NextEra Energy Transmission has agreed to purchase Trans Bay Cable (TBC) for approximately $1bn, including the assumption of debt.
The company has entered definitive agreements with SteelRiver Infrastructure Fund North America and partners for the acquisition.
TBC is a high-voltage direct current (HVDC) submarine cable system that runs 53 miles under the San Francisco Bay. It transfers existing energy from Pittsburg to San Francisco in California and supplies nearly 40% electricity used by San Francisco and its surrounding areas on a daily basis.
NextEra Energy chairman and CEO Jim Robo said: “The Trans Bay Cable provides meaningful benefits to residents of the Bay Area by providing access to safe, reliable and cost-effective electric transmission service.
“This acquisition furthers our goal of creating America’s leading competitive transmission company and is consistent with our strategy of adding high-quality regulated assets to our portfolio.”
Developed in response to a 1998 blackout in the Bay Area, the HVDC cable system was selected by the California Independent System Operator (CAISO) as the suitable energy transmission solution to provide reliable energy to San Francisco.
TBC’s utility rates are set by the federal energy regulatory commission (FERC) and revenues paid by the CAISO.
Completion of the deal is subject to approval of the California Public Utilities Commission, as well as the FERC and expiration or termination of the waiting period under the Hart-Scott-Rodino Act. The transaction is expected to complete next year.
For this transaction, Wells Fargo Securities served as financial advisor, while Pillsbury Winthrop Shaw Pittman served as counsel, and Ellison Schneider Harris & Donlan acted as the regulatory counsel to NextEra Energy Transmission.
RBC Capital Markets served as financial adviser, and Winston & Strawn served as legal adviser to the seller.