally and unconditionally, to the
personal jurisdiction of such courts, and (iii) irrevocably waives, to the fullest extent permitted
by applicable Law, and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement in such court, any claim
that the suit, action or proceeding in such court is brought in an inconvenient forum, that the
venue of such suit, action or proceeding is improper, or that this Agreement, or the subject matter
hereof, may not be enforced in or by such court pursuant to this Section 11.1.
(c)
The Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement (including the exhibits hereto and the disclosure
schedules delivered in connection herewith) were not performed in accordance with their specific
terms or were otherwise breached. Accordingly, the Parties acknowledge and agree that, to
prevent breaches or threatened breaches by the Parties of any of their respective covenants or
obligations set forth in this Agreement and to enforce specifically the terms and provisions of
this Agreement, the Parties shall be entitled to an injunction, specific performance and other
equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof, in addition to any other remedy to which they are entitled in law or in equity.
In connection with any request for specific performance or equitable relief by any Party, each of
the other Parties waives any requirement for the security or posting of any bond in connection
with such remedy.
(d)
Each Party hereby waives its right to trial by jury in connection with any
suit, action or proceeding relating to this Agreement or the transactions.
Section 11.2 Entire Agreement. This Agreement, including the exhibits,
annexes and schedules hereto (and including the Confidentiality Agreement), constitutes the
entire agreement of the Parties with respect to the subject matter hereof. This Agreement,
including the exhibits, annexes and schedules hereto may not be modified, amended, altered or
terminated except by a written instrument specifically referring to this Agreement signed by all
the Parties.
Section 11.3 Waivers and Consents.
All waivers and consents given
hereunder shall be in writing. No waiver by any Party of any breach or anticipated breach of any
provision hereof by any other Party shall be deemed a waiver of any other contemporaneous,
preceding or succeeding breach or anticipated breach, whether or not similar. Except as
provided in this Agreement, no action taken pursuant to this Agreement, including any
investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party
taking such action of compliance by any other Party with any representations, warranties,
covenants or agreements contained in this Agreement. The failure of any Party to assert any
rights under this Agreement or otherwise shall not constitute a waiver of such rights.
Section 11.4 Notices. Except as otherwise provided in this Agreement, all
notices, requests, claims, demands and other communications hereunder shall be in writing and
shall be given (and, in the case of delivery in person or by overnight courier, shall be deemed to
have been duly given upon receipt) by delivery in person or overnight courier to the respective
parties at the following addresses, delivery by electronic mail transmission to the respective
parties at the following email addresses, or at such other address or email address for a party as
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shall be specified in a notice given in accordance with this Section 11.4; provided, however, that
delivery by electronic mail transmission shall be deemed to have been duly given upon receipt
only if promptly confirmed by telephone:
if to Green or Merger Sub, to:
Iberdrola USA, Inc.
52 Farm View Drive
New Gloucester, Maine 04260
Telephone: 207-688-6363
Attention: R. Scott Mahoney, Vice President, General Counsel and Secretary
Email: Scott.mahoney@iberdrolausa.com
with a copy to (which shall not constitute notice):
Iberdrola, S.A.
Tomás Redondo 1
28033 Madrid, Spain
Telephone: +(34) 91 325 77 64
Attention: Manuel Toledano
Email: mtoledano@iberdrola.es
and with a copy to (which shall not constitute notice):
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022-4834
Attention: David A. Kurzweil
Telephone: 212-906-1200
Email: david.kurzweil@lw.com
if to Blue, to:
UIL Holdings Corporation
157 Church Street
P.O. Box 1564
New Haven, CT 06506-0901
Attention: Richard Nicholas, Executive Vice President and Chief Financial
Officer, and Sigrid Kun, Vice President, Assistant General Counsel and Corporate
Secretary Telephone: 203-499-0790 / 203-499-5858
Email: richard.nicholas@uinet.com
sigrid.kun@uinet.com
with a copy to (which shall not constitute notice):
Sullivan & Cromwell LLP
125 Broad Street
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New York, New York 10004
Attention: Joseph B. Frumkin
Telephone: 212-558-4000
Email: frumkinj@sullcrom.com
Section 11.5 Assignments, Successors and No Third-Party Rights. No Party
may assign any of its rights or delegate any of its obligations under this Agreement without the
prior written consent of the other Parties. Any unauthorized purported assignment without shall
be void. Subject to the preceding two sentences, this Agreement will apply to, be binding in all
respects upon and inure to the benefit of the successors and permitted assigns of the Parties.
Except as expressly provided in Section 6.13, nothing expressed or referred to in this Agreement
will be construed to give any Person other than the Parties to this Agreement any legal or
equitable right, remedy or claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this
Section 11.5. Subject to the provisions of Article IX, the Parties expressly acknowledge and
agree that, prior to the Effective Time, each of Green and Blue shall have the right, on behalf of
its respective stockholders, to pursue damages against the other Parties for losses in the event of
any breach of this Agreement by such Parties.
Section 11.6 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction or invalid or unenforceable in any situation shall, as
to that jurisdiction or to that situation, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms and provisions
of this Agreement or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction or in any other situation. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
[remainder of this page intentionally left blank; signature pages follow]
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EXHIBIT J
AFFIDAVIT, EXHIBITS AND
WORKPAPERS OF DR. WILLIAM
HIERONYMUS
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Iberdrola, S.A.
Iberdrola USA, Inc.
Iberdrola USA Networks, Inc.
Green Merger Sub, Inc.
UIL Holdings Corporation
)
)
)
)
)
)
)
Docket No. EC15-___-000
AFFIDAVIT OF WILLIAM H. HIERONYMUS
INTRODUCTION AND SUMMARY
1. My name is William H. Hieronymus. I am a Vice President of Charles River
Associates Inc. My office address is 200 Clarendon Street, Boston MA 02116. For
nearly four decades I have specialized in economic and regulatory issues
concerning network industries, principally the electric power industry. Since
approximately 1988, a main focus of my work has been on restructuring the industry
and on associated regulatory and market formation issues. I have helped to design
tests to determine the presence or absence of market power and measures to
mitigate market power. I have often testified concerning market power and its
mitigation. This includes having testified before the Federal Energy Regulatory
Commission (“FERC” or the “Commission”) regarding more than 30 mergers and
significant acquisitions. My resume is attached as Exhibit WHH-1.
2. I have been asked by counsel for Iberdrola, S.A. (“Iberdrola”), Iberdrola USA, Inc.,
Iberdrola USA Networks, Inc., and Green Merger Sub, Inc. (collectively the
“Iberdrola Applicants”), as well as counsel for UIL Holdings Corporation (“UIL
Holdings” and together with the Iberdrola Applicants, the “Applicants”) to assess the
Affidavit of William Hieronymus
Page 2 of 24
market power implications of Iberdrola’s acquisition of UIL Holdings, as described in
more detail in the Application to which this Affidavit is attached (the “Transaction”).
In particular, I have sought to determine whether the Transaction meets the de
minimis exemption from the requirement to file the Competitive Analysis Screen.1 I
conclude that the Transaction meets the requirements of the exemption. The only
market in which Iberdrola’s affiliates and UIL Holdings’ affiliates both own generation
is the market operated by ISO New England Inc. (“ISO-NE”) and the quantities that
they own are very small. In ISO-NE, Iberdrola is affiliated with three small wind
facilities and a UIL Holdings’ subsidiary has a half interest in two peaking stations.
These capacities, conservatively including potential imports from Iberdrola’s affiliated
generation in the market operated by the New York Independent System Operator,
Inc. (“NYISO”), reflect only 0.36 percent and 0.55 of the installed capacity in the ISONE market, respectively, for a combined market share of less than 1 percent.2 As
described herein, even under extremely conservative assumptions,3 the combined
market share in ISO-NE of the Applicants and their affiliates would be only 2.6
percent, still a de minimis amount. There are no defined sub-markets in ISO-NE in
which Iberdrola and its affiliates, on the one hand, and UIL Holdings and its affiliates,
on the other hand, both own generation. Moreover, as discussed below, while the
1
The exemption is contained is Section 33.3(a)(2) of the Commission’s regulations which states that “(a)
Competitive Analysis Screen need not be filed” if the applicants demonstrate “that the merging entities do not
currently conduct business in the same geographic markets or that the extent of business transactions in the same
geographic market is de minimis.”
2
Market size is based on summer-rated capacity installed in ISO-NE, exclusive of demand resources (“DR”), plus
the simultaneous import limit (“SIL”) for the ISO-NE. Generation data are 2014 from the ISO-NE CELT Report, May
16, 2014. The CELT report derates wind units on a reliability basis. The aggregate rating of the Iberdrola affiliated
units in the CELT Report is 15 MW. The rating I used, 30.9 MW, is their nameplate capacity derated by their 2014
capacity factors as discussed later and constitutes an only 0.1 percent share of the ISO-NE market. Even if I did not
derate the units, their nameplate capacity is only 0.3 percent of the ISO-NE market.
3
That is, assuming nameplate ratings for all units, including the wind turbines, and control over all of the capacity
associated with units jointly-owned by unaffiliated entities.
Affidavit of William Hieronymus
Page 3 of 24
effects of the transaction are de minimis even if the Applicants and their affiliates
control all of this generation, for reasons discussed below, it may be appropriate to
treat all of it as outside of their control. None of the Applicants or their affiliates have
any long term contracts that give them control over other generation in ISO-NE.
Hence, the horizontal impact of the merger on the ISO-NE market clearly is de
minimis.
3. The only jurisdictional market that is first tier to ISO-NE is the NYISO market.
Iberdrola’s affiliates own a modest amount of wind generation in NYISO. Iberdrola’s
affiliates also own some small power facilities and is the purchaser of power from
small contracts entered into pursuant to the Public Utility Regulatory Policies Act of
1978 (“PURPA”) that predate the restructuring of the electricity industry in New York.
