1023-00001 · Ironside Capital Management LP · Regulatory

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MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP

FROM: Pamela Cross, Responsible Partner, Calderwood & Harkness LLP Theresa Kim, Lead Associate, Calderwood & Harkness LLP Owen Fischer, Working Associate, Calderwood & Harkness LLP

DATE: September 14, 2022

RE: Oregon Public Utility Commission — Approval Process for Transfer of Utility Assets in Connection with the Acquisition of Cascadia Renewables Holdings, Inc.

C&H Matter No.: 1023-00001

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I. Executive Summary

The purpose of this memorandum is to analyze the Oregon Public Utility Commission ("OPUC" or the "Commission") approval process applicable to the proposed acquisition of 100% of the outstanding equity interests of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation, by Cascadia Acquisition Corp. ("Acquisition Corp."), a newly formed Delaware corporation wholly owned by Meridian Infrastructure Partners Fund IV, LP ("Fund IV") and ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest"). This memorandum has been prepared at the request of Ironside Capital Management LP ("Ironside" or "ICM"), which serves as investment adviser to ICM Co-Invest and whose affiliated limited partners hold a 28.57% equity interest in Acquisition Corp. through the Vehicle.

The proposed acquisition, at an agreed enterprise value of approximately $1.95 billion, will result in an indirect change of control of Cascadia's regulated utility assets in the State of Oregon. Under Oregon Revised Statutes ("ORS") § 757.480 and related statutory and regulatory provisions, a change of control of this nature requires prior approval from the OPUC. The Commission applies a "public interest" standard in evaluating such transactions, considering the impact on ratepayers, service quality, safety, and the financial viability of the utility post-acquisition.

We anticipate that the OPUC filing will be made in mid-October 2022 and that a docket number will be assigned upon receipt of a complete application. We note for the file that the application was subsequently filed on October 14, 2022 and assigned Docket No. UM-2287. The application will be prepared under the lead of Breckenridge Sloane & Pratt LLP ("BSP"), counsel to Meridian Infrastructure Partners, with input from Calderwood & Harkness LLP on behalf of Ironside and ICM Co-Invest, and from Ridgeway, Ashford & Malone PC ("RAM"), counsel to Cascadia.

Based on our review of applicable precedent and the nature of the transaction, we estimate a review period of approximately four to seven months from the date a complete filing is accepted by the Commission, with approval potentially achievable in the first quarter or early second quarter of 2023. This timeline is, however, subject to several variables, including the complexity of intervenor participation, the extent to which proceedings become contested, the possibility of settlement negotiations, and the emergence of collateral issues—most notably the Portland Metropolitan Water District's potential renegotiation of the Bull Run Filtration Project concession, which could draw additional scrutiny to the financial stability of the post-closing entity.

This memorandum complements our separate analyses of Federal Energy Regulatory Commission ("FERC") Section 203 requirements (FERC Docket No. EC22-143-000, application to be filed on or about October 19, 2022) and Committee on Foreign Investment in the United States ("CFIUS") considerations (voluntary notice filed and acknowledged September 20, 2022). Those analyses are addressed in separate C&H memoranda and are incorporated herein by reference only to the extent necessary for context.

We recommend that Ironside be prepared for the possibility that OPUC approval may not be obtained within the original outside date set forth in the Equity Purchase Agreement ("EPA") of December 31, 2022, and that an extension of the outside date may be necessary. As discussed below, we understand that a First Amendment to the EPA extending the outside date to March 31, 2023 was anticipated and subsequently executed on November 22, 2022.

II. Background on the Transaction

A. Transaction Overview

Cascadia Renewables Holdings, Inc. is an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. Founded in 2003, Cascadia owns and operates a diversified portfolio of renewable energy and water-infrastructure assets across the Pacific Northwest, including fourteen (14) hydroelectric generation facilities, six (6) wind farms, and three (3) water-treatment concessions located in Oregon, Washington, and Idaho. Cascadia's asset base reflects a mix of regulated and unregulated operations, with its regulated utility activities concentrated primarily in its Oregon hydroelectric generation operations and, to a more limited extent, certain of its water-treatment operations.

For the fiscal year ended December 31, 2021, Cascadia reported total revenues of approximately $487 million and adjusted EBITDA of approximately $138 million, as audited by Halstead & Greer LLP, Cascadia's independent public accounting firm. These figures include revenue derived from both regulated and unregulated operations. Cascadia's assets include long-term power-purchase agreements ("PPAs") with Oregon and Washington electric utilities, as well as municipal water-service contracts, with a weighted-average remaining contract life of approximately twenty-two (22) years. This contracted revenue base provides significant visibility into Cascadia's future cash flows and has been a key driver of the valuation agreed upon by the parties.

Among Cascadia's most significant assets is the Bull Run Filtration Project concession with the Portland Metropolitan Water District (the "PMWD"), a forty-year concession agreement executed in approximately 2018. The Bull Run Filtration Project concession generates approximately $64 million in annual revenue, representing approximately 13.1% of Cascadia's FY 2021 total revenue. The concession agreement grants Cascadia the right and obligation to design, build, operate, and maintain the Bull Run water-filtration facility, which serves a substantial portion of the Portland metropolitan area's municipal water supply. As discussed in greater detail below, the PMWD issued a renegotiation notice on October 28, 2022, which may have implications for the OPUC review process.

The proposed acquisition is structured as a 100% equity acquisition. Cascadia Acquisition Corp., a newly formed Delaware corporation, will acquire all of the outstanding shares of common stock of CRH from Cascadia's existing shareholders. Acquisition Corp. was formed solely for the purpose of effecting this transaction and has no prior operating history, assets, or liabilities apart from those related to the proposed acquisition.

B. Acquiring Entities and Capital Structure

The acquisition will be funded through a combination of equity contributions from the co-sponsors and acquisition debt financing. The equity component totals $1,050,000,000, contributed by the following entities in the following proportions:

Fund IV is managed by Meridian Infrastructure GP IV LLC, its general partner, and advised by Meridian Infrastructure Advisors LLC, its registered investment adviser. ICM Co-Invest is a co-investment vehicle formed for the purpose of this transaction, with Meridian Infrastructure GP IV LLC serving as general partner and Ironside Capital Management LP's affiliated limited partners holding substantially all of the limited partnership interests (99.99%). Ironside Capital Management LP serves as investment adviser to the Vehicle.

The acquisition debt financing comprises two facilities:

(a) A $975,000,000 senior secured term loan facility, with Atlas National Bank, N.A. serving as lead arranger and administrative agent and Pinnacle Credit Partners LLC serving as co-lender and co-syndication agent; and

(b) A $150,000,000 revolving credit facility, expected to be undrawn at closing, also with Atlas National Bank, N.A. as administrative agent.

The total sources and uses of funds are summarized as follows:

The revolving credit facility is excluded from total sources because it is expected to remain undrawn at closing and is intended to provide post-closing working-capital and letter-of-credit capacity for Cascadia's ongoing operations.

The selling shareholders of Cascadia are as follows:

(i) Timberline Growth Equity Fund III, LP, holding approximately 62% of the outstanding equity;

(ii) The Weir Family Trust, holding approximately 18% of the outstanding equity; and

(iii) The Management Rollover Pool, holding approximately 20% of the outstanding equity, of which approximately 50% (representing approximately 10% of total equity) is expected to roll over into the post-closing capital structure through a rollover equity arrangement.

The management rollover is structured to ensure continuity of Cascadia's existing management team and to align the interests of incumbent management with those of the new owners. The terms of the management rollover are addressed in a separate Management Equity Participation Agreement that will be executed concurrently with the closing of the acquisition.

C. Regulatory Approvals Required

The consummation of the acquisition is subject to the receipt of several regulatory approvals, which are summarized below:

Oregon Public Utility Commission. Approval is required under ORS § 757.480 for the indirect change of control of Cascadia's regulated utility assets in Oregon. This approval is the subject of the present memorandum.

Federal Energy Regulatory Commission. Approval is required under Section 203 of the Federal Power Act (16 U.S.C. § 824b) for the transfer of jurisdictional facilities, including Cascadia's wholesale power sales contracts and certain hydroelectric generation assets that are FERC-jurisdictional. The FERC application is expected to be filed under Docket No. EC22-143-000 on or about October 19, 2022. Our analysis of the FERC approval process is set forth in a separate C&H memorandum dated September 12, 2022.

Committee on Foreign Investment in the United States. A voluntary notice was filed with CFIUS, and the Committee acknowledged receipt of the notice on September 20, 2022. Based on our preliminary assessment, we do not anticipate that CFIUS will identify any foreign ownership, control, or influence issues, as neither Ironside nor Meridian has any foreign government ownership or control, and the limited partner bases of both Fund IV and ICM Co-Invest are predominantly domestic institutional investors. No further action is currently required with respect to CFIUS.

The Equity Purchase Agreement, executed on September 15, 2022, by and among Cascadia Acquisition Corp. (as Buyer), CRH (as the Company), and the selling shareholders (collectively, as Sellers), includes the receipt of OPUC and FERC approvals as express conditions to closing. Section 8.01(c) of the EPA provides that neither party shall be obligated to consummate the closing unless all required regulatory approvals shall have been obtained and shall remain in full force and effect, free of any conditions or restrictions that would constitute a "Burdensome Condition" as defined in Section 8.01(c)(ii) of the EPA. The original outside date for closing set forth in Section 10.01(b) of the EPA is December 31, 2022, subject to extension by mutual written agreement of the parties. As discussed further below, this outside date was subsequently extended to March 31, 2023 pursuant to the First Amendment to the Equity Purchase Agreement dated November 22, 2022, in part due to the anticipated timeline for OPUC review.

III. Oregon Regulatory Framework

A. Governing Statutes

The OPUC's authority to review and approve changes of control of Oregon public utilities derives from several interrelated statutory provisions in Oregon Revised Statutes Chapter 757. The principal statutes applicable to the proposed transaction are summarized below.

ORS § 757.480 — Transfer of Utility Property and Change of Control. This is the primary statute governing the OPUC's jurisdiction over the proposed acquisition. ORS § 757.480 provides that no public utility, and no person or entity holding a controlling interest in a public utility, may directly or indirectly sell, lease, assign, mortgage, or otherwise dispose of or encumber its property, franchise, license, or permit necessary or useful in the performance of its duties to the public, and no person or entity may acquire, directly or indirectly, ownership or control of such property, without first obtaining the approval of the Commission. The statute applies to both direct transfers of utility property and indirect changes of control accomplished through the acquisition of equity interests in a holding company or parent entity of the utility. Because the proposed acquisition involves the purchase of 100% of the equity of CRH, which in turn owns and controls Cascadia's regulated utility operations in Oregon, the transaction constitutes an indirect change of control subject to the requirements of ORS § 757.480.

