Mar 31, 2015

GridLiance and Blackstone Announce the Formation of a New Electric Transmission Company

Form the Nation’s First Competitive Transmission Company Focused on Public Power, Creating New Opportunities for Public Power to Invest in Regulated Transmission Projects That Will Lower Delivered Energy Costs and Provide More Reliable Transmission Service for Their Customers

Announce 30-Year Joint Development Agreements with Missouri Joint Municipal Electric Utility Commission and Oklahoma Municipal Power Authority

GridLiance Is Led by Industry Veterans Ed Rahill, Noman Williams, Carl Huslig and Beth Emery

Kansas City, Mo. & Chicago & New York, March 31st: GridLiance GP, LLC (“GridLiance” or “the Company”) and Blackstone Energy Partners, an affiliate of The Blackstone Group L.P. (NYSE:BX), today announced the formation of GridLiance, the nation’s first competitive transmission company focused on collaborating with under-served U.S. municipal, cooperative and joint action agency utilities (“Public Power”) to jointly plan, develop, own and operate transmission infrastructure. These new projects will deliver important customer benefits, including lower delivered energy costs and more reliable transmission service.

Founded by industry veteran Edward Rahill, GridLiance will enable its current and future Public Power partners to participate in the development of new transmission projects that earn a regulated return from the Federal Energy Regulatory Commission (“FERC”) or other regulatory bodies. Historically, transmission-dependent Public Power utilities have been unable to invest in – and financially benefit from – transmission projects because they lack the scale, planning infrastructure, regulatory influence and the engagement necessary to effectively participate in the Regional Transmission Organization (“RTO”) planning process.

Public Power’s inability to participate equally with incumbent investor-owned utilities (“IOUs”) in the award of new transmission construction projects has left them without the ability to earn margins from regionally-funded projects that would offset rising transmission rates. At the same time, Public Power utilities lack, in many cases, the interconnected transmission networks enjoyed by other incumbents because the regional transmission planning process does not always reflect Public Power’s needs. Current and future GridLiance partners will be better positioned to influence planning studies and reverse this trend by leveraging GridLiance’s experience and planning efforts. As future projects reflect Public Power’s transmission needs, the grid will better serve the entire region and create lasting benefits for Public Power and their customers.

“Public Power is core to the nation’s energy system, with its obligation to deliver safe and reliable electric service to millions of residential customers and thousands of businesses,” said Ed Rahill, GridLiance’s President and CEO. “Despite the important role Public Power plays, these entities have been largely excluded from participating in the planning of and investment in new transmission infrastructure as well as the financial and service reliability benefits they provide to customers.”

“Through our innovative, low-cost operating model, we are bringing together Public Power utilities to create a strong, unified regional entity that can better represent Public Power’s interests in the RTO planning and project award process,” continued Mr. Rahill. “Working together, we will have the necessary scale and resources to more effectively invest in, develop and construct new transmission infrastructure and ensure that Public Power is a viable competitive alternative to incumbent IOUs now building most of the projects. We are delighted to be joined by Blackstone in this endeavor and expect to benefit from their oversight and financial support, including their proven track record of successfully developing energy projects around the world.”

“Partnering with GridLiance is an exciting opportunity to help the under-represented Public Power sector build critical transmission infrastructure that will deliver long-term public benefits, including improving the reliability of the U.S. power grid, increasing accessibility to renewable generation and lowering energy costs for the nation’s nearly 40 million Public Power customers,” said Sean Klimczak, a Senior Managing Director at Blackstone who oversees the firm’s investments in the transmission, power and natural resource sectors. “The GridLiance partnership is consistent with Blackstone’s track record of working with innovative companies – and their talented management teams – to solve critical energy infrastructure problems and to improve the delivery of service. Through Blackstone Energy Partners and Blackstone Capital Partners, we have substantial committed capital available to invest in new transmission projects to deliver energy security to America and look forward to working closely with Ed, his team and our Public Power partners for many years to come.”

Benefits of Partnering with GridLiance
Under the GridLiance Municipal/Cooperative Network model, Public Power entities will have a partner that collaborates with them on the development of new customer-focused projects in which they can jointly invest. Having options for the development of projects inside and outside their immediate service territory gives these entities a better opportunity to improve their regional transmission system and to make investments at the same rate of return historically realized by incumbent IOUs.

