On April 7, 2017, TerraForm Power, Inc. (TerraForm) filed an application with the Texas PUC pursuant to Sections 39.158 and 39.154 of the Public Utility Regulatory Act (PURA) for approval of the conveyance of certain Class A shares of TerraForm to Orion US Holdings 1 L.P. (Orion).

"The calculation of generation market share in the application erroneously includes capacity owned and controlled by Luminant, based on the incorrect premise that Luminant is or may be an affiliate of Orion," Luminant said in comments on the application

"Luminant files this motion, and comments solely to clarify that it is not affiliated with Orion as a matter of law under applicable provisions of PURA. Therefore, Luminant's capacity should not be included in the calculation of the capacity of the post-transaction combined entity under PURA §§ 39.154 and 39.158," Luminant said

"Luminant's only connection to Orion is through Brookfield Asset Management Private Institutional Capital Adviser (Canada), L.P. (BAMPIC), a registered investment adviser, which manages an investment in approximately 15 percent of the stock of Luminant's parent holding company, Vistra Energy Corp. Under PURA, a connection of this nature -- via a registered investment adviser -- does not amount to affiliation," Luminant said

"Specifically, PURA has one definition of 'affiliate' that applies to all of Title II (i.e., PURA) and that definition turns on whether persons or corporations are linked by virtue of ownership or control of at least 5 percent of their voting securities. PURA § 11.0042 clarifies that certain types of entities -- including registered investment advisers like BAMPIC -- do not count as persons or corporations in the definition of 'affiliate.' Therefore, if two entities are connected through an exempted PURA § 11.0042 entity, that entity breaks the chain of affiliation that otherwise might exist, and the two are not affiliates. The Commission has affirmed that PURA § 11.0042 -- which took effect on June 17, 2005 -- eliminates from PURA the notion of so-called portfolio affiliates," Luminant said

"Because Luminant's only connection to Orion is through a registered investment adviser that is thus not a 'person' or 'corporation' in the definition of affiliate in PURA, Luminant is not affiliated with Orion as a matter of law," Luminant said

"In addition, PURA § 39.154 -- which is the governing statute for purposes of determining whether an application under PURA § 39.158 must be approved -- imposes a 20 percent cap only on capacity that is both owned and controlled by a PGC and its affiliates. The obvious intent of this provision is to enable the Commission to monitor ownership and control of generating assets in ERCOT and ensure that no one PGC or group of PGCs owns and controls such a substantial share of generating capacity that they can potentially control the market. Neither Orion nor BAMPIC has any ownership or control over Luminant or its generating facilities. Luminant makes all pricing and operational decisions with respect to its generating facilities. Therefore, including Luminant's generating facilities in the numerator of the calculation of TerraForm's and Orion's post-transaction combined capacity would be inconsistent with PURA § 39.154," Luminant said

"Luminant asserts that the Commission need not explicitly address the question of whether Orion is an affiliate of Luminant's PGCs in order to determine that the TerraForm application meets the requirements of PURA § 39.158. The Commission can, as TerraForm has requested, determine that the application meets the standard in PURA § 39.158 whether using the highest or lowest capacity totals provided in TerraForm's supplemental application. This approach would resolve the proceeding without need of addressing whether Orion is or is not an affiliate of Luminant. Luminant would be harmed, however, by even an implicit determination that Orion is an affiliate of Luminant's PGCs, especially in a proceeding in which Luminant is not even the applicant and the Commission has not been presented evidence from the entities that are alleged by a third party (i.e., TerraForm) to be affiliates. Therefore, while Luminant's strong preference is for the Commission to refrain from including Luminant's installed generation capacity in the numerator of the calculation of generation market share in this matter, alternatively Luminant asks that the order conclude that the application meets the standard in PURA § 39.158 with or without Luminant's capacity and there is no need in this proceeding to address whether that Luminant capacity must be included," Luminant said