ORS § 757.511 — Affiliated Interest Transactions. This statute addresses transactions between a public utility and its affiliates, and may require OPUC approval for post-closing affiliated interest transactions between Cascadia and entities affiliated with Meridian or Ironside. Under ORS § 757.511, a public utility may not enter into a contract or arrangement with an affiliated interest for the furnishing of management, supervisory, construction, engineering, accounting, legal, financial, or similar services, or for the purchase, sale, lease, or exchange of property, without the prior approval of the Commission, unless the contract or arrangement is determined to be at arm's length and consistent with the public interest. To the extent that post-closing operations contemplate the provision of management services or shared services by Meridian-affiliated entities (such as Meridian Infrastructure Advisors LLC) to Cascadia or its subsidiaries, such arrangements may trigger the affiliated interest approval requirements of ORS § 757.511. We recommend that any contemplated affiliated interest transactions be identified and addressed in the OPUC application to avoid delays or supplemental filings.

ORS § 757.495 — Authority to Impose Conditions. This statute authorizes the OPUC to impose conditions on the approval of transactions under ORS § 757.480 as the Commission deems necessary to protect the public interest. Conditions may include, without limitation, requirements relating to rate treatment, capital expenditure commitments, service quality standards, workforce retention, environmental compliance, reporting obligations, and restrictions on financial transactions between the utility and its affiliates. As discussed in detail in Section VI below, the OPUC has regularly exercised its authority under ORS § 757.495 to impose conditions on approved utility transactions, and we expect that approval of the Cascadia acquisition will be subject to conditions of a similar nature.

OAR Chapter 860, Division 027 — Procedural Rules. The procedural rules governing applications for changes in ownership or control of Oregon public utilities are set forth in Oregon Administrative Rules Chapter 860, Division 027. These rules prescribe the form and content of applications, the procedures for public notice and comment, the rights of intervenors, and the procedural schedule for contested and uncontested proceedings. Division 027 also establishes the Commission's authority to convene prehearing conferences, set discovery schedules, and designate administrative law judges to preside over contested proceedings.

B. Scope of OPUC Jurisdiction Over Cascadia

A threshold question in the OPUC review process is the scope of the Commission's jurisdiction over Cascadia's various business activities and asset classes. Cascadia's portfolio includes a diverse mix of hydroelectric generation facilities, wind farms, and water-treatment concessions, not all of which are subject to the same regulatory framework.

Hydroelectric Generation Facilities. Cascadia's fourteen hydroelectric facilities include both FERC-licensed projects and state-licensed facilities operating under Oregon utility certificates. To the extent that any of these facilities provide service to Oregon retail customers under OPUC-approved tariffs, or hold certificates of public convenience and necessity issued by the OPUC, they are regulated utility assets subject to the Commission's jurisdiction. We understand, based on information provided by RAM, that at least eight of Cascadia's fourteen hydroelectric facilities are located in Oregon and operate under Oregon utility licenses or certificates, making them squarely within the OPUC's jurisdictional reach. The remaining facilities, located in Washington and Idaho, may be subject to the regulatory authority of those states' utility commissions but are not directly subject to OPUC jurisdiction.

Wind Farms. Cascadia's six wind farms operate primarily as qualifying facilities or merchant generators selling power under long-term PPAs to Oregon and Washington electric utilities. These facilities do not, to our knowledge, hold Oregon utility certificates or provide direct retail service to Oregon customers. As a result, the wind farms may not fall within the OPUC's jurisdictional reach for purposes of ORS § 757.480, although the Commission may consider the financial contribution of these assets to the overall viability of the post-closing entity. We note, however, that the OPUC has in past proceedings taken a broad view of its jurisdictional authority where an acquiring entity's financial condition is materially dependent on unregulated assets.

Water-Treatment Concessions. Cascadia's three water-treatment concessions, including the Bull Run Filtration Project, are principally governed by municipal franchise agreements and concession contracts rather than OPUC tariff regulation. Water-treatment services are generally subject to regulation by the Oregon Health Authority and the relevant municipal authorities rather than the OPUC. However, to the extent that any Cascadia subsidiary holding a water-treatment concession also holds a utility certificate from the OPUC—even if that certificate relates to a different aspect of the subsidiary's operations—the OPUC may assert incidental jurisdiction over the change of control of that subsidiary. We are working with RAM to confirm whether any of Cascadia's water-treatment subsidiaries hold OPUC utility certificates that would bring them within the scope of ORS § 757.480.

The precise delineation of OPUC jurisdiction over Cascadia's various subsidiaries and assets will be a significant issue in the application process. We recommend that the OPUC application include a clear jurisdictional analysis identifying which Cascadia entities and assets are subject to the Commission's authority, and that the applicants be prepared to respond to OPUC inquiries regarding the regulatory status of assets that fall outside the Commission's direct jurisdiction but contribute materially to Cascadia's financial profile.

C. Standard of Review

The OPUC applies a "public interest" standard in reviewing applications under ORS § 757.480. The Commission has articulated this standard in numerous prior orders and has identified the following principal factors as relevant to its evaluation:

(i) Financial Fitness and Competence of the Acquiring Entity. The Commission evaluates whether the acquiring entity has the financial resources, management expertise, and operational capability to own and operate the utility in a manner consistent with the public interest. This inquiry encompasses the acquiring entity's balance sheet, liquidity, access to capital, track record in managing similar assets, and the qualifications of its principals and management team.

(ii) Impact on Rates and Service Quality. The Commission considers whether the transaction is likely to result in increased rates or diminished service quality for Oregon ratepayers. The applicants bear the burden of demonstrating that the transaction will not adversely affect rates or service, and may be required to provide commitments or conditions addressing rate stability and service continuity.

(iii) Effect on Competition. The Commission assesses whether the transaction would have an anticompetitive effect in relevant markets, including the markets for electricity generation, transmission, and distribution in Oregon. This factor is generally less significant in transactions involving changes of ownership at the holding company level, where the underlying market structure remains unchanged.

(iv) Adequacy of Commitments to Maintain Service Levels. The Commission evaluates whether the applicants have provided adequate assurances that service levels, safety standards, and operational practices will be maintained following the change of control. This may include commitments to maintain staffing levels, honor existing collective bargaining agreements, sustain capital investment programs, and comply with environmental and safety regulations.

(v) Other Factors Deemed Relevant. The Commission retains broad discretion to consider any other factors it deems relevant to the public interest, including the impact of the transaction on utility employees, the local community, environmental resources, and the long-term sustainability of utility operations.

The burden of proof in OPUC proceedings under ORS § 757.480 rests on the applicants. The applicants must affirmatively demonstrate that the transaction satisfies the public interest standard. It is not sufficient merely to show that the transaction will not harm the public interest; the applicants must show that it is affirmatively consistent with the public interest, taking into account all relevant factors.

Upon completing its review, the Commission may take one of three actions: (a) approve the application unconditionally; (b) approve the application with conditions pursuant to ORS § 757.495; or (c) deny the application. In practice, unconditional approvals are rare; the vast majority of approved transactions are approved subject to conditions negotiated among the parties or imposed by the Commission.

IV. Application Requirements and Filing Process

A. Filing Content Requirements

The OPUC application for approval of the proposed acquisition must contain a comprehensive set of information addressing the transaction structure, the parties involved, the financial implications, and the public interest considerations. Based on our review of OAR Chapter 860, Division 027 and prior OPUC filings in comparable proceedings, we expect the application to include the following principal components:

Transaction Description. A detailed narrative description of the proposed acquisition, including the identity of all parties, the transaction structure, the form and amount of consideration, the sources of financing, and the expected closing timeline. The description should clearly explain the chain of ownership from the ultimate investors (including Ironside's limited partners) through ICM Co-Invest and Fund IV to Acquisition Corp. and ultimately to CRH and its operating subsidiaries.

Acquirer Financial Information. Comprehensive financial information regarding the acquiring entities, including audited financial statements (or equivalent documentation) for Fund IV, ICM Co-Invest, and their respective general partners and investment advisers. Because Fund IV and ICM Co-Invest are investment partnerships rather than operating companies, the financial information will need to include details regarding committed capital, available uncalled capital, capital call mechanics, and the financial condition of the general partners and investment advisers—including Ironside Capital Management LP. The Commission will expect to see evidence that the acquiring entities have the financial wherewithal to support Cascadia's ongoing capital needs and to honor any commitments or conditions imposed as part of the approval.

Pro Forma Financial Statements. Pro forma financial statements of Cascadia and its regulated Oregon subsidiaries reflecting the post-closing capital structure, including the impact of the acquisition debt financing on leverage ratios, interest coverage, and debt service requirements. The pro forma financial statements should demonstrate that the post-closing entity will have sufficient financial capacity to maintain and invest in utility infrastructure and to provide reliable service to Oregon ratepayers.

Rates and Service Impact Analysis. An analysis of the expected impact of the transaction on rates charged to Oregon customers and on the quality and reliability of utility service. This analysis should address both the near-term and long-term implications of the change in ownership, including any planned changes to rate structures, tariff provisions, or service offerings.

Operational Continuity. A description of any planned changes to Cascadia's management, operations, workforce, or capital investment plans following the closing. If no changes are planned, the application should affirmatively state that the acquiring entities intend to maintain the existing management team, workforce, operational practices, and capital investment programs.

Affiliated Interest Transactions. Identification and description of any affiliated interest transactions that may arise following the closing, including management services agreements, shared services arrangements, cost-allocation methodologies, and any other contracts or arrangements between Cascadia and entities affiliated with Meridian or Ironside. If no affiliated interest transactions are contemplated, the application should so state.

Material Transaction Documents. Copies of the Equity Purchase Agreement and material ancillary documents, including the commitment letters for the acquisition debt financing, the limited partnership agreements for Fund IV and ICM Co-Invest (to the extent relevant to governance and control), and any management equity participation agreements or rollover equity arrangements. Confidential treatment requests may be filed for commercially sensitive information contained in these documents.

Environmental and Operational Compliance History. A summary of Cascadia's environmental and operational compliance history, including any pending environmental proceedings, regulatory citations, or compliance deficiencies. This is particularly relevant given Cascadia's hydroelectric operations, which are subject to extensive state and federal environmental regulation, including requirements under the Federal Power Act, the Endangered Species Act, the Clean Water Act, and various Oregon environmental statutes.

Public Interest Narrative. A comprehensive narrative addressing each element of the OPUC's public interest standard, demonstrating how the proposed acquisition will serve the public interest by ensuring continued safe, reliable, and affordable utility service to Oregon ratepayers.

B. Filing Mechanics

The application will be filed with the OPUC Administrative Hearings Division, which is responsible for managing the docketing, procedural scheduling, and adjudication of contested proceedings before the Commission. A filing fee, as prescribed by OAR 860-027, will be due upon submission of the application.

The applicants of record will be Cascadia Renewables Holdings, Inc. (as the regulated utility entity) and Cascadia Acquisition Corp. (as the acquiring entity), filing jointly. Fund IV and ICM Co-Invest may be identified as interested parties or may be named as co-applicants, depending on the OPUC's preferences and the advice of BSP, which is serving as lead regulatory counsel for the filing.