UIL Holdings’ affiliates make no sales into NYISO and are precluded from doing so
by restrictions placed on operation of their generation by the Connecticut state
regulator. Hence, there is no horizontal impact of the Transaction on the NYISO
market.
4. While not directly relevant to the issue of whether the impact of the Transaction on
these two markets is de minimis, it is notable that both the ISO-NE and NYISO
markets have consistently been shown to be very unconcentrated for all of the time
periods and price levels that the Commission’s Delivered Price Test requires be
analyzed.4 Under these circumstances, a transaction cannot fail the horizontal
4
For example, my analysis in Docket No. EC11-35-000 (the NSTAR-Northeast Utilities merger) found that the ISONE market was unconcentrated in all periods. My analysis of the ISO-NE market in the Gaz Metro-Central Vermont
Public Service merger filed in Docket No. EC11-117-000 filed in September 2011 found that the ISO-NE Economic
Capacity market had time period HHIs ranging between 492 and 613. My analysis of the NYISO market in the
Iberdrola-Energy East transaction in Docket No. EC07-122-000 found that the NYISO market also was
Affidavit of William Hieronymus
Page 4 of 24
market power screen unless it is so large that it results in the market becoming at
least moderately concentrated and further results in a Herfindahl-Hirschman Index
(“HHI”) increase of at least 100 points. Given the de minimis overlap of generation
in ISO-NE owned or operated by the Applicants and their affiliates and no overlap of
generation in NYISO, that clearly is not the case with the Transaction.
5. I also assessed the potential for competitive harm arising from vertical market power
aspects of the Transaction. The three areas of inquiry dictated by the Commission’s
regulations are control over transmission, control over certain inputs to electricity
and control over sites for new generation.
6. Affiliates of UIL Holdings own transmission assets in ISO-NE, and affiliates of
Iberdrola own transmission assets in ISO-NE and NYISO. However, control over all
of this transmission has been turned over to the relevant regional transmission
organization (“RTO”). Commission policy is that in such cases, ownership of
transmission raises no vertical market power issues.5 Otherwise, the Applicants only
own those limited transmission facilities necessary to interconnect their generating
facilities to the transmission grid, which do not pose vertical market power concerns.
7. None of the Applicants or their affiliates own or control high pressure gas
transmission facilities. UIL Holdings indirectly owns two gas distribution companies
unconcentrated in all time periods. While these analyses were performed some time ago, no more recent analysis
of which I am aware has found either market to be other than unconcentrated.
5
See Exelon Corp., 149 FERC ¶ 61,148 at P 79 (2014) (finding that RTO membership allows the Commission to
conclude that merger applicants will not have the ability to use their expanded transmission system to harm
competition in the wholesale electric markets and the combination of electric generation and transmission
facilities will not give merger applicants an ability to exercise vertical market power where the transmission
facilities will continue to be subject to a Commission-approved OATT); Energy East Corp., 121 FERC ¶ 61,236 at P
24 (2007) (“Turning over operational control of transmission facilities to an independent entity mitigates any
concerns about transmission-related vertical market power because it eliminates a company’s ability to use its
transmission system to harm competition”).
Affidavit of William Hieronymus
Page 5 of 24
in Connecticut and one gas distribution company in Massachusetts, and Iberdrola
indirectly owns one gas distribution company in Maine. Iberdrola also indirectly
owns two gas distribution companies in NYISO. Any vertical competitive impact
arising from the transportation functions of these distribution companies is restricted
to the market in which the facilities are located as gas distribution in one RTO cannot
be an input to producing electricity in another RTO. In ISO-NE, UIL Holdings’
affiliates transport gas for a modest amount of generation. The vertical nexus to the
Transaction requires that this gas distribution at least theoretically could be used to
advantage generation owned by Iberdrola’s affiliates by raising rivals’ costs or
foreclosing entry. However, Iberdrola’s affiliated generation capacity in ISO-NE is de
minimis (even when combined with UIL Holdings’ affiliated generation in ISO-NE)
and, because it is sold under long term contracts, it cannot be used for competitive
advantage. Since UIL Holdings and its affiliates do not produce or sell electricity in
NYISO, there can be no vertical issue arising in that market.
8. Therefore, I conclude that the de minimis exemption from the Commission’s filing
requirements extends to the vertical analysis requirements. I note that the vertical
analysis specified in Part 33.4 of the Commissions regulations seeks only to
determine whether both the upstream (gas transportation) and downstream
(electricity) markets are highly concentrated, not whether the transaction has an
adverse competitive effect.6 Concentration in the upstream market is measured
based on shares of firm capacity entitlements. UIL Holdings’ affiliates have such
6
Order No. 642 (November 15, 2000) states that the required analysis seeks only to determine if “both the
upstream and downstream markets are found to be conducive to the exercise of market power” (P. 96.) Only as
mitigation for failing the test does the effect of the transaction (or lack thereof) become a consideration. See FERC
Regulations Part 33.4(e)(i).
Affidavit of William Hieronymus
Page 6 of 24
entitlements in ISO-NE. Hence, out of an abundance of caution, I have analyzed
whether the upstream market is highly concentrated. As discussed later in this
affidavit, the HHI in the upstream market is less than 1,000, reflecting an
unconcentrated market that is far less concentrated than the 1,800 level required to
fail the upstream branch of the Part 33.4 test. Since the Part 33.4 vertical market
power test is failed only if both upstream and downstream markets are highly
concentrated, the test is passed.
9. The remaining issue is whether the Applicants have sufficient control over
generating sites to foreclose entry into the ISO-NE market. While each controls
some sites, most potential sites (other than very limited windfarm sites) would be
properties in their historic control areas, so that concentration, if any, would extend
at most to part of Connecticut and part of Maine. This clearly is not sufficient to
constitute an entry barrier for new generation in the ISO-NE market.
HORIZONTAL MARKET POWER ANALYSIS
Relevant Geographic Markets
10. The Commission’s regulations require analysis of each geographic market in which
merger applicants both have electricity supply operations. It also requires analysis
of jurisdictional markets that are first tier to such markets. UIL Holdings is affiliated
with utility operations only in ISO-NE. Hence, the only potentially relevant markets
are ISO-NE and jurisdictional markets first tier to it. The only such first tier market is
NYISO. Both ISO-NE and NYISO have or have had load pockets that the
Commission has found merit analysis as separate markets (i.e., submarkets).
However, there are no such submarkets in which Iberdrola and its affiliates, on the
Affidavit of William Hieronymus
Page 7 of 24
one hand, and UIL Holdings and its affiliates on the other hand, both own generation
and, indeed, none in which one owns generation and the other has gas
transportation activities. Hence, there is no need to assess the impact of the
Transaction on any sub-market in ISO-NE or NYISO.
Product Definitions
11. Order No. 592 specifies two types of “products” for analyzing the horizontal effects of
a transaction on energy markets. The first is Economic Capacity – generation
supply that is economic at the price level relevant the time periods in the Delivered
Price Test. The second is Available Economic Capacity. This is generation supply
that is economic at the relevant price and is surplus to the sellers’ own-load and
long-term contract needs. Additionally, effects of the transaction on capacity
markets (where they exist) and ancillary services markets may merit consideration.
12. Commission policy and precedent is to focus on Economic Capacity in markets that
have been restructured to have retail access and to sever the regulated relationship
between generating capacity and retail load. Both the ISO-NE and NYISO markets
have extensive retail access and in both RTOs most generation is no longer ratebased and no longer is vertically related to any own load.7 In such markets,
Available Economic Capacity is very similar to Economic Capacity and Commission
7
In both ISO-NE and NYISO, the investor owned utilities were required to divest all, or nearly all, of their owned
generation. Only Vermont, which contains a small portion of ISO-NE load and generation, remains vertically
integrated. There also are municipal utilities that remain at least partly vertically integrated. There also are small
amounts of vestigial PURPA contracts that pre-date the utility restructuring of the 1990s. Some power, primarily
renewables, is “put” to distribution utilities and is subject to bilateral contracts. In the case of Connecticut there
are a few recent contracts that were allocated to the successful bidders in a state-run auction that are covered by
long term bilateral contracts with the state’s two distribution utilities These include the capacity partly owned by
UIL. In New York, small amounts of renewable generation and PURPA contracts were retained, NYPA remains
vertically integrated and, like Connecticut, there are some recent bilateral contracts that underwrite new
generation.
Affidavit of William Hieronymus
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precedent is that Economic Capacity be given the primary weight in considering the
economic effects of a transaction.
13. Concerning the potential need to assess the effects of the Transaction on ancillary
services, it is notable that both RTOs co-optimize energy and ancillary services, so
an analysis of the energy market also serves as an analysis of market-based
ancillary services.8 My analysis of the effects of this Transaction below computes
HHI changes based on the controlled capacity of the Applicants and their affiliates.
Hence, it demonstrates a lack of competitive harm to the ISO-NE capacity market.
Applicants’ Controlled Generation
UIL Holdings
14. As described in the Application, UIL Holdings’ electric utility subsidiary, The United
Illuminating Company (“United Illuminating”), sold all of its generation as part of
electricity restructuring in Connecticut. Hence, it owns and controls no generation in
ISO-NE or elsewhere.9
15. UIL Holdings owns 50 percent of GCE Holdings LLC (“GCE”), the other half of which
is owned by affiliates of NRG Energy, Inc., NRG Connecticut Peaking LLC and NRG
Yield Operating LLC. GCE was formed to bid into a competitive process held by the
State of Connecticut to provide new generation within the state. As a result of
successful bids into the state-run process, GCE’s wholly-owned subsidiaries
GenConn Devon LLC (“GenConn Devon”) and GenConn Middletown LLC
(“GenConn Middletown”) were awarded contracts to own and operate two
8
Since all of the generating capacity owned or operated by Iberdrola and its affiliates is wind power and is
essentially incapable of supplying market-based ancillary services, an analysis of ancillary services distinct from
energy would show no competitive impact arising from the transaction.
