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Dec. 19-23: ETP assets rumored for sale; net metering ending in Arizona

A brief look back at successes and setbacks in the energy industry.


ANADARKO — Anadarko Petroleum Corp. announced Dec. 21 a deal to divest upstream and midstream assets in the Marcellus Shale to Alta Marcellus Development LLC for $1.24 billion. Anadarko said it will use the sale proceeds for more drilling in the oil-rich Delaware Basin of Texas and the DJ Basin in Colorado. "We like the deal [for Anadarko] as it improves the pro-forma corporate growth profile and liquids cut and leaves [about] $3.7B of cash on hand pro-forma," analysts at Tudor Pickering Holt & Co. said.

ALGONQUIN POWER — Kansas regulators approved on Dec. 22 Algonquin Power & Utilities Corp.'s proposed $2.4 billion acquisition of Empire District Electric Co., clearing the way for the companies to close the merger Jan. 1, 2017. As part of the approved settlement agreement, Empire District agreed to withdraw its pending rate case in Kansas and freeze its current base rates until Jan. 1, 2019.

LAKE CHARLES METHANOL — The U.S. Department of Energy on Dec. 21 announced the offer of a conditional commitment of up to $2 billion in loan guarantees to Lake Charles Methanol LLC to build the world's first methanol production facility to use carbon capture technology in Lake Charles, La. The company plans to sell the captured carbon to Denbury Onshore LLC for enhanced oil recovery. The project will be the first loan guarantee made under the Advanced Fossil Energy Project solicitation issued by the Departments Loan Programs Office and the first petroleum coke-to-methanol facility in the U.S.

TEXAS SOLAR — The Public Utility Commission of Texas handed solar companies a big win, approving measures encouraging a growing market for distributed generation and rejecting restrictions supported by utilities. The PUCT said companies like SolarCity Corp and Sunrun Inc. that lease rooftop systems can sign interconnection agreements with utilities, a change opposed by Oncor Electric Delivery Co. LLC and American Electric Power Co. Inc.'s Texas utilities. At the same time, the PUCT refused to require solar companies to submit to commission regulation, saying they wanted to avoid restricting customers' "preferences with respect to [distributed generation] arrangements."


ETP Energy Transfer Partners LP shares climbed 2.29% Dec. 22 following media reports that Blackstone Group LP is in talks to buy a stake in assets held by the gas pipeline partnership. But the report by The Wall Street Journal, which cited "people familiar with the matter" also said among those involved in the talks was former Energy Transfer Equity LP CFO Jamie Welch, who was ousted in February after Energy Transfer Equity's failed merger deal with Williams Cos. Inc. "The deal seems a little strange to us given former CFO Welch sued Energy Transfer after he was fired earlier this year," CreditSights analysts told their clients, adding that the number of assets that might be for sale is limited as well.


GREAT PLAINS — Kansas Corporation Commission staff recommended rejection of Great Plains Energy Inc.'s proposed acquisition of Westar Energy Inc., saying the merger was not in the public interest. KCC staff raised concern about maintaining quality of service for customers while "dramatically reducing the operating costs of the combined company" and pointed to problems with the companies' projected savings calculation. Analysts, however, remained optimistic about the transaction closing, noting that all three commissioners are appointed by Kansas Gov. Sam Brownback, who supports the deal.

PLATINUM PARTNERS — Mark Nordlicht, founder of hedge fund Platinum Partners, and six associates were arrested and charged Dec. 19 with securities and investment fraud related to what federal authorities said was a $1 billion investment scam that relied partly on the assets of a now-defunct oil driller. Nordlicht and his associates "engaged in one of the largest and most brazen investment frauds perpetrated on the investing public," U.S. Attorney Robert Capers said. As part of the indictment, the SEC said Nordlicht masterminded a scheme to divert almost $100 million from Black Elk Energy Offshore Operations, which at one time owned a drilling platform in the Gulf of Mexico, to boost Platinum funds.

ARIZONA SOLAR — Over the objections of solar parties, the Arizona Corporation Commission voted 4-1 on Dec. 20 to end net metering as a policy for rooftop solar customers, lowering the compensation amount for power that customers send to utilities from their distributed generation installations. The ACC decided to replace net metering with a complex formula-based approach that uses projected wholesale power costs from proxy generation assets and an avoided cost and benefit valuation methodology to arrive at a compensation rate for rooftop solar. Following the vote, Wells Fargo Securities reiterated its "outperform" rating for Pinnacle West Capital Corp. Arizona's utilities have argued that net metering shifts a utility's fixed costs from customers with rooftop solar to those without it.