With respect to counsel coordination, the OPUC application will be prepared under the primary direction of Breckenridge Sloane & Pratt LLP, counsel to Meridian Infrastructure Partners, which has extensive experience with Oregon utility regulatory proceedings. RAM will provide company-specific information, operational data, and financial materials on behalf of Cascadia. Calderwood & Harkness LLP will review and comment on the application before filing to ensure adequate and accurate disclosure regarding the role, structure, and financial resources of ICM Co-Invest and Ironside Capital Management LP.

We recommend that C&H's review focus in particular on the following areas:

(a) The accuracy and completeness of disclosures relating to the co-invest structure, including the governance arrangements between Meridian Infrastructure GP IV LLC (as general partner) and Ironside (as investment adviser and economic interest holder);

(b) The presentation of Ironside's financial resources, including its approximately $14.8 billion in assets under management and approximately $3.2 billion in infrastructure-specific AUM across three investment vehicles;

(c) The identification of Marcus J. Calloway and Renata Obasi as key principals of Ironside and the description of their respective roles in the transaction and in the ongoing oversight of the investment; and

(d) Consistency between the representations made in the OPUC application and those made in the EPA, the FERC § 203 application, and the CFIUS voluntary notice.

C. Expected Filing Date

The target filing date for the OPUC application is mid-October 2022. We understand that BSP is in the process of preparing the application, with input from RAM on company-specific information and from C&H on co-invest-related disclosures. The application was subsequently filed on October 14, 2022 and was assigned Docket No. UM-2287 by the Commission.

Calderwood & Harkness's role in connection with the OPUC filing is advisory and review-oriented: we will review the draft application prepared by BSP for accuracy and completeness of co-invest disclosures, provide Ironside financial information and background materials as needed for inclusion in or attachment to the application, and coordinate with BSP on any OPUC inquiries that implicate Ironside's interests or the structure of the co-invest vehicle.

V. OPUC Review Process and Expected Timeline

A. Procedural Stages

The OPUC review process for a change-of-control application under ORS § 757.480 proceeds through several distinct procedural stages. While the specific procedures may vary depending on whether the proceeding is contested or uncontested, the general progression is as follows:

1. Filing and Docket Assignment. Upon receipt of a complete application, the OPUC's Administrative Hearings Division assigns a docket number and opens a formal proceeding. The docket number serves as the official case reference throughout the proceeding. For the Cascadia transaction, the anticipated docket number is UM-2287, which was subsequently confirmed upon the filing of the application on October 14, 2022. The Commission's staff will conduct an initial review of the application for completeness and may issue a deficiency notice if additional information is required before the application is deemed complete for purposes of commencing the review period.

2. Public Notice and Comment Period. Following the acceptance of a complete application, the OPUC publishes a public notice in the Commission's bulletin and, in some cases, in newspapers of general circulation in affected service areas. The public notice describes the proposed transaction, identifies the parties, and invites interested persons and entities to file comments or petitions to intervene in the proceeding. The typical comment period is twenty to thirty days from the date of the published notice. During this period, members of the public may submit written comments to the Commission expressing their views on the proposed transaction.

3. Intervention and Party Status. Interested parties who wish to participate actively in the proceeding—beyond the submission of written comments—may file petitions to intervene. Intervention grants the petitioner full party status, including the right to participate in discovery, file testimony, cross-examine witnesses, and participate in settlement negotiations. Based on our review of comparable proceedings, we anticipate that the following entities may seek to intervene in the Cascadia proceeding:

(a) The Oregon Department of Justice ("ODOJ"), which represents the public interest in utility proceedings before the OPUC and frequently participates as an active party;

(b) The Citizens' Utility Board of Oregon ("CUB"), a statutorily created ratepayer advocacy organization that regularly intervenes in OPUC proceedings involving changes of utility ownership;

(c) Local governments in the areas served by Cascadia's Oregon utility operations, including municipalities and counties that may have an interest in the continuity of service;

(d) Environmental organizations, particularly those with an interest in the management and operation of Cascadia's hydroelectric facilities, dam relicensing processes, and associated environmental compliance obligations; and

(e) The Portland Metropolitan Water District, which holds the counterparty position under the Bull Run Filtration Project concession and may have concerns about the impact of the change of ownership on the performance of the concession agreement.

4. Discovery and Testimony. If the proceeding is contested—meaning that one or more intervenors raise substantive objections to the application or request a formal evidentiary hearing—the Commission or its designated administrative law judge ("ALJ") will establish a procedural schedule that typically includes phases for written discovery (interrogatories and requests for production of documents), the filing of direct testimony by the applicants and intervenors, the filing of rebuttal testimony, and the filing of surrebuttal testimony if permitted. Discovery in OPUC proceedings can be extensive, and intervenors such as CUB and ODOJ are known to submit detailed and probing discovery requests. If the proceeding is uncontested—meaning that no party has filed substantive objections or requested a hearing—the Commission may proceed on the written record without a formal discovery or testimony phase.

5. Settlement Conferences. In many Oregon utility proceedings, the parties engage in settlement negotiations aimed at reaching a stipulated resolution that can be presented to the Commission for approval. Settlement conferences may be convened at the direction of the ALJ or may be initiated voluntarily by the parties. Stipulated agreements typically set forth a negotiated set of conditions under which the parties agree that the transaction should be approved. If all parties to the proceeding join the stipulation, the proceeding is effectively resolved, and the Commission's review is limited to determining whether the stipulated conditions are consistent with the public interest. Many OPUC change-of-control proceedings have been resolved by stipulation, and we would recommend pursuing this path if feasible.

6. Hearing. If the proceeding is not resolved by stipulation, the ALJ will conduct evidentiary hearings at which the parties present their cases through live testimony, cross-examination of witnesses, and the introduction of exhibits. The ALJ will prepare a proposed order containing findings of fact and conclusions of law, which is submitted to the full Commission for review.

7. Commission Decision. The full Commission issues a final order approving, approving with conditions, or denying the application. In contested proceedings, the Commission may adopt, modify, or reject the ALJ's proposed order. In stipulated proceedings, the Commission typically issues a final order adopting the stipulation. The final order is subject to reconsideration and judicial review under applicable Oregon administrative law provisions.

B. Timeline Estimates

Based on our review of precedent proceedings and consultation with BSP regarding the Commission's current docket load, we provide the following timeline estimates:

Assuming a filing date of October 14, 2022:

Best Case (Uncontested / Stipulated). If the application proceeds without substantive objections, or if the parties reach a stipulated resolution relatively quickly, a final order could be issued by approximately February or March 2023. This scenario assumes that no intervenor raises issues requiring extensive discovery or testimony and that the Commission's staff does not identify significant concerns requiring additional review.

Reasonable Estimate (Moderately Contested). Our best estimate, taking into account the complexity of the transaction and the likelihood of intervenor participation, is that a final order will be issued by approximately March to May 2023. This timeline assumes some degree of contested proceedings—likely driven by CUB and/or ODOJ seeking conditions related to ratepayer protection—but resolution by stipulation prior to a full evidentiary hearing.

Adverse Scenario (Contested with Hearings). If the proceeding becomes fully contested—for example, if the PMWD intervenes and raises significant issues regarding the concession renegotiation, or if environmental groups challenge the transaction on grounds related to hydroelectric dam operations—the timeline could extend to June through August 2023 or potentially beyond.

We note that the original EPA outside date of December 31, 2022 is clearly insufficient to accommodate the OPUC review process under any realistic scenario. We understand that this was recognized by the parties and that the First Amendment to the EPA, dated November 22, 2022, extended the outside date to March 31, 2023, in part due to the anticipated timeline for OPUC review. If the proceeding becomes contested and extends beyond March 2023, a further extension of the outside date may be required.

C. Potential Complications

Several factors may complicate or extend the OPUC review process for the Cascadia transaction:

Bull Run Filtration Project Concession Renegotiation. The Portland Metropolitan Water District issued a renegotiation notice on October 28, 2022—approximately two weeks after the OPUC filing—seeking to renegotiate certain terms of the Bull Run Filtration Project concession. The Bull Run concession represents approximately $64 million in annual revenue, or approximately 13.1% of Cascadia's FY 2021 total revenue. The renegotiation notice may draw OPUC attention to the financial stability of the transaction and the ongoing viability of a key revenue contract supporting the post-closing entity. The Commission may require the applicants to provide assurances regarding the outcome of the renegotiation process and the financial resilience of the post-closing entity in the event that the concession terms are materially altered. This development has the potential to significantly complicate the OPUC proceedings, particularly if the PMWD itself intervenes.

Financial Structure Concerns. Intervenors, particularly CUB and ODOJ, may raise concerns about the financial structure of the acquisition, including the degree of leverage (the $975 million term loan represents approximately 48.1% of the $2.025 billion total capitalization), the implications of private equity ownership for utility service quality and rate stability, and the potential for excessive dividend distributions or financial engineering at the expense of ratepayer interests. These concerns are not uncommon in OPUC proceedings involving private equity or infrastructure fund acquirers and are typically addressed through ring-fencing provisions, dividend restrictions, and reporting obligations imposed as conditions of approval.

Environmental Concerns. Environmental organizations may raise concerns about Cascadia's hydroelectric operations, including dam relicensing obligations, fish passage requirements, water quality impacts, and compliance with the Endangered Species Act and Oregon environmental statutes. Hydroelectric asset transfers have historically drawn heightened environmental scrutiny before the OPUC, and the applicants should be prepared to present a robust environmental compliance narrative supported by appropriate technical documentation.

Oregon SB 1567 (2022). If Oregon Senate Bill 1567 (2022) or related regulatory changes are cited by intervenors in the context of the concession renegotiation or more broadly, the OPUC may require assurances regarding the post-closing entity's compliance with any new regulatory requirements and its financial resilience in the face of an evolving regulatory landscape.

VI. Precedent Transactions and OPUC Outcomes

A. Summary of Relevant Precedents

In evaluating the likely outcome of the OPUC review process for the Cascadia transaction, we have identified and reviewed several recent OPUC proceedings involving changes of control of Oregon utilities or utility-owning holding companies. We have focused in particular on proceedings involving infrastructure fund or private equity acquirers, as these proceedings are most closely analogous to the proposed Cascadia acquisition and provide the most useful guidance regarding the Commission's likely approach.

For each precedent, we summarize below: (i) the OPUC docket number; (ii) the parties to the transaction; (iii) the approximate transaction size; (iv) the timeline from filing to final order; (v) whether the proceeding was contested; (vi) the conditions imposed by the Commission; and (vii) the key takeaways for the Cascadia transaction. A tabular summary of these precedents is provided in Appendix B.

B. Precedent 1: Evergreen Utility Holdings / Summit Infrastructure Acquisition

OPUC Docket No. UM-2131. This proceeding involved the acquisition of Evergreen Utility Holdings, LLC ("Evergreen"), an Oregon electric utility serving approximately 38,000 residential and commercial customers in the Rogue Valley, by Summit Infrastructure Fund V, LP ("Summit Fund V"), a $4.2 billion infrastructure investment fund managed by Summit Infrastructure Partners, Inc. The transaction was valued at approximately $620 million in enterprise value.