9
For this reason, United Illuminating qualified as a Category 1 seller prior to its affiliation with the GenConn Devon
and GenConn Middletown entities (as defined and discussed below).
Affidavit of William Hieronymus
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combustion turbine peaking facilities. It now owns, indirectly, two four-unit LM6000
peaking facilities. The Devon peaking station, rated in the ISO-NE CELT Report at
187.6 MW (summer) was commissioned in 2010. The Middletown peaking station,
rated at 187.6 MW (summer), was commissioned in 2011. The Devon facility is in
the Southwest Connecticut zone of ISO-NE which the Commission has identified as
a submarket. The Middletown facility is in the Connecticut zone, also from time to
time identified by the Commission as a submarket within ISO-NE. GCE’s whollyowned subsidiary GenConn Energy LLC (“GenConn Energy”) acts as an agent for
GenConn Devon and GenConn Middletown in the ISO-NE market. As noted earlier,
none of Iberdrola or its affiliates control any electric supply or even inputs to electric
supply in these areas.
16. Because none of the Iberdrola or its affiliates have operations in these sub-markets,
the effect of the Transaction is by definition de minimis and there is no need to
analyze any submarkets separately from the analysis of ISO-NE as a whole.
GenConn Devon and GenConn Middletown are covered by long term bilateral
contracts with Connecticut Light & Power Company (now Eversource Energy).
Eversource Energy and United Illuminating have a cost and benefit sharing contract
under which United Illuminating receives 20 percent of the costs and receives 20
percent of the benefits received under the contracts. The contracts are contracts for
differences; the utilities pay all of the costs of the facilities that are not recovered in
ISO-NE markets. In turn, these net costs are collected in delivery tariffs as nonbypassable charges. As a result of these arrangements, the shareholders of the
Affidavit of William Hieronymus
Page 10 of 24
utilities’ parent companies do not benefit from higher prices in the ISO-NE markets.
Moreover, the utilities do not take delivery of power as a result of these contracts.
17. Further, under terms dictated by the Connecticut Public Utilities Regulatory
Authority, the entities controlling the Devon and Middletown facilities are required to
offer their full capacity only into the ISO-NE Locational Forward Reserve Market.
Because the units are offered in as price-taking, their offers always have been
accepted. Hence, while theoretically GenConn Energy is capable of offering
untaken capacity from GenConn Devon and GenConn Middletown into the ISO-NE
energy market, this will tend not to occur due to the market rules affecting energy
market participation by resources with forward reserve commitments.
18. UIL Holdings and its affiliates have no long term contracts to sell or purchase
electricity other than to pay their share of unrecovered costs under their allocated
share of the state-mandated contracts for new generation.
19. To summarize, the generating capacity of UIL Holdings and its affiliates is limited to
a 50 percent ownership interest in a total of 375 MW of peaking capacity, or
approximately 188 MW of peaking capacity. The 2014 ISO-NE CELT report lists
installed capacity of 29,257 MW exclusive of imports and demand resource (DR).
The most recently computed SIL into ISO-NE is 4,548 MW; the market is thus
33,805 MW. UIL Holdings and its affiliates’ market share is thus at most 0.55
percent.10 Even if I assume more conservatively that UIL Holdings and its affiliates
control 100 percent of the peaking capacity of the Devon and Middletown units,
10
Additionally, UIL is constructing three fuel cell projects in Connecticut that have an anticipated total capacity of
8.4 MW and that are expected to commence operations in the next two to six months, including a 2.8 MW
generator in Glastonbury, CT, a 2.8 MW generator in New Haven, CT, and a 2.8 MW generator in Bridgeport, CT.
This is 0.0248 percent of ISO-NE capacity. If I include this additional capacity in UIL Holdings’ total capacity, UIL
Holdings’ share would increase to 0.57 percent of the ISO-NE market.
Affidavit of William Hieronymus
Page 11 of 24
which it does not, UIL Holdings’ market share would still be only 1.1 percent.
Moreover, it cannot profit from higher prices received from sales from this capacity
and has no latitude concerning how it is bid into the ISO-NE markets.
Iberdrola
20. Iberdrola has indirect ownership interests in three small windfarms in ISO-NE:
Groton Wind LLC, a 46 MW (nameplate) facility in New Hampshire, Lempster Wind
LLC, a 28 MW facility also in New Hampshire, and New England Wind, LLC, a 28.5
MW facility in western Massachusetts.11 Their 2014 capacity factors were 25.8
percent, 31.8 percent and 38.1 percent respectively. Hence, their derated capacity
is 30.9 MW.12 The derated capacity of these units is less than 0.1 percent of the
33,805 MW size of the ISO-NE market. Even if not derated they would represent
only 0.3 percent of the market.13 As stated earlier, none of these units are in the
Connecticut or Southwest Connecticut submarkets in which the Middletown and
Devon peaking units are located.
21. Commission precedent supports the conclusion that that these wind units are not
controlled by Iberdrola or its affiliates. First, since they are wind units, Iberdrola and
its affiliates cannot determine when and to what level they will be dispatched.
Second, the units were built pursuant to renewable energy mandates and are sold
bilaterally under long term contracts. It is conservative to include long term
11
In the ISO-NE CELT report, New England Wind is called Hoosac, its former name.
It is not possible to use the customary 5 years of performance to derate the units since they are not 5 years old.
13
Of course, their market share would be larger (albeit still small) in off-peak periods when the amount of
Economic Capacity would be less. However, UIL’s peaking facilities are not economic in such periods, so the effect
of the Transaction would be zero.
12
Affidavit of William Hieronymus
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purchases as controlled by the buyer and exclude long term sales from the capacity
controlled by the seller.14
22. As described in the Application, Iberdrola’s electric distribution subsidiary, Central
Maine Power Company (“Central Maine Power”), owns no generation but retains
some power entitlements under long-term contracts with non-utility generators and
other market entities. Central Maine Power sells such power entitlements for
periods ranging from one to three years under auctions approved by the Maine
Public Utility Commission. As such, Central Maine Power does not retain any
control over such generation rights.
Applicants Market Shares and the Change in HHIs
23. How large the Applicants’ market shares are, and hence the impact of the
Transaction on market HHIs, depends on how much of their capacity is treated as
controlled by them. For reasons I have discussed, it would be reasonable to treat
none of their generation as controlled by them. If either the Iberdrola-affiliated wind
units or the two peaking units partly-owned by UIL Holdings’ affiliates is deemed not
to be controlled by its owner, then the change in HHIs necessarily is zero in all time
periods.
24. Even if the capacity of its share of the two combustion turbine facilities is treated as
controlled by UIL Holdings’ affiliates and the derated capacity of the Iberdrola wind
units is treated as controlled by Iberdrola’s affiliates, they constitute only 0.55 and
0.1 percent, respectively, of the ISO-NE wholesale market. The change in HHI in
14
See, e.g., 18 C.F.R. § 33.3(c)(4)(i)(A) (providing that economic capacity for purposes of the Commission’s delivery
price test be adjusted by subtracting capacity committed under long-term firm sales contracts and adding capacity
acquired under long-term firm purchase contracts) (emphasis added).
Affidavit of William Hieronymus
Page 13 of 24
high price periods when the peaking units are included in Economic Capacity is 0.1
HHI points and it is zero in lower price periods.15
25. NYISO is the only jurisdictional market that is first tier to ISO-NE and thus requires
examination. UIL Holdings and its affiliates control no generation in that market.
Iberdrola’s affiliates do own some wind generating units in NYISO and have small
amounts of other capacity and contracts.
26. Iberdrola indirectly owns 50 percent of Flat Rock Windpower LLC and Flat Rock
Windpower II LLC with capacities of 231 MW (nameplate) and 90.75 MW
(nameplate), respectively. Iberdrola also controls the 74 MW (nameplate)
Hardscrabble Wind Power LLC. All are interconnected with Niagara Mohawk’s
transmission system.
27. As described in the Application, Iberdrola’s indirect subsidiary New York State
Electric & Gas Corporation (“NYSEG”) retained only about 70 MW its prerestructuring generation. This generation consists primarily of hydroelectric facilities
and it also has a few non-yet expired vestigial PURPA contracts with small power
producers. Another utility subsidiary, Rochester Gas and Electric Corporation
(“RG&E”), similarly owns about 69 MW of electric generation and has remaining
small power contracts signed before relevant PURPA provisions ceased to apply.
The utilities do not control dispatch of these units – the NYSEG hydroelectric units
are run of river, and the PURPA units are not under dispatch control by the utilities
that passively pay for power from them.
15
This is derived based on the familiar “2AB” method, e.g. 2*.5*.1=0.1 As I and others have explained frequently,
the impact of a transaction that does not change the size of the market on the HHI is 2AB, where A is the pretransaction percentage share of one party and B is the share of the other. The pre-merger contribution to the
2
2
2
2
2
market HHI of the two entities are A and B . Their post-merger share is (AB) , or A + 2AB + B . Hence the impact
of the merger on the HHI is 2AB.
Affidavit of William Hieronymus
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28. It is clear that the impact of the Transaction on the NYISO market is de minimis.
Most importantly, UIL Holdings and its affiliates do not have any capacity in the
NYISO. Even if the New England generation owned by UIL Holdings’ affiliates is
assumed to be available for sale into NYISO, it would compete with other ISO-NE
generation and with generation from PJM, Quebec and Ontario for the limited SIL
into NYISO. Hence, its attributable share of the imported Economic Capacity would
be, at most, a few MW. In fact, since Devon and Middletown must be bid into the
ISO-NE forward reserve market, they cannot be bid into the NYISO energy and
ancillary services markets. Since their share necessarily is zero, the effect of the
Transaction on the NYISO HHI necessarily is zero.
29. While not necessary to find that the de minimis exemption applies to this market, it
also is relevant that Iberdrola and its affiliates’ share of the market is small.