Partnering with GridLiance provides the following benefits to Public Power and also helps federal and state regulatory agencies achieve critical policy objectives:

  • Public Power utilities partnering with GridLiance will benefit from enhanced access to attractive investments in new regulated transmission projects. Margins earned from these regulated projects can be used to help reduce their customers’ delivered electricity rates.
  • New transmission projects are expected to improve electric system reliability, increase market efficiency and relieve network congestion, thereby further lowering the delivered energy prices that customers otherwise would pay. GridLiance is committed to being the low-cost provider. Notably, GridLiance is free of any legacy corporate expenses, which burden the cost structure of many market competitors and impose additional costs to electricity consumers.
  • GridLiance will focus on planning for additional local transmission infrastructure which will enhance transmission service reliability for customers. GridLiance recognizes that the RTO planning process does not always reflect Public Power’s needs and interests adequately because their systems are often excluded from planning models. As a result, Public Power systems are often served by a single radial feed, and are not part of a looped system, leaving customers exposed to outages if that one connection goes down.
  • Public Power can invest in new transmission projects with the assurance that GridLiance will take full operational responsibility and will adhere to relevant compliance requirements. GridLiance’s team has deep expertise in building and operating transmission infrastructure. Leveraging its scale and resources, GridLiance can more efficiently provide joint system planning, construction and maintenance services, as well as better meet all the regulatory guidelines, including The North American Electric Reliability Corporation’s reliability standards.
  • Enabling GridLiance’s Public Power partners and their transmission assets to function more effectively under the RTO structure advances FERC’s goal of establishing large-scale regional planning by all affected utilities. This better ensures the most cost-effective projects are selected. Additionally, GridLiance’s centralized, world-class compliance function will lower the cost and risk of meeting reliability compliance programs.
  • Public Power and other utilities serve many of the “wind rich” regions and sometimes struggle with the cost to get this energy transmitted to distant load centers. Utilities that operate outside wind generation regions also face challenges related to the delivery of renewable energy into their service territories. Therefore, increasing transmission infrastructure to deliver wind energy will increase access to clean energy, which will help all utilities meet state renewable portfolio standards and customer preferences.

GridLiance and its affiliates have entered into their first 30-year joint development agreements with the Missouri Joint Municipal Electric Utility Commission (“MJMEUC”) and the Oklahoma Municipal Power Authority (“OMPA”). Under these agreements, GridLiance affiliates formed to operate in each of the Southwest Power Pool, Inc. (“SPP”) and the Midcontinent Independent System Operator, Inc. (“MISO”) regions have the exclusive right to jointly plan, construct and operate transmission infrastructure for these agencies.

“Partnering with GridLiance provides us with a crucial new tool and an opportunity to access the operational and financial benefits of new transmission projects,” said Duncan Kincheloe, President and CEO of MJMEUC. “It provides us with a much-needed, full seat at the table for planning and other functions. This relationship will provide benefits to all of our stakeholders, including putting the brakes on rising energy costs for customers and improving regional reliability.”

“GridLiance provides Public Power agencies with the opportunity to directly shape our transmission future, something that was previously not possible,” said David Osburn, General Manager of OMPA. “With GridLiance’s support, we will finally have the scale necessary to participate in new transmission projects and will achieve the regulatory influence we need to participate in the regional transmission planning and award process.”

In addition to jointly planning, developing, owning and operating new transmission assets, GridLiance is working with Public Power entities to identify existing transmission infrastructure that can be efficiently and cost-effectively upgraded and integrated into the RTO. As part of this initiative, the Company is actively seeking opportunities to acquire and operate existing electric transmission lines and related facilities owned by Public Power utilities that prefer to focus on their core load-serving business.

Company’s Experienced Management Team
GridLiance has a proven team, with deep operations expertise and a combined 100+ years of industry experience. The Company is led by President & CEO Edward M. Rahill, former President of ITC Grid Development; SVP & COO Noman L. Williams, former Vice President of Transmission Policy and Compliance for Sunflower Electric Power Corporation; SVP of Business Development Carl A. Huslig, former President of ITC Great Plains and before that an executive of a large Midwestern utility; and SVP & General Counsel N. Beth Emery, former Husch Blackwell LLP Partner.

Mr. Rahill has more than 20 years of experience in the industry, including the start-up and management of new ventures. As a part of the management team that acquired ITC Transmission from DTE Energy in 2003, Mr. Rahill and the ITC management team built the first successful independent electric transmission company operating in SPP and MISO. As CFO of ITC Holdings, Mr. Rahill led the successful IPO of the Company in July of 2005 and the subsequent acquisitions of METC in Michigan and Alliant’s IPL transmission assets in Iowa, Minnesota and Illinois.

