Virginia Commission Approves Keydet Solar Facilities, Allows for Amendments to Solar CPCNs
On May 30, 2023, the Virginia State Corporation Commission issued a final order granting Keydet Solar Company, LLC’s (“Keydet”) application for certificates of public convenience and necessity (“CPCNs”) for a 145 MW solar facility along with associated transmission and distribution facilities. The project will be located in Charles City County, Virginia.
This is another in a growing list of projects to be developed thanks in large part to the adoption of the Virginia Clean Economy Act (“VCEA”)in 2020. Not only will this project add more solar to the grid in line with the VCEA, but this particular order included a procedural issue regarding the actual certificate that is granted. Specifically, under the final order, the Commission can amend the name(s) on a certificate rather than cancel the existing certificate and reissue it with the new name(s).
That’s an important issue, as new solar projects are located adjacent or close to existing solar facilities. It makes sense to share existing facilities as opposed to building new, costly, and redundant facilities. But, canceling a CPCN can result in a default of financing obligations under standard financing agreements that are used in today’s market, even if the certificate is simultaneously re-issued upon cancellation. Therefore, solar developers will continue to need joint-use CPCNs, which will require amendment, rather than cancellation and reissuance, to conform with industry-standard financing agreements.
Diving into the details of the case, part of Keydet’s application included facilities – a collector substation and a generation tie line (“gen-tie line”) – previously certificated to Keydet’s affiliate, Skipjack Solar Center, LLC (“Skipjack”). Keydet also sought to utilize a 2,677-foot portion of Skipjack’s distribution facilities, included in Skipjack’s distribution CPCN, and incorporate three undeveloped parcels of land that had been referenced in Skipjack’s generation CPCN.
Commission Staff (“Staff”) asserted that all three of Skipjack’s previously granted certificates (distribution, transmission, and generation) needed to be canceled and simultaneously reissued to accommodate changes to the ownership and/or operation of the facilities, or to accommodate changes to the facilities themselves. Staff testified that its internal process for these cases does not allow for amendments, only cancellation and reissuance of a new certificate with a new certificate number.
Skipjack and Keydet objected to cancellation and reissuance of Skipjack’s certificates, noting that Skipjack’s financers and tax equity partners consider certificate cancellation an event of default under Skipjack’s agreements with its lenders. As mentioned above, contract language stating certificate cancellation is an act of financial default is industry-standard. Skipjack and Keydet urged the Commission to amend the relevant Skipjack certificates rather than order a cancellation and simultaneous reissuance of the amended certificate in order to avoid triggering a contractual default.
The Commission ordered that Skipjack’s generation, transmission, and distribution CPCNs be amended without cancellation. The Commission issued Keydet sole-use generation and distribution CPCNs, as well as joint-use transmission and distribution CPCNs with Skipjack.
GreeneHurlocker represented Keydet and Skipjack in this proceeding. For more information on this case please contact Brian Greene or Victoria Howell.