According to the 2014 NYISO Gold Book, the summer 2014 capacity of the NYISO
is 41,297 MW. The nameplate capacity of the Iberdrola wind units is less than 1
percent of the market, a de minimis share of the market. Their derated capacity
would be far less. Assuming that their capacity factors are similar to the NYISO
average for wind units,16 their derated capacity is only 92.3 MW and they are only
0.22 percent of NYISO supplies.17 If not derated, they are 0.96 percent of NYISO
suppliers.
30. The small amount of generation controlled by Iberdrola’s affiliates in NYISO also is
relevant to the conclusion that the impact of the Transaction on the ISO-NE market
16
The average capacity factor is only 23.3 percent (computed from 2014 capacity and output values on pages 57
and 58 of the 2014 NYISO Gold Book).
17
Even if Iberdrola’s subsidiaries’ run of river hydro and PURPA contract power were deemed to be controlled by
them, Iberdrola and its affiliates’ share of the NYISO market still would be well below 1 percent of the market.
Affidavit of William Hieronymus
Page 15 of 24
is de minimis. Even if it were fully deliverable into the ISO-NE market, the derated
NYISO wind capacity would be 0.27 percent of the ISO-NE market and the
nameplate capacity only 1.17 percent. Combining the latter with its 30.9 MW of
derated ISO-NE generation would give Iberdrola and its affiliates only 123.2 MW in
ISO-NE, or 0.36 percent of the market and result in a peak period HHI change of 0.4
points.18 Combined with the market share in ISO-NE of UIL Holdings’ affiliates of
0.55 percent, the post-Transaction market share of the Applicants and their affiliates
would be only 0.91 percent. This is a quite conservative calculation because, for
reasons discussed earlier, a strong case can be made that neither UIL Holdings nor
Iberdrola controls their ISO-NE generation. Even if all of Applicants’ owned
generation is deemed to be controlled by them, adding Iberdrola’s NYISO generation
as fully deliverable into ISO-NE greatly over-estimates the impact of the transaction
on the ISO-NE market. Just as UIL Holdings’ affiliates’ generation would have to
compete with other Economic Capacity for limited import capability into NYISO,
Iberdrola’s affiliates’ NYISO generation would have to compete with other NYISO
and Canadian capacity for import shares in ISO-NE. Given the amount of NYISO
generation and the relative size of the SIL into ISO-NE, the dilution of Iberdrola’s
affiliates’ NYISO generation would be up to a factor of 10 (during summer peak
conditions when all capacity is economic) for a share well under 0.1 percent.
31. To summarize the most conservative case I can construct, even if 1) all of
Applicants’ ISO-NE generation (including NRG’s share of the GenConn units) is
considered to be controlled by them, 2) none of Iberdrola’s affiliated wind powered
18
Again using the 2AB method, this is 2*0.36*0.55=0.4.
Affidavit of William Hieronymus
Page 16 of 24
generation is derated, and 3) all of its NYISO wind-powered generation is assumed
to be delivered preferentially into ISO-NE, the Transaction still would be shown to
have reflect de minimis participation in a common market. UIL Holdings’ affiliated
attributed generation would be 375.2 MW and Iberdrola’s affiliated attributed
generation would be 498 MW. Their shares of ISO-NE would be 1.1 and 1.5
percent, respectively, for a combined market share of 2.6 percent. The change in
HHI arising from the transaction would be 1.65 points.
32. Based on the foregoing, I conclude that the Transaction could not possibly have
horizontal effects that cause market power concerns. The extent of the participation
of UIL Holdings’ affiliates in the NYISO market is de minimis, indeed, zero. The
participation of Iberdrola’s affiliates in the NYISO market also is de minimis. Taking
account of importing energy from Iberdrola’s affiliates’ NYISO facilities into ISO-NE
does not change the conclusion that its share of the ISO-NE market is de minimis.
As I have demonstrated, the impact on HHIs for any time period in either market
would be well less than 1 point under all but the most unfavorable assumptions so
that, even if it were not the case that both markets are unconcentrated, the merger
could not possible be found to fail the Commission’s delivered price test.
VERTICAL MARKET POWER ANALYSIS
Electric Transmission
33. Concerning vertical market power, the most important and pervasive issue is
whether a vertically integrated utility could use its control over electric transmission
to foreclose entry or disadvantage rivals. A second issue is whether applicants
could use control over fuels supplies or transportation facilities to disadvantage
Affidavit of William Hieronymus
Page 17 of 24
rivals. Most commonly, the facilities at issue are high pressure gas transmission
systems. A third issue is whether applicants could use dominant control of sites for
new generation to foreclose entry.19 Beginning with transmission, as a result of its
acquisition of Energy East Corporation in 2008, Iberdrola indirectly owns Central
Maine Power and its transmission system. As described in the Application, Central
Maine Power also is a part owner of Maine Electric Power Company, which owns a
345 kV connector between Maine and New Brunswick. Control of this transmission
has been turned over to ISO-NE. In NYISO, Iberdrola indirectly owns the
transmission facilities of its utility subsidiaries, RG&E and NYSEG. Control of these
facilities has been turned over to the NYISO. The only other transmission facilities
that Iberdrola or its affiliates control are those necessary to connect its windpower
facilities to the transmission grid. These radial lines are of no competitive
significance.
34. UIL Holdings indirectly owns transmission facilities developed by United Illuminating
and located in Connecticut. UIL Holdings also indirectly owns transmission facilities
that are a part of the New England East West (“NEEWS”) project as a result of a
purchase of these facilities from Eversource Energy.20 United Illuminating also has
an approximately 5.4 percent entitlement interest in the HQ Interconnection, the
United States portion of the transmission interconnection that connects HydroQuebec and ISO-NE. Control over these facilities has been turned over to ISO-NE.
United Illuminating also indirectly owns a share of the transmission facilities
connecting the Devon and Middletown facilities to the transmission grid.
19
See, e.g., Seneca Generation, LLC, 145 FERC ¶ 61,098 at P 16 (2013) (finding no vertical market power concerns
where applicants did not have dominant control over generating sites in the relevant market).
20
See The Connecticut Light & Power Co., Docket No. EC11-29-000 (Feb. 7, 2011).
Affidavit of William Hieronymus
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35. As stated in my summary, the fact that control of these transmission facilities has
been ceded to ISO-NE or NYISO moots any competitive issues and means that
there are no vertical market power issues arising from the Applicants’ control over
electric transmission.
Gas Transportation
36. Moving on to the issue of control over inputs to electricity generation, the only
activity of any of the Applicants or their affiliates that is potentially relevant is control
over gas delivery systems. None of the Applicants or their affiliates exercises
control over any high pressure gas transmission. None of the Applicants or their
affiliates own or control any wellhead supplies or other fuels transportation facilities.
Iberdrola and UIL Holdings are each affiliated with gas distribution companies that
provide, or could provide, gas transportation services to generators.21 While I
discuss the amounts of generation to which such services are provided, I note that
the fact that generation is served from the distribution companies indirectly owned by
the Applicants is not actually relevant to the part of the Commission’s vertical market
power test that analyzes the market structure for gas transportation since the
upstream market structure is measured based on shares of firm transmission rights
on gas transmission pipelines serving the downstream generation facilities.
37. Beginning with UIL Holdings and its affiliates, UIL Holdings’ indirect subsidiary The
Southern Connecticut Gas Company provides gas to the recently-installed 130 MW
21
As described in the Application, UIL owns a LNG facility used to provide peak shaving services. The facility is
embedded in the Southern Connecticut Gas Company distribution system and has no firm interstate gas contracts.
Its output is subject to a FERC-approved open access tariff and is fully subscribed by Southern Connecticut Gas
Company. In addition, UIL’s subsidiaries own two intrastate LNG facilities in Rocky Hill, Connecticut and Whatley,
Massachusetts, both of which are peak-shaving facilities associated with the distribution activities of Connecticut
Natural Gas Corporation and Berkshire Gas Company, respectively, and do not offer service to third-parties.
Affidavit of William Hieronymus
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dual-fueled peakers at New Haven Harbor station, as well as the older 443 MW
dual-fueled unit at New Haven Harbor station. It employs a short lateral connection
to serve the 520 MW Bridgeport Energy combined cycle unit. It also serves the twounit, 507 MW-rated Milford Station, also using a short lateral connection.
38. Connecticut Natural Gas Corporation serves a 64 MW cogeneration facility, Capital
District Energy Cogeneration Associates, in Hartford, CT. The Berkshire Gas
Company, UIL’s third gas distribution company, serves no gas-fired generation.
39. The total amount of generation to which UIL Holdings’ affiliates provide
transportation service, 1,664 MW, is only about 5 percent of the 33,805 MW ISO-NE
market. Importantly, UIL Holdings and its affiliates cannot foreclose entry, even in
the part of ISO-NE where it has distribution facilities, because most gas-fired
generation is served directly off of high pressure gas transmission lines. Moreover,
even capacity that chooses to be served off of distribution systems need not locate
in the territories served by these distribution companies. Finally, with respect to both
new and existing customers, the gas distribution companies are all open access
suppliers whose tariffs and terms and conditions of service are regulated by state
regulators in either Massachusetts or Connecticut.
40. Iberdrola indirectly owns Maine Natural Gas Corporation (“MNG”), which is a local
gas distribution company in Maine that delivers natural gas to approximately 4,000
customers in southern Maine. MNG only serves one gas-fired generator in ISO-NE Westbrook Energy, a 515 MW (summer) combined cycle natural gas generator in
Westbrook, Maine. While Iberdrola’s two New York combination utility subsidiaries
provide gas to some generation, this generation is not in the same market as either
Affidavit of William Hieronymus
Page 20 of 24
the electric or gas transportation facilities of UIL Holdings and its affiliates so that it
cannot be used to create market power to benefit those assets
41. As noted in my summary, Part 33.4 of the Commission’s regulations governing
analyses of vertical issues does not consider whether applicants own high pressure
natural gas pipelines. Whether affiliated gas distribution companies serve electric
generation is also irrelevant.22 In assessing competitive effects of a transaction, the
analysis of upstream gas transportation markets is concerned solely with the market
structure of firm entitlement rights for gas transmission on interstate pipelines.
