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FERC Waiver to Help Facilitate NJR's Purchase of Talen Energy's Natgas Trading Portfolio

FERC has agreed to waive capacity release regulations and related tariff provisions to help facilitate the sale of Talen Energy Marketing LLC's retail and wholesale natural gas trading business to an affiliate of NJR Energy Services Co.

According to Federal Energy Regulatory Commission [RP17-963] records, NJR and Talen filed a joint petition for the waiver -- and requested that the Commission expedite their request -- on Aug. 4. The petition states that NJR's affiliate, NJR Retail Services Co. (NJRRS), acquired Talen's natural gas trading portfolio on July 27, but did not disclose financial terms of the sale.

The sale involves natural gas transportation and storage agreements on four major interstate pipeline systems -- Transcontinental Gas Pipe Line Co. LLC (Transco), Texas Eastern Transmission LP, Tennessee Gas Pipeline Co. LLC (TGP) and Columbia Gas Transmission LLC.

"Talen Energy is pleased that FERC granted the waiver today," spokesman Todd Martin told NGI on Tuesday. He added that the Allentown, PA-based company has been "focusing on its core business" since going private last December. The parent company is one of the largest independent power producers.

"The company has re-defined its strategy, driven resources into growth areas and divested of non-core assets," Martin said. "Many of Talen Energy's former natural gas employees will be joining NJR, bringing their institutional knowledge to a multi-year, non-exclusive agreement to procure natural gas for our generating stations."

According to FERC Form 552 submissions, Wall, NJ-based NJR ranked 30th in terms of natural gas volumes traded in 2016, while Talen ranked 104th. As a combined entity, NJR would have ranked 24th.

The joint petition states that, upon closing, Talen entered into a transitional asset management agreement with NJR, with the latter assuming management of Talen's 17 different service agreements for firm natural gas transportation or storage service. Upon receiving FERC's waiver, the transitional agreement was to be "recalled and contemporaneously transferred to NJR via permanent release."

The sale also calls for Talen to assign its retail natural gas sales agreements to NJRRS upon the completion of certain closing conditions. The assignment is not dependent upon a waiver by FERC.

Talen served as the base contract shipper for 10 of the 17 service agreements, for a collective 112,996 Dth/d of capacity. The company also served as the replacement shipper under four temporary release contracts (15,000 Dth/d), and had entered into three asset management agreements (39,500 Dth/d) with three releasing shippers on two of the aforementioned pipelines. Talen also transferred to NJRRS its wholesale natural gas purchase and sales agreements, and one precedent agreement involving the PennEast Pipeline Project.

Specifically, Talen held a firm transportation agreement for 30,000 Dth/d with Transco that ends in 2018, and another for 30,000 Dth/d with Texas Eastern that expires in 2023. Talen also held six agreements with Columbia for a combined 38,373 Dth/d expiring between 2018 and 2026. Two separate agreements with TGP -- one for 7,500 Dth/d, the other for 7,123 Dth/d -- are to expire on Oct. 31, but continue on a monthly basis thereafter.

Talen served as the replacement shipper under two temporary releases of capacity with Delmarva Power & Light Co. on Transco (5,000 Dth/d) and Columbia (5,000 Dth/d), respectively, and through two additional temporary releases of capacity with United States Gypsum Co. (USG) -- one for 2,000 Dth/d year-round, and one alternating between 1,000 and 2,000 Dth/d, depending on the date. The Delmarva agreements are to expire on Oct. 31, while the USG agreements are to expire in 2018.

Of the three asset management agreements, EQT Energy LLC had prescribed for 25,000 Dth/d from Texas Eastern into 2019, while South Jersey Gas Co. had signed up for 10,000 Dth/d from Columbia until Oct. 31 and USG agreed to 4,500 Dth/d from Columbia into 2018.

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