The application was filed on March 11, 2019 and assigned Docket No. UM-2131. The Commission issued its final order on August 9, 2019, resulting in an approximately five-month review period from filing to final order. The proceeding was uncontested; no intervenor filed substantive objections to the application or requested an evidentiary hearing. The matter was resolved by stipulation among the applicants, the Citizens' Utility Board of Oregon, and the Oregon Department of Justice.

The Commission approved the transaction subject to the following principal conditions:

(a) A rate freeze for Evergreen's Oregon customers for a period of three years following the closing, with any rate adjustments during that period subject to a separate rate-case proceeding;

(b) A minimum capital expenditure commitment of $45 million over the first five years post-closing for infrastructure upgrades and maintenance of Evergreen's distribution system;

(c) A workforce retention commitment requiring Summit Fund V to maintain Evergreen's Oregon workforce at pre-transaction levels for at least two years following closing, subject to attrition and for-cause terminations;

(d) Quarterly reporting to the OPUC for three years post-closing on Evergreen's financial performance, capital expenditures, service quality metrics, and compliance with the conditions of approval; and

(e) Ring-fencing provisions prohibiting the commingling of Evergreen's regulated utility assets with unregulated affiliates and restricting upstream dividends and distributions from Evergreen to its parent entities during the three-year transition period.

Takeaway for Cascadia Transaction. The Evergreen/Summit proceeding demonstrates that infrastructure fund acquirers are familiar to the OPUC and are generally approved, but that conditions related to ratepayer protection, capital investment commitments, workforce retention, and reporting obligations are standard. The five-month timeline is broadly consistent with our estimate for an uncontested proceeding. The stipulated resolution with CUB and ODOJ suggests that early engagement with these organizations can facilitate an efficient process.

C. Precedent 2: Pacific Ridge Energy / Clearfield Capital Partners Acquisition

OPUC Docket No. UM-2054. This proceeding involved the acquisition of Pacific Ridge Energy, Inc. ("Pacific Ridge"), an Oregon corporation that owned and operated four hydroelectric generation facilities on the Deschutes and Willamette Rivers, by Clearfield Capital Partners Fund VII, LP ("Clearfield Fund VII"), a $2.8 billion private equity fund specializing in energy and natural resources investments. The transaction was valued at approximately $410 million in enterprise value.

The application was filed on June 22, 2017 and assigned Docket No. UM-2054. The Commission issued its final order on January 19, 2018, resulting in an approximately seven-month review period from filing to final order. The proceeding was contested by two environmental intervenors—the Oregon Rivers Council and the Deschutes Basin Conservation Alliance—who raised concerns about the impact of the change of ownership on Pacific Ridge's dam relicensing commitments and environmental compliance obligations.

The contested issues centered on Clearfield Fund VII's willingness and ability to fund the significant capital expenditures associated with upcoming FERC dam relicensing proceedings for two of Pacific Ridge's facilities, as well as the intervenors' concern that a private equity acquirer with a finite fund life would prioritize short-term returns over long-term environmental stewardship. The intervenors requested that the Commission impose conditions requiring Clearfield Fund VII to establish escrow accounts for dam relicensing costs and to commit to specific environmental mitigation measures.

After several months of discovery, written testimony, and settlement negotiations, the parties reached a partial stipulation addressing most of the contested issues. The Commission ultimately approved the transaction subject to the following principal conditions:

(a) A requirement that Clearfield Fund VII establish a dedicated capital reserve of $25 million to fund dam relicensing costs and environmental compliance expenditures over the first ten years post-closing;

(b) A commitment to comply with all existing and future environmental permits, licenses, and regulatory orders applicable to Pacific Ridge's hydroelectric operations, including FERC relicensing conditions;

(c) Annual environmental compliance reporting to the OPUC for five years post-closing, including reports on dam safety, fish passage, water quality, and habitat mitigation;

(d) A rate freeze for Pacific Ridge's Oregon customers for a period of four years following closing; and

(e) Restrictions on distributions from Pacific Ridge to Clearfield Fund VII during the first five years post-closing, except to the extent that Pacific Ridge's capital reserves exceeded specified minimum thresholds.

Takeaway for Cascadia Transaction. The Pacific Ridge/Clearfield proceeding is particularly relevant to the Cascadia transaction because it involved hydroelectric assets, which share many of the same regulatory and environmental issues as Cascadia's hydroelectric portfolio. The seven-month timeline reflects the additional complexity introduced by environmental intervenors, and we should anticipate the possibility of similar intervention in the Cascadia proceeding. The Commission's focus on dam relicensing costs and environmental compliance underscores the importance of preparing robust environmental compliance narratives and demonstrating the acquirer's willingness to fund long-term environmental obligations. In this regard, we note that the Clearwater Environmental Consulting Inc. Phase I and Phase II environmental reports commissioned in connection with Ironside's due diligence on the Cascadia transaction will be valuable supporting materials for the OPUC application.

D. Precedent 3: Columbia Basin Water Services / Ridgeline Partners Fund II Acquisition

OPUC Docket No. UM-2098. This proceeding involved the acquisition of Columbia Basin Water Services, Inc. ("Columbia Basin"), an Oregon company holding municipal water-service contracts in the Portland metropolitan area and the mid-Willamette Valley, by Ridgeline Partners Fund II, LP ("Ridgeline Fund II"), a $1.5 billion infrastructure investment fund. The transaction was valued at approximately $285 million in enterprise value.

The application was filed on February 5, 2018 and assigned Docket No. UM-2098. The Commission issued its final order on August 3, 2018, resulting in an approximately six-month review period from filing to final order. The proceeding was contested by the City of Tualatin, one of the municipal counterparties to Columbia Basin's water-service contracts, which was concerned about the impact of the change of ownership on the performance of its water-service agreement and the continuity of service to the city's residents.

The City of Tualatin intervened in the proceeding and submitted extensive discovery requests and written testimony focusing on Ridgeline Fund II's operational track record, its plans for the management of the Columbia Basin water-service contracts, and its commitment to maintaining service quality and capital investment levels. The City also expressed concern about the finite fund life of Ridgeline Fund II and the potential for a secondary sale of the Columbia Basin assets within the fund's investment horizon.

After protracted settlement negotiations, the parties reached a stipulation that included the following principal conditions:

(a) Guaranteed service levels for all municipal water-service contracts for a period of five years following closing, measured by reference to specified service quality metrics agreed upon with the relevant municipal counterparties;

(b) Establishment of a $15 million escrow account to fund capital improvements to Columbia Basin's water-treatment and distribution infrastructure over the first seven years post-closing;

(c) Municipal approval rights for certain management changes at the Columbia Basin level, including the appointment or removal of the general manager and the chief operating officer;

(d) A commitment not to assign or transfer the municipal water-service contracts without the prior written consent of the relevant municipal counterparty (consistent with the existing contractual provisions);

(e) Annual reporting to the OPUC and to the relevant municipal counterparties on Columbia Basin's financial performance, capital expenditures, and service quality metrics; and

(f) A requirement that Ridgeline Fund II maintain Oregon-based management and operational decision-making for Columbia Basin throughout the fund's investment period.

Takeaway for Cascadia Transaction. The Columbia Basin/Ridgeline proceeding is directly relevant to the Cascadia transaction because it involved water-service contracts with municipal counterparties, analogous to Cascadia's Bull Run Filtration Project concession with the PMWD. The City of Tualatin's intervention as a municipal counterparty foreshadows the possibility that the PMWD may intervene in the Cascadia proceeding, particularly in light of the concession renegotiation notice issued on October 28, 2022. If the PMWD does intervene, we should expect it to raise similar concerns regarding service continuity, capital investment, and management stability. The conditions imposed in the Columbia Basin proceeding—particularly the guaranteed service levels, escrow requirements, and municipal approval rights—provide a useful template for the types of conditions that may be proposed in the Cascadia proceeding.

E. Common Conditions Imposed by OPUC in Precedent Proceedings

Drawing on the three precedent proceedings discussed above, as well as our broader review of OPUC practice, we have identified the following categories of conditions that the Commission commonly imposes in connection with the approval of utility change-of-control transactions:

Rate Freeze or Cap. A freeze or cap on rates charged to Oregon customers for a specified period, typically three to five years, to protect ratepayers from the risk of rate increases attributable to the change of ownership. Rate adjustments during the freeze period are generally permitted only through a separate rate-case proceeding before the OPUC.

Minimum Capital Expenditure Commitments. A requirement that the acquirer commit to specified minimum levels of capital investment in utility infrastructure over a defined period post-closing. These commitments are intended to ensure that the utility's physical assets are maintained and upgraded to support safe and reliable service.

Workforce Retention and Collective Bargaining Continuity. Requirements that the acquirer maintain the utility's existing workforce at pre-transaction levels for a specified period and honor existing collective bargaining agreements. These conditions address concerns about potential workforce reductions or the erosion of labor protections following a change of ownership.

Ring-Fencing Provisions. Structural and financial protections designed to insulate the regulated utility from the financial risks of its unregulated affiliates and parent entities. Ring-fencing provisions may include prohibitions on commingling of assets, restrictions on intercompany loans and guarantees, requirements for separate books and records, and independent governance provisions for the utility.

Reporting Obligations. Requirements that the post-closing entity provide regular reports to the OPUC on financial performance, capital expenditures, service quality metrics, and compliance with the conditions of approval. Reporting obligations are typically quarterly or annual and extend for a specified period, usually three to five years post-closing.

Restrictions on Dividends or Distributions. Restrictions on the payment of dividends or distributions from the regulated utility to its parent entities during a transition period following the closing. These restrictions are intended to ensure that the utility retains sufficient financial resources to fund its operations, capital programs, and regulatory obligations.

Oregon-Based Management. Requirements that the utility maintain Oregon-based management and operational decision-making, rather than consolidating management functions at a distant corporate headquarters. This condition reflects the Commission's interest in ensuring that the utility remains responsive to local service needs and regulatory requirements.

Environmental Compliance Commitments. Commitments to comply with all applicable environmental laws, permits, and regulatory orders, and to fund any environmental remediation or mitigation obligations associated with the utility's operations. These conditions are particularly significant for transactions involving hydroelectric or other resource-intensive utility operations.

VII. Strategic Considerations for Ironside and ICM Co-Invest

A. Disclosure Obligations

The OPUC review process will require extensive disclosure regarding the identities, financial condition, and qualifications of all entities and individuals involved in the acquisition. As the investment adviser to ICM Co-Invest and the ultimate economic interest holder (through its affiliated limited partners) of a 28.57% equity interest in Acquisition Corp., Ironside Capital Management LP may be required to disclose its financial condition, investment history, and infrastructure management capabilities to the OPUC. While the primary filing responsibility rests with BSP as lead regulatory counsel, C&H should ensure that the disclosures relating to Ironside are accurate, complete, and presented in a manner that supports the applicants' case.