Moreover, the test is whether the market is highly concentrated. Failing the screen
relating to this test merely overcomes the presumption that a transaction is
competitively benign and even then only if the downstream market, with assignment
of control over generation modified to allocate gas-served plants to their pipeline
supplier, also is highly concentrated.
42. I have reviewed the impact of the Transaction on the upstream market using the
metrics that Section 33.4 propose be used. The relevant measure of market
participation in the “upstream” market is the firm transmission rights held by shipper.
43. The Applicants’ gas distribution companies have long term firm contracts for gas
transmission. This is unremarkable and likely irrelevant to whether they could
actually exercise vertical market power. Most long term firm rights are held by gas
distribution companies precisely because they are required to serve their retail
customers during peak periods. Firm capacity dedicated to meeting the needs of
22
It could, however, be relevant to the downstream branch of the analysis.
Affidavit of William Hieronymus
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local distribution company customers is unavailable to provide firm service to electric
generation.23
44. That said, Connecticut Natural Gas has long term firm contracts for 248.3 MMcfd;
Southern Connecticut Gas has contracts for 234.1 MMcfd and Berkshire Gas
Company has contracts for 40.0 MMcfd. These contracts are required to be held by
state regulations that require each local distribution company (“LDC”) to provide
reliable service to local gas firm customers in their respective franchise areas, and
the contracts have primary delivery points to those franchise areas.
45. The total pipeline capacity entering New England is 4,683 MMcfd.24 Hence, UIL
Holdings and its affiliates have control of 10.6 percent of the inward pipeline
capacity.
46. The Commission’s Part 33.4 methodology inquires whether both the upstream and
downstream markets are highly concentrated. The “upstream” market is firm rights
on interstate pipelines serving the “downstream” electrical market, in this case, ISONE. The HHI for the upstream market is computed based on shares of firm gas
transportation rights. The upstream market is the electric generation supply market
with the notable exception that gas-fired plants are assumed to be controlled by the
pipeline that supplies them. The HHI for the downstream market is the HHI for
23
Moreover, unused firm capacity reverts to the pipeline, so shippers cannot withhold unused capacity from
others.
24
EIA, State Net Inflow Capacity. Excel spreadsheet for 2014 data available at
http://www.eia.gov/naturalgas/data.cfm#pipelines. Compiled by summing the direct imports from non-New
England sources for each of the six New England states. Note that this excludes approximately 600 MMcf/d of
non-pipeline capacity into New England. This is Excelerate’s Gateway deepwater LNG facility that connects within
New England to the Algonquin pipeline.
Affidavit of William Hieronymus
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electric energy with that change in the attribution of control. The test is passed
unless both the upstream and downstream markets are highly concentrated.25
47. Notably, the Part 33.4 test is unaffected by how much or how little firm transportation
capacity is controlled by applicants. The only way that applicants’ shares or the
effect of combining their shares could affect operation of the Part 33.4 vertical test is
through operation of the de minimis exemption. But for that exemption, a merger in
which their shares were nearly zero, or where one of the applicants adding nothing
to combined shares could fail the test. For this reason, the de minimis exemption is
important, since it is the only way in which the effects of the merger (or lack of such
effects) relates to whether the transaction has potential vertical market power
effects.26
48. While I believe that the vertical portion of the market power tests specified in Part
33.4 of the Commission’s regulations is unnecessary because the effects of the
Transaction are de minimis, I nevertheless have performed the upstream branch of
the test. The results are shown in Exhibit WHH-2.27 The upstream HHI is 938, far
25
While I have not performed a downstream analysis for this transaction, I am confident that such an analysis
would show that the downstream market is not highly concentrated. I prepared such an analysis of the ISO-NE
Market in Docket No. EC11-35-000, the Northeast Utilities-NSTAR merger. I found that the downstream market,
modified as required for the vertical test, was not highly concentrated. The maximum HHI was 1,137, well below
the 1,800 level that is the lower bound for a highly concentrated market. While this analysis is several years old, it
is not plausible that the HHI has since increased to highly concentrated levels.
26
Interestingly, Order No. 697, an order subsequent to Order No. 642 that also is concerned with market power,
takes a wholly different approach to vertical market power arising from control over fuels, fuels transportation and
generating sites. Control over wellhead supplies and interstate gas transportation are categorically not a market
power issue for electricity markets. For intrastate transmission distribution and storage, and generating sites, the
Commission created a rebuttable presumption that they did not create market power issues and merely required
that applicants for market rate authority disclose their vertical holdings and attest that they had not and would not
use them to foreclose entry. See: Order No. 697, para. 446-448.
27
These data were compiled by SNL from Index of Customers data that pipelines supply to FERC. Because the data
are based on delivery rights to off-take points, and contracts allow shippers flexibility in nominating delivery
points, the aggregate of potential deliveries to all named off-take points exceeds the contract maximums. As a
result of this phenomenon, the size of the market, so measured, exceeds the total amount deliverable to New
Affidavit of William Hieronymus
Page 23 of 24
less concentrated than a highly concentrated market’s HHI of 1,800 or greater.
Since the upstream market is not highly concentrated, the vertical market power test
relating to control over gas transmission is passed.
Control Over Generation Sites
49. The other vertical issue identified in Order No. 642 is control over generating sites
that could be a barrier to entry of new generation. As formerly vertically integrated
utilities, affiliates of Iberdrola, on the one hand, and UIL Holdings, on the other hand,
are likely to each control some potential sites in ISO-NE, primarily in the parts of
Connecticut and Maine where they are distribution companies . Affiliates of
Iberdrola also control some very limited sites for wind farm development in ISONE.28 However, this control is far from the dominant control that would impede
entry. Moreover, since the Applicants and their affiliates are only minor sellers of
electricity in the ISO-NE wholesale market, they would have no material incentive to
exercise such control if they had it. Finally, there are no other barriers to entry that
would raise any vertical market power concerns.
50. To summarize with respect to vertical market power, even assuming that there could
be vertical market power issues for a Transaction that has so little overlap in any
electricity market, Applicants clearly lack vertical market power. Applicants have
turned control of their transmission facilities over to the relevant RTOs. They pass
England. The effect of this double-counting of delivery rights is to increase computed market concentration. This
is because the double-counting is most prevalent for large LDCs because their geographic market size results in
multiple delivery points. UIL Holdings is an example. The sum of its delivery rights is 829 MMcf/d, but its actual
contract maximums total 523 MMcf/d. In contrast, a power plant, industrial plant or small gas distribution
company generally will have only one off-take point from a pipeline. Hence, the double-counting reflected in this
analysis conservatively over-estimates the concentration of the market, and nevertheless demonstrates that the
upstream market is not highly concentrated.
28
Note also that site control activities are required to be reported to the Commission pursuant to 18 C.F.R.
35.42(d).
Affidavit of William Hieronymus
Page 24 of 24
the Commission’s Part 33.4 test for vertical market power associated with gas
transportation by a wide margin. They do not have the ability to impede entry as a
result of dominant control of suitable generation sites.
Exhibit WHH-1
Ph.D. Economics
University of Michigan
WILLIAM H. HIERONYMUS
M.A. Economics
University of Michigan
B.A. Social Sciences
University of Iowa
William Hieronymus has consulted extensively to managements of electricity and gas companies, their
counsel, regulators, and policymakers. His principal areas of concentration are the economics, structure
and regulation of network utilities and associated management, policy, and regulatory issues. Dr.
Hieronymus has spent the last twenty-five years working on the restructuring and privatization of utility
systems in the U.S. and internationally. In this context he has assisted the managements of energy
companies on corporate and regulatory strategy, particularly relating to asset acquisition and divestiture.
He has testified extensively on regulatory policy issues and on market power issues related to market
design, mergers and acquisitions and claims of market manipulation. In his nearly forty years of
consulting to this sector, he also has performed a number of more specific functional tasks, including
analyzing potential investments; assisting in negotiation of power contracts, tariff formation, demand
forecasting, and fuels market forecasting. Dr. Hieronymus has testified frequently on behalf of energy
sector clients before regulatory bodies, federal courts, arbitrators and legislative bodies in the United
States, the United Kingdom and Australia. He has contributed to numerous projects, including the
following:
ELECTRICITY SECTOR STRUCTURE, REGULATION, AND
RELATED MANAGEMENT AND PLANNING ISSUES
U.S. Market Restructuring Assignments
•
Dr. Hieronymus has served as an advisor to the senior executives of electric utilities on restructuring
and related regulatory issues, and he has worked with senior management in developing strategies
for shaping and adapting to the emerging competitive market in electricity. Related to some of these
assignments, he has testified before state agencies on regulatory policies and on contract and asset
valuation.
1
•
For utilities seeking merger approval, Dr. Hieronymus has prepared and testified to market power
analyses at FERC and before state commissions. He also has assisted in discussions with the
Antitrust Division of the Department of Justice and in responding to information requests. The
mergers on which Dr. Hieronymus has testified include both electricity mergers and combination
mergers involving electricity and gas companies. Among the major mergers on which he has
testified are Duke-Progress, Duke-Cinergy, NSTAR-Northeast Utilities, First Energy-Allegheny
Sempra (Enova and Pacific Enterprises), Xcel (New Century Energy and Northern States Power),
Exelon (Commonwealth Edison and Philadelphia Electric), AEP (American Electric Power and
Central and Southwest), Dynegy-Illinois Power, Con Edison-Orange and Rockland, DominionConsolidated Natural Gas, NiSource-Columbia Energy, E-on-PowerGen/LG&E and NYSEG-RG&E,
Iberdrola-Energy East, Texas Energy Futures-TXU, GDF/Suez-FirstLight and MacQuarie-Puget,
Fortis Energy-NUS (Tucson Electric) and WEC-Integrys. He also submitted testimony in mergers
that were terminated, usually for unrelated reasons, including Exelon-NRG, EEG (Exelon and
PSEG), Constellation-FPL Energy, Entergy-Florida Power and Light, Northern States Power and
Wisconsin Energy, KCP&L and Utilicorp and Consolidated Edison-Northeast Utilities. Testimony on
similar topics has been filed for a number of smaller utility mergers and for numerous asset
acquisitions. Dr. Hieronymus has also assisted numerous clients in the pre-merger screening of
potential acquisitions and merger partners.
