The VEA Board of Directors has approved the sale of VEA’s 230 kV High Voltage Transmission System to GridLiance
September 15, 2016—Valley Electric Association, Inc. (VEA) and GridLiance Holdco, L.P. (GridLiance) – which is backed by Blackstone Energy Partners, an affiliate of Blackstone (NYSE:BX) – announce that the VEA Board of Directors has approved the sale of VEA’s 230 kV High Voltage Transmission System (HVTS) to GridLiance. The planned sale now moves to a vote of approval by the VEA members. VEA owns the facilities through its subsidiary Valley Electric Transmission Association, LLC. GridLiance plans to acquire the assets through a new transmission company it will form to operate in the Western Interconnection.
“This is a great moment for Valley Electric member-owners,” said Thomas H. Husted, Chief Executive Officer for VEA. “With approval from our members, we will be entering into a partnership with one of the country’s foremost transmission companies. That’s the way GridLiance looks at it, too: forming a relationship with our Cooperative as they enter the Western markets. There are no downsides to this partnership.”
VEA joined the California Independent System Operator Corporation (CAISO) in 2013, placing the HVTS in the California market and under CAISO’s regional tariff. In addition to optimizing the 230 kV transmission system economically, joining CAISO created enhanced opportunities for renewable generation in VEA’s service territory.
In May of 2016, VEA issued a request for proposals to sell the HVTS, comprising approximately 160 miles of 230 kV transmission lines and related substation equipment. Multiple companies submitted formal bids, and two finalists were further evaluated by the VEA Board before they selected GridLiance as the successful bidder. GridLiance will pay net book value for the assets, assume outstanding debt, and provide additional value that brings the total consideration to over $200 million. VEA and GridLiance are currently working together on an exclusive basis to finalize the definitive agreements, which are expected to be signed within the next few weeks.
“This transaction allows us to enter the region with assets located in a strategic area and with a utility partner with impressive foresight in developing the high voltage transmission system as a gateway between California and the rest of the West,” said Ed Rahill, President and Chief Executive Officer of GridLiance. “We are excited to join forces with VEA, and we look forward to a long-term partnership with future investment opportunities that will contribute to the areas of economic development as well as rate and reliability benefits to VEA and its members.”
Under the agreement, GridLiance will use VEA long-term to operate, maintain and manage the system – preserving local jobs and ensuring that the relationships and experience VEA staff have developed will continue to benefit the high voltage transmission system. The acquisition will not affect the remaining transmission distribution facilities owned by VEA.
About Valley Electric Association, Inc.
Valley Electric Association, Inc. (VEA) is a member-owned nonprofit electric utility headquartered in Pahrump, Nev. While VEA started as a small rural electric utility in 1965, the company now provides electric service to more than 45,000 people within a vast 6,800-square-mile service area located primarily along the California-Nevada border, with the majority in Nevada. Valley Communications Association (VCA), a wholly owned subsidiary of VEA, began proving high-speed communications to our member-owners in the spring of 2016. VEA’s service area starts in Sandy Valley, southwest of Las Vegas, and extends north for more than 250 miles to Fish Lake Valley. For more information about VEA, please visit www.vea.coop.
Incorporated in 2014, GridLiance’s core business model is to partner with municipalities, public power agencies and electric cooperatives (Public Power) to increase system reliability and lower costs. GridLiance’s differentiated operating model provides its Public and Cooperative Power partners with new opportunities to invest in regulated transmission projects or rely on GridLiance to plan and construct transmission for their benefit. GridLiance currently operates over 400 miles of transmission lines and related substation facilities in Oklahoma, has long term co-development agreements and asset purchase agreements in place with Public Power utilities operating in Missouri, Oklahoma, and Kansas, and is negotiating new arrangements with utilities in several other states. For more information about GridLiance, visit www.GridLiance.com