In particular, we recommend that the following information regarding Ironside be highlighted in the application to demonstrate financial fitness and infrastructure management competence:

(a) Ironside's total assets under management of approximately $14.8 billion as of the most recent reporting date, reflecting a diversified portfolio of alternative investments across multiple asset classes;

(b) Ironside's infrastructure-specific AUM of approximately $3.2 billion, deployed across three infrastructure investment vehicles, demonstrating a dedicated and experienced infrastructure investment platform;

(c) Ironside's track record of successful infrastructure investments, including prior investments in utility and utility-adjacent assets, transportation infrastructure, and essential services; and

(d) The qualifications and experience of Ironside's senior investment professionals, including Marcus J. Calloway, Founder and Chief Investment Officer, and Renata Obasi, Senior Managing Director responsible for infrastructure investments.

Marcus J. Calloway and Renata Obasi may be identified as key principals in the filing and may be asked to provide biographical information, professional credentials, and descriptions of their roles in the management and oversight of the Cascadia investment. We recommend that C&H prepare draft biographical summaries and credential packages for both individuals in advance of the filing.

B. Co-Invest Structural Considerations

The OPUC may inquire into the governance structure of ICM Co-Invest, and the applicants should be prepared to explain the allocation of rights and responsibilities between Meridian Infrastructure GP IV LLC (as general partner) and Ironside (as investment adviser and economic interest holder). Several aspects of the co-invest structure may warrant particular attention:

Governance and Decision-Making. Meridian Infrastructure GP IV LLC serves as general partner of ICM Co-Invest and holds investment decision-making authority with respect to the Vehicle's interest in Acquisition Corp. Ironside, through its affiliated limited partners, holds the economic interest but does not exercise direct control over investment decisions. This governance structure may require explanation to the OPUC, which will want to understand who is making management decisions with respect to Cascadia and how the interests of the co-invest limited partners are protected.

Dormancy Governance Provisions. Section 7.04 of the ICM Co-Invest LP Agreement contains dormancy governance provisions and wind-down election rights that allow the limited partners to trigger a wind-down of the Vehicle under specified circumstances. The OPUC may view these provisions as bearing on the stability and long-term commitment of the acquiring entity, and the applicants should be prepared to explain how these provisions operate and to provide assurances that the exercise of wind-down rights would not adversely affect the regulated utility.

Economics and Fee Structure. The carried interest structure of ICM Co-Invest—10% above an 8% preferred return, with no management fee—differs from the terms of Fund IV's main partnership (20% carried interest with customary management fees). The OPUC may inquire into these differences and may view the co-invest's fee structure as relevant to the alignment of interests between the acquiring entities and the regulated utility. We should be prepared to explain how the co-invest economics differ from those of Fund IV and why these differences do not raise concerns about the stability or commitment of the co-invest investment.