•
For utilities seeking to establish or extend market rate authority, Dr. Hieronymus has provided scores
of analyses concerning market power in support of submissions under Sections 205 and/or 206 of
the Federal Power Act.
•
For utilities and power pools engaged in restructuring activities, he has assisted in examining various
facets of proposed reforms. Such analysis has included features of the proposals affecting market
efficiency and revenue adequacy and those that have potential consequences for market power.
Where relevant, the analysis also has examined the effects of alternative reforms on the market
performance, and achievement of the client’s objectives. In some cases, these analyses have led to
testimony and/or participation in stakeholder processes.
•
For a group of generation companies in ERCOT, he developed potential changes in the energy
market structure and forecasts of the effects of such changes on prices in the market and on the
revenues earned by new generators. For another company he led a study assessing the impact of a
more reliable system arising from adoption of a capacity market on the Texas economy. For another
major generation owner he testified concerning the impacts of relaxation of restrictions on its bidding
behavior on market prices and market revenue adequacy. For yet another company, he led
analyses and testified respecting the need for a capacity market to supplement the ERCOT energy
market in PUCT Project 400000.
•
For a group of generation owners in PJM, he is assisting in developing analyses, filings and
testimony concerning changes needed to make the capacity market revenue adequate. The issues
addressed include participation requirements for imports and demand-side resources, the need for
measures to assure adequate winter supplies and needed changes in the capacity market design.
2
•
For generators and marketers, Dr. Hieronymus has testified extensively on market power and market
manipulation. Current and past assignments include analysis of (and in some cases testimony
concerning) market manipulation on electricity trading platforms and in electricity physical product
markets, allegations of market power arising from agency and partnering arrangements with other
suppliers, economic withholding in capacity markets and the use of contracts to gain leverage to
increase profits from such withholding. Some of this testimony related to the electricity crisis in the
WECC that occurred during the period May 2000 through May 2001 and took place in various
dockets over the following decade. His testimony concerning this period covered, inter alia, the
economics of long term contracts entered into during that period the behavior of market participants
during the crisis period and the nexus between purportedly dysfunctional spot markets and forward
contracts. He also provided testimony and other regulatory support in dockets concerned with
economic and physical withholding, partnership arrangements and bidding and scheduling practices
potentially in violation of the California ISO tariff and/or FERC anti-manipulation policies. He also
has testified concerning market power and market manipulation in East Coast markets and
concerning damages arising from potential manipulation of outage schedules in a Canadian market.
•
In 2011 and 2012, he testified concerning manipulation of capacity markets by states and other
entities who were taking advantage of the steepness of capacity demand curves to depress prices by
out-of-market rules. At least in part as a result of the cases in which the testimonies were filed, the
three Northeastern RTOs have adopted Modified Offer Price Rules to curb such monopsonistic
behavior.
•
In connection with a major investigation of alleged market manipulation by a trading house he
directed a number of analyses of the firm’s incentives to engage in manipulative behavior and on the
market impact of its alleged actions.
•
For the New England Power Pool (NEPOOL), Dr. Hieronymus examined the issue of market power
in connection with NEPOOL’s movement to market-based pricing for energy, capacity, and ancillary
services. He also assisted the New England utilities in preparing their market power mitigation
proposal. The main results of his analysis were incorporated in NEPOOL’s market power filing
before FERC and in ISO-New England’s market power mitigation rules.
•
For a coalition of independent generators, he provided affidavits advising FERC on changes to the
rules under which the northeastern U.S. power pools operate.
•
For both utilities and generators he has testified on a number of occasions on market mitigation rules
for the New York City load pocket and their relationship to policy goals such as market-based entry.
•
Currently, he is assisting a coalition of major utilities in both the FERC generic inquiry into capacity
markets and the reform of aspects of the PJM market rules
Valuation of Utility Assets in North America
•
Dr. Hieronymus has testified in state securitization and stranded cost quantification proceedings,
primarily in forecasting the level of market prices that should be used in assessing the future
revenues and the operating contribution earned by the owner of utility assets in energy and capacity
markets. The market price analyses are tailored to the specific features of the market in which a
utility will operate and reflect transmission-constrained trading over a wide geographic area. He also
has testified in rebuttal to other parties’ testimony concerning stranded costs, and has assisted
companies in internal stranded cost and asset valuation studies.
3
•
He was the primary valuation witness on behalf of a western utility in an arbitration proceeding
concerning the value of a combined cycle plant coming off lease that the utility wished to purchase.
•
He assisted a bidder in determining the commercial terms of plant purchase offers as well as
assisting clients in assessing the regulatory feasibility of potential acquisitions and mergers.
•
He has testified concerning the value of terminated long-term contracts in connection with contract
defaults by bankrupt power marketers and merchant generators.
•
In connection with the Western U.S. long term contracts proceeding, he testified with respect to
benchmarking of contracts and to the relationship between market prices and long run marginal
costs of new generation.
Other U.S. Utility Engagements
•
In an arbitration proceeding, Dr. Hieronymus testified with respect to contract terms relating to
security provisions for repaying front-end loaded contract payments.
•
Dr. Hieronymus has contributed to the development of several benchmarking analyses for U.S.
utilities. These have been used in work with clients to develop regulatory proposals, set cost
reduction targets, restructure internal operations, and assess merger savings.
•
Dr. Hieronymus was a co-developer of a market simulation package tailored to region-specific
applications. He teamed to conduct numerous multi-day training sessions using the package to help
utility clients in educating management regarding the consequences of wholesale and retail
deregulation and in developing the skills necessary to succeed in this environment.
•
He has made numerous presentations to U.S. utility managements regarding overseas electricity
systems and market restructuring.
•
In connection with nuclear generating plants then-nearing completion, he has testified in
Pennsylvania, Louisiana, Arizona, Illinois, Missouri, New York, Texas, Arkansas, New Mexico, and
before the Federal Energy Regulatory Commission regarding plant-in-service rate cases on the
issues of equitable and economically efficient treatment of plant costs for tariff-setting purposes,
regulatory treatment of new plants in other jurisdictions, the prudence of past system planning
decisions and assumptions, performance incentives, and the life-cycle costs and benefits of the
units. In these and other utility regulatory proceedings, Dr. Hieronymus and his colleagues have
provided extensive support to counsel, including preparation of interrogatories, cross-examination
support, and assistance in writing briefs.
•
On behalf of utilities in the states of Michigan, Massachusetts, New York, Maine, Indiana,
Pennsylvania, New Hampshire, and Illinois, he has submitted testimony in regulatory proceedings on
the economics of completing nuclear generating plants that were then under construction. His
testimony has covered the likely cost of plant completion; forecasts of operating performance; and
extensive analyses of the impacts of completion, deferral, and cancellation upon ratepayers and
shareholders. For the senior managements and boards of utilities engaged in nuclear plant
construction, Dr. Hieronymus performed analyses to inform strategic decisions concerning the
continuance of construction.
•
For an eastern Pennsylvania utility that suffered a nuclear plant shutdown due to NRC sanctions
relating to plant management, he filed testimony regarding the extent to which replacement power
cost exceeded the costs that would have occurred but for the shutdown.
4
•
For a major Midwestern utility, Dr. Hieronymus headed a team that assisted senior management in
devising its strategic plans, including examination of such issues as plant refurbishment/life
extension strategies, impacts of increased competition, and available diversification opportunities.
•
On behalf of two West Coast utilities, Dr. Hieronymus testified in a needs certification hearing for a
major coal-fired generation complex concerning the economics of the facility relative to competing
sources of power, particularly unconventional sources and demand reductions.
•
For a large western combination utility, he participated in a major 18-month effort to provide the client
with an integrated planning and rate case management system.
•
For two Midwestern utilities, Dr. Hieronymus prepared an analysis of intervenor-proposed
modifications to the utilities' resource plans. He then testified on their behalf before a legislative
committee.
U.K. Assignments (Primarily 1988-1994)
•
Following promulgation of the white paper that established the general framework for privatization of
the electricity industry in the United Kingdom, Dr. Hieronymus participated extensively in the task
forces charged with developing the new market system and regulatory regime. His work on behalf of
the Electricity Council and the twelve regional distribution and retail supply companies focused on
the proposed regulatory regime, including the price cap and regulatory formulas, and distribution and
transmission use of system tariffs. He was an active participant in industry-government task forces
charged with creating the legislation, regulatory framework, initial contracts, and rules of the pooling
and settlements system. He also assisted the regional companies in the valuation of initial contract
offers from the generators, including supporting their successful refusal to contract for the proposed
nuclear power plants that subsequently were canceled as being non-commercial.
•
During the preparation for privatization, Dr. Hieronymus assisted several individual U.K. electricity
companies in understanding the evolving system, in developing use of system tariffs, and in
enhancing commercial capabilities in power purchasing and contracting. He continued to advise a
number of clients, including regional companies, power developers, large industrial customers, and
financial institutions on the U.K. power system for a number of years after privatization.
•
Dr. Hieronymus assisted four of the regional electricity companies in negotiating equity ownership
positions and developing the power purchase contracts for a 1,825 megawatt combined cycle gas
station. He also assisted clients in evaluating other potential generating investments including
cogeneration and non-conventional resources.
