On January 22, 2015, the Federal Energy Regulatory Commission (“Commission”) issued a Proposed Policy Statement on Hold Harmless Commitments (“Policy Statement”), in which it proposed changes to the basis on which it will review transactions subject to Section 203 of the Federal Power Act (“FPA”). Specifically, the Policy Statement proposes clarifications to the rules regarding the identification of transaction-related costs and use of hold harmless commitments, which are often included in Section 203 applications for transactions involving traditional franchised public utilities as a means of demonstrating that a proposed transaction will not adversely affect ratepayers. As part of a hold harmless commitment, an applicant typically commits not to seek recovery of transaction-related costs in Commission-jurisdictional rates unless the applicant can demonstrate that the costs are off-set by transaction-related savings. The Commission must ensure that a proposed transaction does not have an adverse impact on jurisdictional rates and has traditionally allowed applicants to use a hold harmless commitment to satisfy this prong of the Commission’s analysis. Read More
As we reported in June 2014, the U.S. Department of Commerce (the “Department”) announced that certain crystalline silicon photovoltaic (“CSPV”) products from the People’s Republic of China (“PRC” or “China”) had been produced by taking advantage of subsidies, and that such products could therefore be subjected to countervailing duties when imported into the United States (http://www.globalpowerlawandpolicy.com/2014/06/department-of-commerce-issues-preliminary-countervailing-duty-determination-on-crystalline-solar-pv-products-from-china/). Read More
New York – A cross-border team of lawyers from global law firm K&L Gates LLP has advised Québec-based Boralex Inc. (TSX: BLX) on its acquisition of French wind farm owner and operator Enel Green Power France SAS for a total net consideration of approximately €280 million in cash. The transaction makes Boralex the largest independent wind power producer in France, and the third largest onshore wind player, behind only the two incumbent French utilities.
The K&L Gates team advising Boralex on the acquisition and on the related approximately €175 million project financing was led by New York corporate partners Sandy Feldman and Holly Hatfield. Other members of the team include New York tax partner Adam Tejeda and corporate associate Justin Purtle; Paris corporate partners Olivia Lê Horovitz and Caroline Ledoux, tax partner Bertrand Dussert, real estate counsel Joanna Klat, corporate associates François Lan, Nawal Sabsibo, and Alexandre Brossier, and labor and employment associate Julie Bouchard; and Frankfurt finance partners Matthias Grund and Bastian Bongertz and finance associate Dominik Pauly.
K&L Gates regularly represents Boralex in both the U.S. and Europe, including in previous transactions in France such as the 2012 acquisitions of French wind company interests from both U.S.-based AES Corporation and French company InnoVent SAS.
See original post here.
On January 13, 2015,, the Internal Revenue Service (IRS) released Notice 2015-4, which provides new guidance on the small wind energy project credit under Section 48 of the Internal Revenue Code (IRC). In particular, the guidance provides that small wind energy projects must meet certain performance and quality standards to qualify for the credit. The official notice is scheduled to be published on January 26 in Internal Revenue Bulletin 2015-4.
Notice 2015-4 provides that Section 48-eligible property must use a wind turbine that has a nameplate capacity of not more than 100 kW and meets the performance and quality standards as set forth in either:
(1) American Wind Energy Association (AWEA) Small Wind Turbine Performance and Safety Standard 9.1-2009; or
(2) International Electrotechnical Commission (IEC) 61400-1, 61400-12, and 61400-11.
Small wind turbines must meet the AWEA or IEC standards that are in effect at the time of acquisition of the turbine.
The manufacturer of the turbine may provide a taxpayer with a certification that the manufacturer’s turbine meets one of the standards listed above, and taxpayers may rely on such certifications when claiming the credit under Section 48. However, manufacturers should be aware that issuing erroneous certifications or failing to satisfy certain documentation requirements could trigger penalties under IRC Section 7206 (fraud and making false statements) or IRC Section 6701 (aiding and abetting an understatement of tax liability).