C. Concession Renegotiation Risk

Although the Portland Metropolitan Water District's renegot

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Marcus J. Calloway, Founder & Chief Investment Officer, Ironside Capital Management LP Renata Obasi, Senior Managing Director, Infrastructure, Ironside Capital Management LP
FROM: Pamela Cross, Responsible Partner, Calderwood & Harkness LLP Theresa Kim, Lead Associate, Calderwood & Harkness LLP Owen Fischer, Working Associate, Calderwood & Harkness LLP
DATE: September 14, 2022
RE: Oregon Public Utility Commission — Approval Process for Transfer of Utility Assets in Connection with the Acquisition of Cascadia Renewables Holdings, Inc.
C&H Matter No.: 1023-00001
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I. Executive Summary
The purpose of this memorandum is to analyze the Oregon Public Utility Commission ("OPUC" or the "Commission") approval process applicable to the proposed acquisition of 100% of the outstanding equity interests of Cascadia Renewables Holdings, Inc. ("Cascadia" or "CRH"), an Oregon corporation, by Cascadia Acquisition Corp. ("Acquisition Corp."), a newly formed Delaware corporation wholly owned by Meridian Infrastructure Partners Fund IV, LP ("Fund IV") and ICM Cascadia Co-Invest, LP (the "Vehicle" or "ICM Co-Invest"). This memorandum has been prepared at the request of Ironside Capital Management LP ("Ironside" or "ICM"), which serves as investment adviser to ICM Co-Invest and whose affiliated limited partners hold a 28.57% equity interest in Acquisition Corp. through the Vehicle.
The proposed acquisition, at an agreed enterprise value of approximately $1.95 billion, will result in an indirect change of control of Cascadia's regulated utility assets in the State of Oregon. Under Oregon Revised Statutes ("ORS") § 757.480 and related statutory and regulatory provisions, a change of control of this nature requires prior approval from the OPUC. The Commission applies a "public interest" standard in evaluating such transactions, considering the impact on ratepayers, service quality, safety, and the financial viability of the utility post-acquisition.
We anticipate that the OPUC filing will be made in mid-October 2022 and that a docket number will be assigned upon receipt of a complete application. We note for the file that the application was subsequently filed on October 14, 2022 and assigned Docket No. UM-2287. The application will be prepared under the lead of Breckenridge Sloane & Pratt LLP ("BSP"), counsel to Meridian Infrastructure Partners, with input from Calderwood & Harkness LLP on behalf of Ironside and ICM Co-Invest, and from Ridgeway, Ashford & Malone PC ("RAM"), counsel to Cascadia.
Based on our review of applicable precedent and the nature of the transaction, we estimate a review period of approximately four to seven months from the date a complete filing is accepted by the Commission, with approval potentially achievable in the first quarter or early second quarter of 2023. This timeline is, however, subject to several variables, including the complexity of intervenor participation, the extent to which proceedings become contested, the possibility of settlement negotiations, and the emergence of collateral issues—most notably the Portland Metropolitan Water District's potential renegotiation of the Bull Run Filtration Project concession, which could draw additional scrutiny to the financial stability of the post-closing entity.
This memorandum complements our separate analyses of Federal Energy Regulatory Commission ("FERC") Section 203 requirements (FERC Docket No. EC22-143-000, application to be filed on or about October 19, 2022) and Committee on Foreign Investment in the United States ("CFIUS") considerations (voluntary notice filed and acknowledged September 20, 2022). Those analyses are addressed in separate C&H memoranda and are incorporated herein by reference only to the extent necessary for context.
We recommend that Ironside be prepared for the possibility that OPUC approval may not be obtained within the original outside date set forth in the Equity Purchase Agreement ("EPA") of December 31, 2022, and that an extension of the outside date may be necessary. As discussed below, we understand that a First Amendment to the EPA extending the outside date to March 31, 2023 was anticipated and subsequently executed on November 22, 2022.
II. Background on the Transaction
A. Transaction Overview
Cascadia Renewables Holdings, Inc. is an Oregon corporation headquartered at 1100 SW Sixth Avenue, Suite 1800, Portland, Oregon 97204. Founded in 2003, Cascadia owns and operates a diversified portfolio of renewable energy and water-infrastructure assets across the Pacific Northwest, including fourteen (14) hydroelectric generation facilities, six (6) wind farms, and three (3) water-treatment concessions located in Oregon, Washington, and Idaho. Cascadia's asset base reflects a mix of regulated and unregulated operations, with its regulated utility activities concentrated primarily in its Oregon hydroelectric generation operations and, to a more limited extent, certain of its water-treatment operations.
For the fiscal year ended December 31, 2021, Cascadia reported total revenues of approximately $487 million and adjusted EBITDA of approximately $138 million, as audited by Halstead & Greer LLP, Cascadia's independent public accounting firm. These figures include revenue derived from both regulated and unregulated operations. Cascadia's assets include long-term power-purchase agreements ("PPAs") with Oregon and Washington electric utilities, as well as municipal water-service contracts, with a weighted-average remaining contract life of approximately twenty-two (22) years. This contracted revenue base provides significant visibility into Cascadia's future cash flows and has been a key driver of the valuation agreed upon by the parties.
Among Cascadia's most significant assets is the Bull Run Filtration Project concession with the Portland Metropolitan Water District (the "PMWD"), a forty-year concession agreement executed in approximately 2018. The Bull Run Filtration Project concession generates approximately $64 million in annual revenue, representing approximately 13.1% of Cascadia's FY 2021 total revenue. The concession agreement grants Cascadia the right and obligation to design, build, operate, and maintain the Bull Run water-filtration facility, which serves a substantial portion of the Portland metropolitan area's municipal water supply. As discussed in greater detail below, the PMWD issued a renegotiation notice on October 28, 2022, which may have implications for the OPUC review process.
The proposed acquisition is structured as a 100% equity acquisition. Cascadia Acquisition Corp., a newly formed Delaware corporation, will acquire all of the outstanding shares of common stock of CRH from Cascadia's existing shareholders. Acquisition Corp. was formed solely for the purpose of effecting this transaction and has no prior operating history, assets, or liabilities apart from those related to the proposed acquisition.
B. Acquiring Entities and Capital Structure
The acquisition will be funded through a combination of equity contributions from the co-sponsors and acquisition debt financing. The equity component totals $1,050,000,000, contributed by the following entities in the following proportions:
Fund IV is managed by Meridian Infrastructure GP IV LLC, its general partner, and advised by Meridian Infrastructure Advisors LLC, its registered investment adviser. ICM Co-Invest is a co-investment vehicle formed for the purpose of this transaction, with Meridian Infrastructure GP IV LLC serving as general partner and Ironside Capital Management LP's affiliated limited partners holding substantially all of the limited partnership interests (99.99%). Ironside Capital Management LP serves as investment adviser to the Vehicle.
The acquisition debt financing comprises two facilities:
(a) A $975,000,000 senior secured term loan facility, with Atlas National Bank, N.A. serving as lead arranger and administrative agent and Pinnacle Credit Partners LLC serving as co-lender and co-syndication agent; and
(b) A $150,000,000 revolving credit facility, expected to be undrawn at closing, also with Atlas National Bank, N.A. as administrative agent.
The total sources and uses of funds are summarized as follows:
The revolving credit facility is excluded from total sources because it is expected to remain undrawn at closing and is intended to provide post-closing working-capital and letter-of-credit capacity for Cascadia's ongoing operations.
The selling shareholders of Cascadia are as follows:
(i) Timberline Growth Equity Fund III, LP, holding approximately 62% of the outstanding equity;
(ii) The Weir Family Trust, holding approximately 18% of the outstanding equity; and
(iii) The Management Rollover Pool, holding approximately 20% of the outstanding equity, of which approximately 50% (representing approximately 10% of total equity) is expected to roll over into the post-closing capital structure through a rollover equity arrangement.
The management rollover is structured to ensure continuity of Cascadia's existing management team and to align the interests of incumbent management with those of the new owners. The terms of the management rollover are addressed in a separate Management Equity Participation Agreement that will be executed concurrently with the closing of the acquisition.
C. Regulatory Approvals Required
The consummation of the acquisition is subject to the receipt of several regulatory approvals, which are summarized below:
Oregon Public Utility Commission. Approval is required under ORS § 757.480 for the indirect change of control of Cascadia's regulated utility assets in Oregon. This approval is the subject of the present memorandum.
Federal Energy Regulatory Commission. Approval is required under Section 203 of the Federal Power Act (16 U.S.C. § 824b) for the transfer of jurisdictional facilities, including Cascadia's wholesale power sales contracts and certain hydroelectric generation assets that are FERC-jurisdictional. The FERC application is expected to be filed under Docket No. EC22-143-000 on or about October 19, 2022. Our analysis of the FERC approval process is set forth in a separate C&H memorandum dated September 12, 2022.
Committee on Foreign Investment in the United States. A voluntary notice was filed with CFIUS, and the Committee acknowledged receipt of the notice on September 20, 2022. Based on our preliminary assessment, we do not anticipate that CFIUS will identify any foreign ownership, control, or influence issues, as neither Ironside nor Meridian has any foreign government ownership or control, and the limited partner bases of both Fund IV and ICM Co-Invest are predominantly domestic institutional investors. No further action is currently required with respect to CFIUS.
The Equity Purchase Agreement, executed on September 15, 2022, by and among Cascadia Acquisition Corp. (as Buyer), CRH (as the Company), and the selling shareholders (collectively, as Sellers), includes the receipt of OPUC and FERC approvals as express conditions to closing. Section 8.01(c) of the EPA provides that neither party shall be obligated to consummate the closing unless all required regulatory approvals shall have been obtained and shall remain in full force and effect, free of any conditions or restrictions that would constitute a "Burdensome Condition" as defined in Section 8.01(c)(ii) of the EPA. The original outside date for closing set forth in Section 10.01(b) of the EPA is December 31, 2022, subject to extension by mutual written agreement of the parties. As discussed further below, this outside date was subsequently extended to March 31, 2023 pursuant to the First Amendment to the Equity Purchase Agreement dated November 22, 2022, in part due to the anticipated timeline for OPUC review.
III. Oregon Regulatory Framework
A. Governing Statutes
The OPUC's authority to review and approve changes of control of Oregon public utilities derives from several interrelated statutory provisions in Oregon Revised Statutes Chapter 757. The principal statutes applicable to the proposed transaction are summarized below.
ORS § 757.480 — Transfer of Utility Property and Change of Control. This is the primary statute governing the OPUC's jurisdiction over the proposed acquisition. ORS § 757.480 provides that no public utility, and no person or entity holding a controlling interest in a public utility, may directly or indirectly sell, lease, assign, mortgage, or otherwise dispose of or encumber its property, franchise, license, or permit necessary or useful in the performance of its duties to the public, and no person or entity may acquire, directly or indirectly, ownership or control of such property, without first obtaining the approval of the Commission. The statute applies to both direct transfers of utility property and indirect changes of control accomplished through the acquisition of equity interests in a holding company or parent entity of the utility. Because the proposed acquisition involves the purchase of 100% of the equity of CRH, which in turn owns and controls Cascadia's regulated utility operations in Oregon, the transaction constitutes an indirect change of control subject to the requirements of ORS § 757.480.
ORS § 757.511 — Affiliated Interest Transactions. This statute addresses transactions between a public utility and its affiliates, and may require OPUC approval for post-closing affiliated interest transactions between Cascadia and entities affiliated with Meridian or Ironside. Under ORS § 757.511, a public utility may not enter into a contract or arrangement with an affiliated interest for the furnishing of management, supervisory, construction, engineering, accounting, legal, financial, or similar services, or for the purchase, sale, lease, or exchange of property, without the prior approval of the Commission, unless the contract or arrangement is determined to be at arm's length and consistent with the public interest. To the extent that post-closing operations contemplate the provision of management services or shared services by Meridian-affiliated entities (such as Meridian Infrastructure Advisors LLC) to Cascadia or its subsidiaries, such arrangements may trigger the affiliated interest approval requirements of ORS § 757.511. We recommend that any contemplated affiliated interest transactions be identified and addressed in the OPUC application to avoid delays or supplemental filings.
ORS § 757.495 — Authority to Impose Conditions. This statute authorizes the OPUC to impose conditions on the approval of transactions under ORS § 757.480 as the Commission deems necessary to protect the public interest. Conditions may include, without limitation, requirements relating to rate treatment, capital expenditure commitments, service quality standards, workforce retention, environmental compliance, reporting obligations, and restrictions on financial transactions between the utility and its affiliates. As discussed in detail in Section VI below, the OPUC has regularly exercised its authority under ORS § 757.495 to impose conditions on approved utility transactions, and we expect that approval of the Cascadia acquisition will be subject to conditions of a similar nature.
OAR Chapter 860, Division 027 — Procedural Rules. The procedural rules governing applications for changes in ownership or control of Oregon public utilities are set forth in Oregon Administrative Rules Chapter 860, Division 027. These rules prescribe the form and content of applications, the procedures for public notice and comment, the rights of intervenors, and the procedural schedule for contested and uncontested proceedings. Division 027 also establishes the Commission's authority to convene prehearing conferences, set discovery schedules, and designate administrative law judges to preside over contested proceedings.
B. Scope of OPUC Jurisdiction Over Cascadia
A threshold question in the OPUC review process is the scope of the Commission's jurisdiction over Cascadia's various business activities and asset classes. Cascadia's portfolio includes a diverse mix of hydroelectric generation facilities, wind farms, and water-treatment concessions, not all of which are subject to the same regulatory framework.
Hydroelectric Generation Facilities. Cascadia's fourteen hydroelectric facilities include both FERC-licensed projects and state-licensed facilities operating under Oregon utility certificates. To the extent that any of these facilities provide service to Oregon retail customers under OPUC-approved tariffs, or hold certificates of public convenience and necessity issued by the OPUC, they are regulated utility assets subject to the Commission's jurisdiction. We understand, based on information provided by RAM, that at least eight of Cascadia's fourteen hydroelectric facilities are located in Oregon and operate under Oregon utility licenses or certificates, making them squarely within the OPUC's jurisdictional reach. The remaining facilities, located in Washington and Idaho, may be subject to the regulatory authority of those states' utility commissions but are not directly subject to OPUC jurisdiction.