•
Dr. Hieronymus also has consulted on the separate reorganization and privatization of the Scottish
electricity sector. Part of his role in that privatization included advising the larger of the two Scottish
companies and, through it, the Secretary of State on all phases of the restructuring and privatization,
including the drafting of regulations, asset valuation, and company strategy.
•
He assisted one of the Regional Electricity Companies in England and Wales in the 1993 through
1995 regulatory proceedings that reset the price caps for its retailing and distribution businesses.
Included in this assignment was consideration of such policy issues as incentives for the economic
purchasing of power, the scope of price control, and the use of comparisons among companies as a
basis for price regulation. Dr. Hieronymus’s model for determining network refurbishment needs was
used by the regulator in determining revenue allowances for capital investments.
5
•
He assisted one of the Regional Electricity Companies in its defense against a hostile takeover,
including preparation of its submission to the Cabinet Minister who had the responsibility for
determining whether the merger should be referred to the competition authority.
•
In 2013 he was principal author of a paper submitted to OFGEM in its “RPI-X at 25” inquiry,
suggesting changes in how rates are regulated.
•
Also in 2013 he participated, along with others at CRA in an analysis of market power issues
concerning the upcoming forward capacity market.
Assignments Outside of the U.S. and U.K.
•
Dr. Hieronymus testified before the federal court of Australia concerning the market power
implications of acquisition of a share of a large coal-fired generating facility by a large retail and
distribution company.
•
For the European Bank for Reconstruction and Development, he performed analyses of least-cost
power options and evaluated the return on a major investment that the Bank was considering for a
partially completed nuclear plant in Slovakia. Part of this assignment involved developing a forecast
of electricity prices, both in Eastern Europe and for potential exports to the West.
•
For the OECD he performed a study of energy subsidies worldwide and the impact of subsidy
elimination on the environment, particularly on greenhouse gases.
•
For the Magyar Villamos Muvek Troszt, the electricity company of Hungary, Dr. Hieronymus
developed a contract framework to link the operations of the different entities of an electricity sector
in the process of moving from a centralized command- and-control system to a decentralized,
corporatized system.
•
For Iberdrola, the largest investor-owned Spanish electricity company, he assisted in development of
its proposal for a fundamental reorganization of the electricity sector, its means of compensating
generation and distribution companies, its regulation, and the phasing out of subsidies. He also has
assisted the company in evaluating generation expansion options and in valuing offers for imported
power.
•
Dr. Hieronymus contributed extensively to a project for the Ukrainian Electricity Ministry, the goal of
which was to reorganize the Ukrainian electricity sector and prepare it for transfer to the private
sector and the attraction of foreign capital.
•
At the request of the Ministry of Power of the USSR, Dr. Hieronymus participated in the creation of a
seminar on electricity restructuring and privatization. The seminar was given for 200 invited
Ministerial staff and senior managers for the USSR power system. His specific role was to introduce
the requirements and methods of privatization. Subsequent to the breakup of the Soviet Union, Dr.
Hieronymus continued to advise both the Russian energy and power ministry and the governmentowned generation and transmission company on restructuring and market development issues.
•
On behalf of a large continental electricity company, Dr. Hieronymus analyzed the proposed
directives from the European Commission on gas and electricity transit (open access regimes) and
on the internal market for electricity. The purpose of this assignment was to forecast likely
developments in the structure and regulation of the electricity sector in the common market and to
assist the client in understanding their implications.
6
•
For the electric utility company of the Republic of Ireland, he assessed the likely economic benefit of
building an interconnector between Eire and Wales for the sharing of reserves and the interchange
of power. For a task force representing the Treasury, electricity generating, and electricity
distribution industries in New Zealand, Dr. Hieronymus undertook an analysis of industry structure
and regulatory alternatives for achieving the economically efficient generation of electricity. The
analysis explored how the industry likely would operate under alternative regimes and their
implications for asset valuation, electricity pricing, competition, and regulatory requirements.
•
For China Light and Power he is providing advice and analyses in support of ongoing negotiations of
the contract that constitutes the regulatory regime for the eight year period beginning in 2018.
TARIFF DESIGN METHODOLOGIES
AND POLICY ISSUES
•
Dr. Hieronymus participated in a series of studies for the National Grid Company of the United
Kingdom and for Scottish Power on appropriate pricing methodologies for transmission, including
incentives for efficient investment and location decisions.
•
For a U.S. utility client, he directed an analysis of time-differentiated costs based on accounting
concepts. The study required selection of rating periods and allocation of costs to time periods and
within time periods to rate classes.
•
For EPRI, Dr. Hieronymus directed a study that examined the effects of time-of-day rates on the
level and pattern of residential electricity consumption.
•
For the EPRI-NARUC Rate Design Study, he developed a methodology for designing optimum costtracking block rate structures.
•
On behalf of a group of co-generators, Dr. Hieronymus filed testimony before the Energy Select
Committee of the UK Parliament on the effects of prices on cogeneration development.
•
For the Edison Electric Institute (EEI), he prepared a statement of the industry's position on proposed
federal guidelines regarding fuel adjustment clauses. He also assisted EEI in responding to the U.S.
Department of Energy (DOE) guidelines on cost-of-service standards.
•
For private utility clients, Dr. Hieronymus assisted in the preparation both of their comments on draft
FERC regulations and of their compliance plans for PURPA Section l33.
•
For a state utilities commission, Dr. Hieronymus assessed its utilities' existing automatic adjustment
clauses to determine their compliance with PURPA and recommended modifications.
•
For DOE, he developed an analysis of automatic adjustment clauses currently employed by electric
utilities. The focus of this analysis was on efficiency incentive effects.
•
For the commissioners of a public utility commission, Dr. Hieronymus assisted in preparation of
briefing papers, lines of questioning, and proposed findings of fact in a generic rate design
proceeding.
7
SALES FORECASTING METHODOLOGIES
FOR GAS AND ELECTRIC UTILITIES
•
For the White House Sub-Cabinet Task Force on the future of the electric utility industry, Dr.
Hieronymus co-directed a major analysis of "least-cost planning studies" and "low-growth energy
futures." That analysis was the sole demand-side study commissioned by the task force, and it
formed a basis for the task force's conclusions concerning the need for new facilities and the relative
roles of new construction and customer side-of-the-meter programs in utility planning.
•
For a large eastern utility, Dr. Hieronymus developed a load forecasting model designed to interface
with the utility's revenue forecasting system-planning functions. The model forecasts detailed
monthly sales and seasonal peaks for a 10-year period.
•
For DOE, he directed development of an independent needs assessment model for use by state
public utility commissions. This major study developed the capabilities required for independent
forecasting by state commissions and provided a forecasting model for their interim use.
•
For state regulatory commissions, Dr. Hieronymus has consulted in the development of service arealevel forecasting models of electric utility companies.
•
For EPRI, he authored a study of electricity demand and load forecasting models. The study
surveyed state-of-the-art models of electricity demand and subjected the most promising models to
empirical testing to determine their potential for use in long-term forecasting.
•
For a Midwestern electric utility, he provided consulting assistance in improving the client’s load
forecast, and testified in defense of the revised forecasting models.
•
For an East Coast gas utility, Dr. Hieronymus testified with respect to sales forecasts and provided
consulting assistance in improving the models used to forecast residential and commercial sales.
OTHER STUDIES PERTAINING TO
REGULATED AND ENERGY COMPANIES
•
For the owner of a proposed LNG terminal, Dr. Hieronymus testified with respect to market power
relating to the terminal and associated transmission. Relying substantially on his testimony FERC
concluded that such terminals generically should be treated as equivalent to wellhead gas and hence
should not be price regulated.
•
For two gas distribution utilities with overlapping franchise areas, Dr. Hieronymus testified
concerning the impact of the merger on competition to serve customers and whether the loss of such
competition was in the public interest.
8
•
In a number of antitrust and regulatory matters, Dr. Hieronymus has performed analyses and
litigation support tasks. These cases have included Sherman Act Section 1 and 2 allegations,
contract negotiations, generic rate hearings, ITC hearings, and a major asset valuation suit. In a
major antitrust case, he testified with respect to the demand for business telecommunications
services and the impact of various practices on demand and on the market share of a new entrant.
For a major electrical equipment vendor, Dr. Hieronymus testified on damages with respect to
alleged defects and associated fraud and warranty claims. In connection with mergers for which he
is the market power expert, Dr. Hieronymus assists clients in Hart-Scott-Rodino investigations by the
Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission. In an
arbitration case, he testified as to changed circumstances affecting the equitable nature of a
contract. In a municipalization case, he testified concerning the reasonable expectation period for
the supplier of power and transmission services to a municipality. In two Surface Transportation
Board proceedings, he testified on the sufficiency of product market competition to inhibit the
exercise of market power by railroads transporting coal to power plants.
•
For one owner of the Trans-Alaskan Pipeline, he submitted testimony to FERC in 2010 concerning
cost pooling and related issues of cost and revenue allocation among co-owner.
•
For a landholder, Dr. Hieronymus examined the feasibility and value of an energy conversion project
that sought a long-term lease. The analysis was used in preparing contract negotiation strategies.
•
For an industrial client considering development and marketing of a total energy system for
cogeneration of electricity and low-grade heat, Dr. Hieronymus developed an estimate of the
potential market for the system by geographic area.
•
For the U.S. Environmental Protection Agency (EPA), he was the principal investigator in a series of
studies that forecasted future supply availability and production costs for various grades of steam
and metallurgical coal to be consumed in process heat and utility uses.
Dr. Hieronymus has been an invited speaker at numerous conferences on such issues as market power,
industry restructuring, utility pricing in competitive markets, international developments in utility structure
and regulation, risk analysis for regulated investments, price squeezes, rate design, forecasting customer
response to innovative rates, intervener strategies in utility regulatory proceedings, utility deregulation,
and utility-related opportunities for investment bankers.