Notice 2015-4 is effective for small wind energy property acquired or placed in service after January 26, 2015.
In private company acquisitions, it is common for the buyer to require that a portion of the merger consideration be set aside in escrow as an accessible source of funds to cover the buyer’s post-closing indemnification claims relating to breaches of the target company’s representations and warranties and other specified contingencies. However, the buyer might demand additional protection if its losses under such claims exceed the escrow amount by insisting upon collection of the full loss from the target company’s stockholders. If the losses are significant and the indemnification obligations are uncapped or have a sufficiently high cap, this could require the target company’s stockholders to return their full pro rata share of the merger consideration to the buyer.
To read the full alert, click here.
New Requirement to Report Foreign Direct investment in the U.S.
The Bureau of Economic Analysis of the U.S. Department of Commerce announced in September 2014 that it was reinstating a mandatory requirement that U.S. companies report new foreign investment through the filing of one of a family of survey forms designated as BE-13. BE-13 forms are filed electronically here.
Authority for the Survey
The authority for the survey is based on the International Investment and Trade in Services Survey Act, 90 Stat. 2059, 22 U.S.C. § 3101. The Act grants broad authority to the President “to collect information on international investment and United States foreign trade in services, whether directly or by affiliates, including related information necessary for assessing the impact of such investment and trade, to authorize the collection and use of information on direct investments owned or controlled directly or indirectly by foreign governments or persons, and to provide analyses of such information to the Congress, the executive agencies, and the general public.” 22 U.S.C. § 3101(b).
The National Electricity Amendment (Distribution Network Pricing Arrangements) Rule 2014 No. 9 (Rule Change) came into effect on 1 December 2014, amending the Australian National Electricity Rules (NER) by introducing a more ‘cost reflective’ model for network pricing. Under the new regime, distribution tariffs must comply with several new pricing principles, with the objective that the network prices that a Distribution Network Service Provider (DNSP) charges each consumer should reflect its efficient costs of providing network services to that consumer.
To read the full alert, click here.
The Federal Court of Australia has found that AGL South Australia Pty Ltd (AGL) made false or misleading representations and engaged in misleading or deceptive conduct concerning the level of discount residential consumers would receive under AGL’s energy plans.
The Court held that consumers who commenced an energy plan with AGL between January and mid-July 2012 would have understood through telephone conversations with AGL Customer Service Representatives that they would receive a discount calculated by reference to the rates which would otherwise have applied to them if they had not entered into the energy plan. Although they initially received the discount, in mid-2012 AGL increased the rates under its energy plans and sent a letter to these consumers advising them of their new rates, stating that they would continue to receive their discount.
Justice White held that this was false and misleading as following the rate increase, these rates were actually higher than those AGL applied to similar consumers who had subsequently commenced an energy plan post-July 2012. As such, AGL’s conduct “reduced the benefits of the discounts represented to the consumers when they agreed on their energy plan”.
If you would like to read more about this case, please click here.
12-14 January 2015
The Westgate Hotel
San Diego, CA
K&L Gates is a Platinum Sponsor at Infocast’s Corporate Energy Sourcing Summit 2015, with partner Bill Holmes leading the Summit as Chair. This event focuses on the latest intelligence on financing, business cases, risk, sourcing & sustainability from the leading market players, while evaluating business cases for new strategies and solutions including on & off-site renewables, demand response, efficiency, fuel cells and energy storage. The Summit will be a source of actionable strategies and insights from peers in other sectors including bigbox/retail, manufacturing, data centers, real estate, airports, and universities. The Summit will offer up numerous opportunities to meet key dealmakers, learn about their plans for the upcoming year, and capitalize on new prospects that will lead to successful deals.
Congress is poised to enact a one-year retroactive tax extenders package that would renew a variety of tax incentives—including the production tax credit (PTC) for wind—through the end of 2014. On Wednesday, December 3, the House passed the Tax Increase Prevention Act of 2014 (H.R. 5771) by a vote of 378-46, sending the bill to the Senate for its consideration before the end of the Lame Duck session. Read More