Wind Farms. Cascadia's six wind farms operate primarily as qualifying facilities or merchant generators selling power under long-term PPAs to Oregon and Washington electric utilities. These facilities do not, to our knowledge, hold Oregon utility certificates or provide direct retail service to Oregon customers. As a result, the wind farms may not fall within the OPUC's jurisdictional reach for purposes of ORS § 757.480, although the Commission may consider the financial contribution of these assets to the overall viability of the post-closing entity. We note, however, that the OPUC has in past proceedings taken a broad view of its jurisdictional authority where an acquiring entity's financial condition is materially dependent on unregulated assets.
Water-Treatment Concessions. Cascadia's three water-treatment concessions, including the Bull Run Filtration Project, are principally governed by municipal franchise agreements and concession contracts rather than OPUC tariff regulation. Water-treatment services are generally subject to regulation by the Oregon Health Authority and the relevant municipal authorities rather than the OPUC. However, to the extent that any Cascadia subsidiary holding a water-treatment concession also holds a utility certificate from the OPUC—even if that certificate relates to a different aspect of the subsidiary's operations—the OPUC may assert incidental jurisdiction over the change of control of that subsidiary. We are working with RAM to confirm whether any of Cascadia's water-treatment subsidiaries hold OPUC utility certificates that would bring them within the scope of ORS § 757.480.
The precise delineation of OPUC jurisdiction over Cascadia's various subsidiaries and assets will be a significant issue in the application process. We recommend that the OPUC application include a clear jurisdictional analysis identifying which Cascadia entities and assets are subject to the Commission's authority, and that the applicants be prepared to respond to OPUC inquiries regarding the regulatory status of assets that fall outside the Commission's direct jurisdiction but contribute materially to Cascadia's financial profile.
C. Standard of Review
The OPUC applies a "public interest" standard in reviewing applications under ORS § 757.480. The Commission has articulated this standard in numerous prior orders and has identified the following principal factors as relevant to its evaluation:
(i) Financial Fitness and Competence of the Acquiring Entity. The Commission evaluates whether the acquiring entity has the financial resources, management expertise, and operational capability to own and operate the utility in a manner consistent with the public interest. This inquiry encompasses the acquiring entity's balance sheet, liquidity, access to capital, track record in managing similar assets, and the qualifications of its principals and management team.
(ii) Impact on Rates and Service Quality. The Commission considers whether the transaction is likely to result in increased rates or diminished service quality for Oregon ratepayers. The applicants bear the burden of demonstrating that the transaction will not adversely affect rates or service, and may be required to provide commitments or conditions addressing rate stability and service continuity.
(iii) Effect on Competition. The Commission assesses whether the transaction would have an anticompetitive effect in relevant markets, including the markets for electricity generation, transmission, and distribution in Oregon. This factor is generally less significant in transactions involving changes of ownership at the holding company level, where the underlying market structure remains unchanged.
(iv) Adequacy of Commitments to Maintain Service Levels. The Commission evaluates whether the applicants have provided adequate assurances that service levels, safety standards, and operational practices will be maintained following the change of control. This may include commitments to maintain staffing levels, honor existing collective bargaining agreements, sustain capital investment programs, and comply with environmental and safety regulations.
(v) Other Factors Deemed Relevant. The Commission retains broad discretion to consider any other factors it deems relevant to the public interest, including the impact of the transaction on utility employees, the local community, environmental resources, and the long-term sustainability of utility operations.
The burden of proof in OPUC proceedings under ORS § 757.480 rests on the applicants. The applicants must affirmatively demonstrate that the transaction satisfies the public interest standard. It is not sufficient merely to show that the transaction will not harm the public interest; the applicants must show that it is affirmatively consistent with the public interest, taking into account all relevant factors.
Upon completing its review, the Commission may take one of three actions: (a) approve the application unconditionally; (b) approve the application with conditions pursuant to ORS § 757.495; or (c) deny the application. In practice, unconditional approvals are rare; the vast majority of approved transactions are approved subject to conditions negotiated among the parties or imposed by the Commission.
IV. Application Requirements and Filing Process
A. Filing Content Requirements
The OPUC application for approval of the proposed acquisition must contain a comprehensive set of information addressing the transaction structure, the parties involved, the financial implications, and the public interest considerations. Based on our review of OAR Chapter 860, Division 027 and prior OPUC filings in comparable proceedings, we expect the application to include the following principal components:
Transaction Description. A detailed narrative description of the proposed acquisition, including the identity of all parties, the transaction structure, the form and amount of consideration, the sources of financing, and the expected closing timeline. The description should clearly explain the chain of ownership from the ultimate investors (including Ironside's limited partners) through ICM Co-Invest and Fund IV to Acquisition Corp. and ultimately to CRH and its operating subsidiaries.
Acquirer Financial Information. Comprehensive financial information regarding the acquiring entities, including audited financial statements (or equivalent documentation) for Fund IV, ICM Co-Invest, and their respective general partners and investment advisers. Because Fund IV and ICM Co-Invest are investment partnerships rather than operating companies, the financial information will need to include details regarding committed capital, available uncalled capital, capital call mechanics, and the financial condition of the general partners and investment advisers—including Ironside Capital Management LP. The Commission will expect to see evidence that the acquiring entities have the financial wherewithal to support Cascadia's ongoing capital needs and to honor any commitments or conditions imposed as part of the approval.
Pro Forma Financial Statements. Pro forma financial statements of Cascadia and its regulated Oregon subsidiaries reflecting the post-closing capital structure, including the impact of the acquisition debt financing on leverage ratios, interest coverage, and debt service requirements. The pro forma financial statements should demonstrate that the post-closing entity will have sufficient financial capacity to maintain and invest in utility infrastructure and to provide reliable service to Oregon ratepayers.
Rates and Service Impact Analysis. An analysis of the expected impact of the transaction on rates charged to Oregon customers and on the quality and reliability of utility service. This analysis should address both the near-term and long-term implications of the change in ownership, including any planned changes to rate structures, tariff provisions, or service offerings.
Operational Continuity. A description of any planned changes to Cascadia's management, operations, workforce, or capital investment plans following the closing. If no changes are planned, the application should affirmatively state that the acquiring entities intend to maintain the existing management team, workforce, operational practices, and capital investment programs.
Affiliated Interest Transactions. Identification and description of any affiliated interest transactions that may arise following the closing, including management services agreements, shared services arrangements, cost-allocation methodologies, and any other contracts or arrangements between Cascadia and entities affiliated with Meridian or Ironside. If no affiliated interest transactions are contemplated, the application should so state.
Material Transaction Documents. Copies of the Equity Purchase Agreement and material ancillary documents, including the commitment letters for the acquisition debt financing, the limited partnership agreements for Fund IV and ICM Co-Invest (to the extent relevant to governance and control), and any management equity participation agreements or rollover equity arrangements. Confidential treatment requests may be filed for commercially sensitive information contained in these documents.
Environmental and Operational Compliance History. A summary of Cascadia's environmental and operational compliance history, including any pending environmental proceedings, regulatory citations, or compliance deficiencies. This is particularly relevant given Cascadia's hydroelectric operations, which are subject to extensive state and federal environmental regulation, including requirements under the Federal Power Act, the Endangered Species Act, the Clean Water Act, and various Oregon environmental statutes.
Public Interest Narrative. A comprehensive narrative addressing each element of the OPUC's public interest standard, demonstrating how the proposed acquisition will serve the public interest by ensuring continued safe, reliable, and affordable utility service to Oregon ratepayers.
B. Filing Mechanics
The application will be filed with the OPUC Administrative Hearings Division, which is responsible for managing the docketing, procedural scheduling, and adjudication of contested proceedings before the Commission. A filing fee, as prescribed by OAR 860-027, will be due upon submission of the application.
The applicants of record will be Cascadia Renewables Holdings, Inc. (as the regulated utility entity) and Cascadia Acquisition Corp. (as the acquiring entity), filing jointly. Fund IV and ICM Co-Invest may be identified as interested parties or may be named as co-applicants, depending on the OPUC's preferences and the advice of BSP, which is serving as lead regulatory counsel for the filing.
With respect to counsel coordination, the OPUC application will be prepared under the primary direction of Breckenridge Sloane & Pratt LLP, counsel to Meridian Infrastructure Partners, which has extensive experience with Oregon utility regulatory proceedings. RAM will provide company-specific information, operational data, and financial materials on behalf of Cascadia. Calderwood & Harkness LLP will review and comment on the application before filing to ensure adequate and accurate disclosure regarding the role, structure, and financial resources of ICM Co-Invest and Ironside Capital Management LP.
We recommend that C&H's review focus in particular on the following areas:
(a) The accuracy and completeness of disclosures relating to the co-invest structure, including the governance arrangements between Meridian Infrastructure GP IV LLC (as general partner) and Ironside (as investment adviser and economic interest holder);
(b) The presentation of Ironside's financial resources, including its approximately $14.8 billion in assets under management and approximately $3.2 billion in infrastructure-specific AUM across three investment vehicles;
(c) The identification of Marcus J. Calloway and Renata Obasi as key principals of Ironside and the description of their respective roles in the transaction and in the ongoing oversight of the investment; and
(d) Consistency between the representations made in the OPUC application and those made in the EPA, the FERC § 203 application, and the CFIUS voluntary notice.
C. Expected Filing Date
The target filing date for the OPUC application is mid-October 2022. We understand that BSP is in the process of preparing the application, with input from RAM on company-specific information and from C&H on co-invest-related disclosures. The application was subsequently filed on October 14, 2022 and was assigned Docket No. UM-2287 by the Commission.
Calderwood & Harkness's role in connection with the OPUC filing is advisory and review-oriented: we will review the draft application prepared by BSP for accuracy and completeness of co-invest disclosures, provide Ironside financial information and background materials as needed for inclusion in or attachment to the application, and coordinate with BSP on any OPUC inquiries that implicate Ironside's interests or the structure of the co-invest vehicle.
V. OPUC Review Process and Expected Timeline
A. Procedural Stages
The OPUC review process for a change-of-control application under ORS § 757.480 proceeds through several distinct procedural stages. While the specific procedures may vary depending on whether the proceeding is contested or uncontested, the general progression is as follows:
1. Filing and Docket Assignment. Upon receipt of a complete application, the OPUC's Administrative Hearings Division assigns a docket number and opens a formal proceeding. The docket number serves as the official case reference throughout the proceeding. For the Cascadia transaction, the anticipated docket number is UM-2287, which was subsequently confirmed upon the filing of the application on October 14, 2022. The Commission's staff will conduct an initial review of the application for completeness and may issue a deficiency notice if additional information is required before the application is deemed complete for purposes of commencing the review period.
2. Public Notice and Comment Period. Following the acceptance of a complete application, the OPUC publishes a public notice in the Commission's bulletin and, in some cases, in newspapers of general circulation in affected service areas. The public notice describes the proposed transaction, identifies the parties, and invites interested persons and entities to file comments or petitions to intervene in the proceeding. The typical comment period is twenty to thirty days from the date of the published notice. During this period, members of the public may submit written comments to the Commission expressing their views on the proposed transaction.
3. Intervention and Party Status. Interested parties who wish to participate actively in the proceeding—beyond the submission of written comments—may file petitions to intervene. Intervention grants the petitioner full party status, including the right to participate in discovery, file testimony, cross-examine witnesses, and participate in settlement negotiations. Based on our review of comparable proceedings, we anticipate that the following entities may seek to intervene in the Cascadia proceeding:
(a) The Oregon Department of Justice ("ODOJ"), which represents the public interest in utility proceedings before the OPUC and frequently participates as an active party;
(b) The Citizens' Utility Board of Oregon ("CUB"), a statutorily created ratepayer advocacy organization that regularly intervenes in OPUC proceedings involving changes of utility ownership;
(c) Local governments in the areas served by Cascadia's Oregon utility operations, including municipalities and counties that may have an interest in the continuity of service;
(d) Environmental organizations, particularly those with an interest in the management and operation of Cascadia's hydroelectric facilities, dam relicensing processes, and associated environmental compliance obligations; and
(e) The Portland Metropolitan Water District, which holds the counterparty position under the Bull Run Filtration Project concession and may have concerns about the impact of the change of ownership on the performance of the concession agreement.
4. Discovery and Testimony. If the proceeding is contested—meaning that one or more intervenors raise substantive objections to the application or request a formal evidentiary hearing—the Commission or its designated administrative law judge ("ALJ") will establish a procedural schedule that typically includes phases for written discovery (interrogatories and requests for production of documents), the filing of direct testimony by the applicants and intervenors, the filing of rebuttal testimony, and the filing of surrebuttal testimony if permitted. Discovery in OPUC proceedings can be extensive, and intervenors such as CUB and ODOJ are known to submit detailed and probing discovery requests. If the proceeding is uncontested—meaning that no party has filed substantive objections or requested a hearing—the Commission may proceed on the written record without a formal discovery or testimony phase.
5. Settlement Conferences. In many Oregon utility proceedings, the parties engage in settlement negotiations aimed at reaching a stipulated resolution that can be presented to the Commission for approval. Settlement conferences may be convened at the direction of the ALJ or may be initiated voluntarily by the parties. Stipulated agreements typically set forth a negotiated set of conditions under which the parties agree that the transaction should be approved. If all parties to the proceeding join the stipulation, the proceeding is effectively resolved, and the Commission's review is limited to determining whether the stipulated conditions are consistent with the public interest. Many OPUC change-of-control proceedings have been resolved by stipulation, and we would recommend pursuing this path if feasible.
