Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the requirements, process, and anticipated timeline for obtaining approval from the Federal Energy Regulatory Commission ("FERC" or the "Commission") under Section 203 of the Federal Power Act, 16 U.S.C. §824b ("Section 203" or "FPA §203"), in connection with the proposed acquisition of one hundred percent (100%) of the outstanding equity interests of

II. Background on the Transaction A. Transaction Structure The proposed transaction is structured as a one hundred percent (100%) equity acquisition. AcquisitionCo, a newly formed Delaware corporation established for the sole purpose of consummating this transaction, will acquire all of the outstanding equity interests of Cascadia from Cascadia's existing shareholders. AcquisitionCo is jointly owned by Fund IV and IC

III. Statutory and Regulatory Framework A. Section 203 of the Federal Power Act

Section 203 of the Federal Power Act (16 U.S.C. §824b) establishes the requirement that certain transactions involving jurisdictional public utility facilities receive prior authorization from FERC before they may be consummated. The statute was substantially amended by the Energy Policy Act of 2005, which broadened its scope to cover, among other things, acquisitions of securities in public utilities and holding com

Section 203(a)(1)(A) provides that no public utility shall, without first having secured an order of the Commission authorizing it to do so, sell, lease, or otherwise dispose of the whole of its facilities subject to the jurisdiction of the Commission, or any part thereof of a value in excess of $10,000,000. This subsection is directed at dispositions by the public utility itself — that is, where the public utility i

Section 203(a)(1)(B) applies to mergers or consolidations, directly or indirectly, of the facilities of a public utility subject to the jurisdiction of the Commission, or any part thereof, with the facilities of any other person, by any means whatsoever. This provision is primarily directed at mergers of operating companies and is not directly triggered by the Cascadia transaction, which involves a change in the upst

Section 203(a)(2) provides that no holding company in a holding company system that includes a transmitting utility or an electric utility shall purchase, acquire, or take any security with a value in excess of $10,000,000 of, or, by any means whatsoever, directly or indirectly, merge or consolidate with, a transmitting utility, an electric utility company, a holding company in a holding company system that includes

1. Effect on Competition. The Commission examines whether the proposed transaction will have an adverse effect on competition in relevant wholesale electric power markets. This analysis typically involves identification of the relevant geographic and product markets, assessment of market concentration using the Herfindahl-Hirschman Index ("HHI") or similar analytical tools, and evaluation of whether the transaction c

2. Effect on Rates. The Commission examines whether the proposed transaction will adversely affect rates charged to wholesale electric power customers. This prong focuses on whether the transaction will result in increased costs being passed through to ratepayers, whether customers served under cost-based rate tariffs will be adversely affected, and whether the transaction will undermine any existing rate protections

3. Effect on Regulation. The Commission examines whether the proposed transaction will impair the effectiveness of federal or state regulation of the public utility and its jurisdictional facilities. This prong considers whether the post-transaction ownership structure will create obstacles to regulatory oversight, whether the transaction will result in a loss of regulatory jurisdiction, and whether the combined enti

IV. Filing Requirements A. Form and Content of Application The Section 203 application must be filed with FERC in accordance with the requirements set forth in 18 C.F.R. Part 33. The regulations prescribe both the form and the substantive content of the application. Based on our review of the applicable requirements and current FERC practice, the application must include the following: Verified Application. The appli

V. Review Process and Expected Timeline A. Standard Review Timeline The review process for a Section 203 application typically proceeds as follows: Filing and Docket Assignment. Upon receipt of the application, FERC assigns a docket number (in this case, subsequently assigned as EC22-143-000) and publishes a notice of the filing in the Federal Register. The time between filing and Federal Register publication can var

VI. Substantive Analysis — Likelihood of Approval A. Effect on Competition The first prong of the Merger Policy Statement standard requires the applicant to demonstrate that the proposed transaction will not have an adverse effect on competition in relevant wholesale electric power markets. Cascadia's fourteen (14) hydroelectric facilities are located in the Pacific Northwest, spanning Oregon, Washington, and Idaho.

VII. Conditions That May Be Imposed FERC routinely conditions approval of Section 203 applications on the applicant's compliance with certain standard requirements designed to protect ratepayers, preserve regulatory oversight, and ensure that the transaction is implemented in a manner consistent with the public interest. Based on our review of recent FERC orders in comparable proceedings, we anticipate that the Commi

VIII. Coordination with Other Regulatory Approvals A. Oregon Public Utility Commission (OPUC) In addition to FERC approval under Section 203 of the Federal Power Act, the Cascadia transaction requires separate approval from the Oregon Public Utility Commission for the transfer of Cascadia's state-regulated utility assets. The OPUC has its own filing requirements, review process, and approval standards, which are inde

IX. ICM Co-Invest–Specific Considerations This section addresses considerations specific to ICM Cascadia Co-Invest, LP and Ironside Capital Management LP in connection with the FERC Section 203 filing. Entity Information. ICM Cascadia Co-Invest, LP was formed as a Delaware limited partnership for the purpose of co-investing alongside Fund IV in the Cascadia acquisition. The entity's Employer Identification Number is