In 2007, Mr. Rahill also assumed the position of President of ITC Grid Development where he oversaw the greenfield start-up of ITC Great Plains and the successful development of $500 million in transmission assets within SPP, among other successful projects.

Mr. Williams brings more than 30 years of executive, O&M, system operations, engineering leadership and management experience in the electric utility industry to GridLiance. He previously served as Vice President of Transmission Policy and Compliance for Sunflower Electric Power Corporation, where he was responsible for the engineering services program for Sunflower Member cooperatives, which included construction work, long-term planning and transmission line and substation design and construction. Mr. Williams has held a variety of leadership positions in SPP and currently serves as Chair of SPP’s Market Operations and Policy Committee.

Mr. Huslig has more than 20 years of experience in the utility industry – with Aquila, Inc. and its affiliates, then as President of ITC Great Plains. While responsible for the Aquila system in Missouri and Kansas, he worked extensively within stakeholder groups in SPP and MISO. At ITC Great Plains, Mr. Huslig worked closely with Mr. Rahill to successfully build a start-up transmission company from zero assets to $500 million in six years, making ITC Great Plains the most successful greenfield independent transmission company in the U.S. at the time. As President, Mr. Huslig was responsible for ITC Great Plains’ project development, staffing and compliance and led SPP stakeholder taskforces that changed SPP rules to accommodate independent transmission companies.

Ms. Emery has more than 30 years of experience in the energy and regulatory fields. She has been a national law firm Partner for almost two decades, advising on the development of generation and transmission projects and regulatory compliance for all aspects of the electric industry at the state and federal levels. Earlier in her career, Ms. Emery served as the first General Counsel for the California Independent System Operator Corporation, and as the first in-house General Counsel for CPS Energy, the nation’s largest municipally-owned electric and gas utility.

About GridLiance GP, LLC
Incorporated in 2014, GridLiance GP, LLC is the nation’s first competitive transmission company focused on collaborating with Public Power. Through its subsidiary transmission companies formed to operate in each RTO, GridLiance will jointly plan, develop, own and operate transmission assets with Public Power. GridLiance’s mission is to provide its Public Power partners with opportunities to invest in regulated transmission development projects, enabling the utilities to earn margins from regionally-funded projects to offset transmission rate increases, as well as receive other benefits, including lower energy and delivery costs and increased reliability for their customers, while providing greater access to renewable energy sources. GridLiance has offices in Kansas City, Missouri; Chicago, Illinois; and Austin, Texas. GridLiance seeks to establish long-term agreements with all interested Public Power utilities. It currently has 30-year joint development agreements with the Missouri Joint Municipal Electric Utility Commission (MJMEUC) and the Oklahoma Municipal Power Authority (OMPA), operating within MISO and SPP through its subsidiaries, South Central MCN, LLC and Midcontinent MCN, LLC, respectively. To learn more, please visit www.gridliance.com

About Blackstone Energy Partners
Blackstone Energy Partners is Blackstone’s energy-focused private equity business, with a successful record built on Blackstone’s industry expertise and partnerships with exceptional management teams. Blackstone has invested over $8 billion of equity globally across a broad range of sectors within the energy industry.

Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with almost $300 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets, and secondary funds, all on a global basis. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory, and fund placement services. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.

About MJMEUC
The Missouri Joint Municipal Electric Utility Commission is comprised of 71 municipally-owned retail electric systems in Missouri and Arkansas ranging in size from approximately 225 meters to over 111,000 meters. MJMEUC currently operates two full requirements power pools for 47 cities and supplies 306 MW of electric power to an additional 15 member cities. Since 2007 MJMEUC has acquired ownership interests in dedicated capacity of over 650 MW from approximately 10 newly constructed generation facilities fueled by coal, natural gas and renewable sources. MJMEUC’s total portfolio exceeds 1,100 MW. The membership serves approximately 505,000 retail customers with a combined load of 3,138 MW.

About OMPA
The Oklahoma Municipal Power Authority (OMPA) is a municipal joint action agency owned by 39 municipal electric utilities. OMPA provides economies of scale in power generation, transmission and related services to support substations, distribution systems and customer service programs which allow the community-owned electric utilities to be customer-focused providers. OMPA has a very diverse power supply program with assets in four states and operates in the Southwest Power Pool and Energy Reliability Council of Texas. The members of OMPA serve approximately 250,000 Oklahomans.

Media Contacts:

GridLiance Media
Sard Verbinnen & Co
Ron Low, 415-618-8750
Bryan Locke, 312-895-4700

GridLiance Business
development@gridliance.com

Blackstone Media Contact
Peter Rose, 212-583-5871
rose@blackstone.com