Prior to rejoining CRA in June 2001, Dr. Hieronymus was a Member of the Management Group at PA
Consulting, which acquired Hagler Bailly, Inc. in October 2000. He was a Senior Vice President of Hagler
Bailly. In 1998, Hagler Bailly acquired Dr. Hieronymus’s former employer, Putnam, Hayes & Bartlett, Inc.
He was a Managing Director at PHB. He joined PHB in 1978. From 1973 to 1978 he was a Senior
Research Associate and Program Manager for Energy Market Analysis at CRA. Previously, he served as
a project director at Systems Technology Corporation and as an economist while serving as a Captain in
the U.S. Army.
9
Exhibit WHH-2
Upstream Firm Rights HHI Analysis Summary
Table 1: HHI Analysis of 2015 ISO-NE Gas Pipeline Firm Capacity Rights*
Shipper Parent Company Name
National Grid plc
Northeast Utilities
UIL Holdings Corporation
Excelerate Energy Limited Partnership
Repsol Energy North America Corp.
NiSource Inc.
GDF Suez LLC
Energy Capital Partners LLC
Algonquin Power & Utilities Corp.
Emera Incorporated
EIF Management, LLC
Granite Ridge Energy LLC
Cabot Oil & Gas Corporation
Consolidated Edison, Inc.
Dynegy Inc.
Centrica Plc.
BP plc
Virginia Power Energy Marketing, Inc.
Mobil Natural Gas Inc
NAEA Newington Energy LLC
Unitil Corporation
23 Others
Total Firm
Capacity Rights Total Market Share Capacity Rights
(MDth/day)
(%)
HHI
1,574
19.6
384.7
1,083
13.5
182.1
829
10.3
106.7
800
10.0
99.4
730
9.1
82.8
344
4.3
18.4
323
4.0
16.2
305
3.8
14.5
213
2.7
7.1
145
1.8
3.3
131
1.6
2.7
130
1.6
2.6
125
1.6
2.4
125
1.6
2.4
105
1.3
1.7
101
1.3
1.6
99
1.2
1.5
95
1.2
1.4
92
1.1
1.3
90
1.1
1.3
75
0.9
0.9
509
6.3
3.3
Total
8,023
100
*Notes
1) Reporting period: Jan. 2015
2) Considers all contracts with delivery in CT, RI, MA, NH, VT, ME
3) Capacity rights exceed published pipeline capacities due to multiple delivery points for some contracts
Page 1
938
EXHIBIT K
MAPS OF PHYSICAL PROPERTY
Exhibit K
Exhibit K-1: A map of the service territories of NYSEG, RG&E, CMP and MNG.
Exhibit K-2: A map of the service territory of United Illuminating.
Exhibit K-1
HYDRO PLANTS
I
B
E
R
D
R
O
L
A
U
S
A
N
E
T
W
O
R
K
S
115 KV TRANSMISSION
Canada
Subsidiary Franchise Areas
March 2015
230 KV TRANSMISSION
345 KV TRANSMISSION
ME
New York State Electric & Gas Corporation
C
a
n
a
d
a
Canada
Rochester Gas & Electric Corporation
NH
Lake Ontario
H
Drawn by: Greg Kennedy 05/06/2011 -- Last Revised 03/16/2015 (GSK)
Lake Erie
t
MA
CT
PA
Map Document: \\Pwroch1fil02\arcgis_data\Misc Maps\IBERDROLA USA Subsidiaries Franchise prior to UI merger (B).mxd
NJ
Lon
g
nd
Isla
Maine Natural Gas
A t l a
n
NY
c
e
n
i
VT
O
c
a
Central Maine Power
RI
0
0
25
50
50
100
100 Miles
200 Kilometers
Exhibit K-2
EXHIBIT L
STATUS OF OTHER REGULATORY
ACTIONS AND ORDERS
Exhibit L
Review and/or approval from the following state and federal regulatory bodies are
required prior to the closing of the Proposed Transaction. Filings with each of these
regulatory bodies have either been submitted or will be submitted shortly. As of the date
of this Application, no such approvals have been obtained. The Applicants will file with
the Commission any orders acting upon requests for approval or review that are issued
prior to Commission action on this Application.
State
State of Connecticut Public Utilities Regulatory Authority
Massachusetts Department of Public Utilities
Federal
•
U.S. Department of Justice/Federal Trade Commission pursuant to the
Hart Scott Rodino Act
•
Federal Communications Commission
•
Committee on Foreign Investment in the United States
•
Securities and Exchange Commission (with respect to IUSA becoming
publicly traded on the New York Stock Exchange)
EXHIBIT M
EXPLANATION REGARDING
CROSS SUBSIDIZATION
Exhibit M
The Commission has stated that it will recognize three classes of transactions that
are unlikely to raise cross-subsidization concerns under Section 203(a)(4) of the FPA.
The first such class involves:
transactions where the applicant shows that a franchised public utility with
captive customers is not involved. If no captive customers are involved,
then there is no potential for harm to customers. Therefore, compliance
with Exhibit M could be a showing that no franchised public utility with
captive customers is involved in the transaction.[1]
Each of the franchised public utilities involved in the Proposed Transaction (i.e., CMP,
NYSEG, RG&E, and United Illuminating) are located in states with retail choice, and the
Commission has found that retail cost-based sales in retail choice states are not
considered to be sales to captive customers.2 Because each of these franchised public
utilities operate in states with retail choice, there are no franchised public utilities with
captive customers involved in the Proposed Transaction. The Proposed Transaction thus
falls under the first safe harbor.3 Accordingly, the Commission should find that the
Applicants have complied with Exhibit M requirements and that the Proposed
Transaction does not raise cross-subsidy concerns under Section 203(a)(4) of the FPA.
In addition to the Proposed Transaction falling within this safe harbor, the
Applicants represent that, based on facts and circumstances known to them or that are
1
FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at P 17
(footnote omitted).
2
Market-Based Rates For Wholesale Sales Of Electric Energy, Capacity And Ancillary
Services By Public Utilities, 119 FERC ¶ 61,295 (2007) at P 480; Duquesne Light
Holdings, Inc., et al., 117 FERC ¶ 61,326 at P 38 (2006).
3
The Proposed Transaction also likely falls under the second safe harbor enumerated by
the Commission with respect to transactions that are subject to review by a state
commission because the Proposed Transaction must be reviewed and approved by both
the Connecticut PURA and the Massachusetts DPU. FPA Section 203 Supplemental
Policy Statement, FERC Stats. & Regs. ¶ 31,253 at P 18.
reasonably foreseeable, the Proposed Transaction will not result in, at the time of the
consummation of the Proposed Transaction or in the future, cross-subsidization of a nonutility associate company or pledge or encumbrance of utility assets for the benefit of an
associate company. Specifically, the Proposed Transaction will not result in:
(a)
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;
(b)
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;
(c)
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
(d)
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 service agreements subject to
review under sections 205 and 206 of the FPA.
Lastly, pursuant to 18 C.F.R. § 33.2(j)(1)(i) of the Commission’s regulations, the
following is a disclosure of the existing pledges and encumbrances of the Applicants’
regulated utilities’ assets:
Name of Obligor
Rochester Gas and Electric
Corporation (“RG&E”)
Title of Issue
Outstanding
(000s)
Fixed
/ Adj
Coupon /
Last
Reset
Maturity
Date
Issue Date
FMB Series YY
150,000
F
5.900%
7/15/2019
6/29/2009
125,000
F
4.100%
7/29/2021
7/29/2011
10,500
F
4.750%
5/15/2032
8/26/2004
RG&E
FMB Series AAA
PCN 2004 Series A
(FMB Series RR)
PCN 1997 Series C
(FMB Series ZZ)
29,350
F
5.000%
8/1/2032
8/19/1997
RG&E
FMB Series WW
100,000
F
6.470%
7/15/2032
7/17/2007
RG&E
FMB Series VV
75,000
F
6.375%
9/1/2033
9/15/2003
RG&E
FMB Series XX
150,000
F
8.000%
12/15/2033
12/24/2008
RG&E
RG&E
RG&E Total
639,850
Exhibit M-2
Central Maine Power Company
(“CMP”)
Series A FMB
150,000
F
5.700%
6/1/2019
5/21/2009
CMP
Series B FMB
150,000
F
4.200%
7/15/2021
7/15/2011
CMP
Series D FMB
125,000
F
3.070%
6/15/2022
6/13/2012
CMP
Series F FMB
65,000
F
3.150%
1/15/2025
1/15/2015
CMP
Series G FMB
20,000
F
3.370%
1/15/2027
1/15/2015
CMP
Series C FMB
100,000
F
5.680%
1/4/2042
1/4/2012
CMP
Series E FMB
225,000
F
4.450%
1/15/2043
1/15/2013
CMP
Series H FMB
65,000
F
4.070%
1/15/2045
1/15/2015
CMP Total
900,000
Exhibit M-3
ATTACHMENT 1
VERIFICATIONS
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
)
lberdrola, S.A.
lberdrola USA. Inc.
lberdrola USA Networks. Inc.
Green Merger Sub, Inc.
UIL Holdings Corporation
Docket No. EC I 5-MOO
)
)
VERIFICATION PURSUANT TO 18 C.F.R.
§ 33.7
Mr. R. Scott Mahoney. being duly sworn, deposes and says that: he is General Counsel of
lberdrola USA. Inc. and has the authority to verily the foregoing Application on behalf of
lberdrola USA. Inc.. Iberdrola USA Networks. Inc.. and Green Merger Sub. Inc.; he has read
said Application: and based on his knowledge. information and belief, all of the statements
contained therein pertaining to lherdrola USA. Inc.. lberdrola USA Networks. Inc.. and Green
Menzer Sub. Inc. are true and accurate.
R. Scott Mahoney
General Counsel
Iberdrola USA. Inc.
Subscribed and Swo to before me
thisay of\_. 2015.
La
Notary Public
My Commission expires:
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S U SAN 2 J OH N STON
Notary Pbiic. State f Maine
Eoires May 17,2018
LMrCornrnssion