6. Hearing. If the proceeding is not resolved by stipulation, the ALJ will conduct evidentiary hearings at which the parties present their cases through live testimony, cross-examination of witnesses, and the introduction of exhibits. The ALJ will prepare a proposed order containing findings of fact and conclusions of law, which is submitted to the full Commission for review.
7. Commission Decision. The full Commission issues a final order approving, approving with conditions, or denying the application. In contested proceedings, the Commission may adopt, modify, or reject the ALJ's proposed order. In stipulated proceedings, the Commission typically issues a final order adopting the stipulation. The final order is subject to reconsideration and judicial review under applicable Oregon administrative law provisions.
B. Timeline Estimates
Based on our review of precedent proceedings and consultation with BSP regarding the Commission's current docket load, we provide the following timeline estimates:
Assuming a filing date of October 14, 2022:
Best Case (Uncontested / Stipulated). If the application proceeds without substantive objections, or if the parties reach a stipulated resolution relatively quickly, a final order could be issued by approximately February or March 2023. This scenario assumes that no intervenor raises issues requiring extensive discovery or testimony and that the Commission's staff does not identify significant concerns requiring additional review.
Reasonable Estimate (Moderately Contested). Our best estimate, taking into account the complexity of the transaction and the likelihood of intervenor participation, is that a final order will be issued by approximately March to May 2023. This timeline assumes some degree of contested proceedings—likely driven by CUB and/or ODOJ seeking conditions related to ratepayer protection—but resolution by stipulation prior to a full evidentiary hearing.
Adverse Scenario (Contested with Hearings). If the proceeding becomes fully contested—for example, if the PMWD intervenes and raises significant issues regarding the concession renegotiation, or if environmental groups challenge the transaction on grounds related to hydroelectric dam operations—the timeline could extend to June through August 2023 or potentially beyond.
We note that the original EPA outside date of December 31, 2022 is clearly insufficient to accommodate the OPUC review process under any realistic scenario. We understand that this was recognized by the parties and that the First Amendment to the EPA, dated November 22, 2022, extended the outside date to March 31, 2023, in part due to the anticipated timeline for OPUC review. If the proceeding becomes contested and extends beyond March 2023, a further extension of the outside date may be required.
C. Potential Complications
Several factors may complicate or extend the OPUC review process for the Cascadia transaction:
Bull Run Filtration Project Concession Renegotiation. The Portland Metropolitan Water District issued a renegotiation notice on October 28, 2022—approximately two weeks after the OPUC filing—seeking to renegotiate certain terms of the Bull Run Filtration Project concession. The Bull Run concession represents approximately $64 million in annual revenue, or approximately 13.1% of Cascadia's FY 2021 total revenue. The renegotiation notice may draw OPUC attention to the financial stability of the transaction and the ongoing viability of a key revenue contract supporting the post-closing entity. The Commission may require the applicants to provide assurances regarding the outcome of the renegotiation process and the financial resilience of the post-closing entity in the event that the concession terms are materially altered. This development has the potential to significantly complicate the OPUC proceedings, particularly if the PMWD itself intervenes.
Financial Structure Concerns. Intervenors, particularly CUB and ODOJ, may raise concerns about the financial structure of the acquisition, including the degree of leverage (the $975 million term loan represents approximately 48.1% of the $2.025 billion total capitalization), the implications of private equity ownership for utility service quality and rate stability, and the potential for excessive dividend distributions or financial engineering at the expense of ratepayer interests. These concerns are not uncommon in OPUC proceedings involving private equity or infrastructure fund acquirers and are typically addressed through ring-fencing provisions, dividend restrictions, and reporting obligations imposed as conditions of approval.
Environmental Concerns. Environmental organizations may raise concerns about Cascadia's hydroelectric operations, including dam relicensing obligations, fish passage requirements, water quality impacts, and compliance with the Endangered Species Act and Oregon environmental statutes. Hydroelectric asset transfers have historically drawn heightened environmental scrutiny before the OPUC, and the applicants should be prepared to present a robust environmental compliance narrative supported by appropriate technical documentation.
Oregon SB 1567 (2022). If Oregon Senate Bill 1567 (2022) or related regulatory changes are cited by intervenors in the context of the concession renegotiation or more broadly, the OPUC may require assurances regarding the post-closing entity's compliance with any new regulatory requirements and its financial resilience in the face of an evolving regulatory landscape.
VI. Precedent Transactions and OPUC Outcomes
A. Summary of Relevant Precedents
In evaluating the likely outcome of the OPUC review process for the Cascadia transaction, we have identified and reviewed several recent OPUC proceedings involving changes of control of Oregon utilities or utility-owning holding companies. We have focused in particular on proceedings involving infrastructure fund or private equity acquirers, as these proceedings are most closely analogous to the proposed Cascadia acquisition and provide the most useful guidance regarding the Commission's likely approach.
For each precedent, we summarize below: (i) the OPUC docket number; (ii) the parties to the transaction; (iii) the approximate transaction size; (iv) the timeline from filing to final order; (v) whether the proceeding was contested; (vi) the conditions imposed by the Commission; and (vii) the key takeaways for the Cascadia transaction. A tabular summary of these precedents is provided in Appendix B.
B. Precedent 1: Evergreen Utility Holdings / Summit Infrastructure Acquisition
OPUC Docket No. UM-2131. This proceeding involved the acquisition of Evergreen Utility Holdings, LLC ("Evergreen"), an Oregon electric utility serving approximately 38,000 residential and commercial customers in the Rogue Valley, by Summit Infrastructure Fund V, LP ("Summit Fund V"), a $4.2 billion infrastructure investment fund managed by Summit Infrastructure Partners, Inc. The transaction was valued at approximately $620 million in enterprise value.
The application was filed on March 11, 2019 and assigned Docket No. UM-2131. The Commission issued its final order on August 9, 2019, resulting in an approximately five-month review period from filing to final order. The proceeding was uncontested; no intervenor filed substantive objections to the application or requested an evidentiary hearing. The matter was resolved by stipulation among the applicants, the Citizens' Utility Board of Oregon, and the Oregon Department of Justice.
The Commission approved the transaction subject to the following principal conditions:
(a) A rate freeze for Evergreen's Oregon customers for a period of three years following the closing, with any rate adjustments during that period subject to a separate rate-case proceeding;
(b) A minimum capital expenditure commitment of $45 million over the first five years post-closing for infrastructure upgrades and maintenance of Evergreen's distribution system;
(c) A workforce retention commitment requiring Summit Fund V to maintain Evergreen's Oregon workforce at pre-transaction levels for at least two years following closing, subject to attrition and for-cause terminations;
(d) Quarterly reporting to the OPUC for three years post-closing on Evergreen's financial performance, capital expenditures, service quality metrics, and compliance with the conditions of approval; and
(e) Ring-fencing provisions prohibiting the commingling of Evergreen's regulated utility assets with unregulated affiliates and restricting upstream dividends and distributions from Evergreen to its parent entities during the three-year transition period.
Takeaway for Cascadia Transaction. The Evergreen/Summit proceeding demonstrates that infrastructure fund acquirers are familiar to the OPUC and are generally approved, but that conditions related to ratepayer protection, capital investment commitments, workforce retention, and reporting obligations are standard. The five-month timeline is broadly consistent with our estimate for an uncontested proceeding. The stipulated resolution with CUB and ODOJ suggests that early engagement with these organizations can facilitate an efficient process.
C. Precedent 2: Pacific Ridge Energy / Clearfield Capital Partners Acquisition
OPUC Docket No. UM-2054. This proceeding involved the acquisition of Pacific Ridge Energy, Inc. ("Pacific Ridge"), an Oregon corporation that owned and operated four hydroelectric generation facilities on the Deschutes and Willamette Rivers, by Clearfield Capital Partners Fund VII, LP ("Clearfield Fund VII"), a $2.8 billion private equity fund specializing in energy and natural resources investments. The transaction was valued at approximately $410 million in enterprise value.
The application was filed on June 22, 2017 and assigned Docket No. UM-2054. The Commission issued its final order on January 19, 2018, resulting in an approximately seven-month review period from filing to final order. The proceeding was contested by two environmental intervenors—the Oregon Rivers Council and the Deschutes Basin Conservation Alliance—who raised concerns about the impact of the change of ownership on Pacific Ridge's dam relicensing commitments and environmental compliance obligations.
The contested issues centered on Clearfield Fund VII's willingness and ability to fund the significant capital expenditures associated with upcoming FERC dam relicensing proceedings for two of Pacific Ridge's facilities, as well as the intervenors' concern that a private equity acquirer with a finite fund life would prioritize short-term returns over long-term environmental stewardship. The intervenors requested that the Commission impose conditions requiring Clearfield Fund VII to establish escrow accounts for dam relicensing costs and to commit to specific environmental mitigation measures.
After several months of discovery, written testimony, and settlement negotiations, the parties reached a partial stipulation addressing most of the contested issues. The Commission ultimately approved the transaction subject to the following principal conditions:
(a) A requirement that Clearfield Fund VII establish a dedicated capital reserve of $25 million to fund dam relicensing costs and environmental compliance expenditures over the first ten years post-closing;
(b) A commitment to comply with all existing and future environmental permits, licenses, and regulatory orders applicable to Pacific Ridge's hydroelectric operations, including FERC relicensing conditions;
(c) Annual environmental compliance reporting to the OPUC for five years post-closing, including reports on dam safety, fish passage, water quality, and habitat mitigation;
(d) A rate freeze for Pacific Ridge's Oregon customers for a period of four years following closing; and
(e) Restrictions on distributions from Pacific Ridge to Clearfield Fund VII during the first five years post-closing, except to the extent that Pacific Ridge's capital reserves exceeded specified minimum thresholds.
Takeaway for Cascadia Transaction. The Pacific Ridge/Clearfield proceeding is particularly relevant to the Cascadia transaction because it involved hydroelectric assets, which share many of the same regulatory and environmental issues as Cascadia's hydroelectric portfolio. The seven-month timeline reflects the additional complexity introduced by environmental intervenors, and we should anticipate the possibility of similar intervention in the Cascadia proceeding. The Commission's focus on dam relicensing costs and environmental compliance underscores the importance of preparing robust environmental compliance narratives and demonstrating the acquirer's willingness to fund long-term environmental obligations. In this regard, we note that the Clearwater Environmental Consulting Inc. Phase I and Phase II environmental reports commissioned in connection with Ironside's due diligence on the Cascadia transaction will be valuable supporting materials for the OPUC application.
D. Precedent 3: Columbia Basin Water Services / Ridgeline Partners Fund II Acquisition
OPUC Docket No. UM-2098. This proceeding involved the acquisition of Columbia Basin Water Services, Inc. ("Columbia Basin"), an Oregon company holding municipal water-service contracts in the Portland metropolitan area and the mid-Willamette Valley, by Ridgeline Partners Fund II, LP ("Ridgeline Fund II"), a $1.5 billion infrastructure investment fund. The transaction was valued at approximately $285 million in enterprise value.
The application was filed on February 5, 2018 and assigned Docket No. UM-2098. The Commission issued its final order on August 3, 2018, resulting in an approximately six-month review period from filing to final order. The proceeding was contested by the City of Tualatin, one of the municipal counterparties to Columbia Basin's water-service contracts, which was concerned about the impact of the change of ownership on the performance of its water-service agreement and the continuity of service to the city's residents.
The City of Tualatin intervened in the proceeding and submitted extensive discovery requests and written testimony focusing on Ridgeline Fund II's operational track record, its plans for the management of the Columbia Basin water-service contracts, and its commitment to maintaining service quality and capital investment levels. The City also expressed concern about the finite fund life of Ridgeline Fund II and the potential for a secondary sale of the Columbia Basin assets within the fund's investment horizon.
After protracted settlement negotiations, the parties reached a stipulation that included the following principal conditions:
(a) Guaranteed service levels for all municipal water-service contracts for a period of five years following closing, measured by reference to specified service quality metrics agreed upon with the relevant municipal counterparties;
(b) Establishment of a $15 million escrow account to fund capital improvements to Columbia Basin's water-treatment and distribution infrastructure over the first seven years post-closing;
(c) Municipal approval rights for certain management changes at the Columbia Basin level, including the appointment or removal of the general manager and the chief operating officer;
(d) A commitment not to assign or transfer the municipal water-service contracts without the prior written consent of the relevant municipal counterparty (consistent with the existing contractual provisions);
(e) Annual reporting to the OPUC and to the relevant municipal counterparties on Columbia Basin's financial performance, capital expenditures, and service quality metrics; and
(f) A requirement that Ridgeline Fund II maintain Oregon-based management and operational decision-making for Columbia Basin throughout the fund's investment period.
Takeaway for Cascadia Transaction. The Columbia Basin/Ridgeline proceeding is directly relevant to the Cascadia transaction because it involved water-service contracts with municipal counterparties, analogous to Cascadia's Bull Run Filtration Project concession with the PMWD. The City of Tualatin's intervention as a municipal counterparty foreshadows the possibility that the PMWD may intervene in the Cascadia proceeding, particularly in light of the concession renegotiation notice issued on October 28, 2022. If the PMWD does intervene, we should expect it to raise similar concerns regarding service continuity, capital investment, and management stability. The conditions imposed in the Columbia Basin proceeding—particularly the guaranteed service levels, escrow requirements, and municipal approval rights—provide a useful template for the types of conditions that may be proposed in the Cascadia proceeding.
E. Common Conditions Imposed by OPUC in Precedent Proceedings
Drawing on the three precedent proceedings discussed above, as well as our broader review of OPUC practice, we have identified the following categories of conditions that the Commission commonly imposes in connection with the approval of utility change-of-control transactions:
Rate Freeze or Cap. A freeze or cap on rates charged to Oregon customers for a specified period, typically three to five years, to protect ratepayers from the risk of rate increases attributable to the change of ownership. Rate adjustments during the freeze period are generally permitted only through a separate rate-case proceeding before the OPUC.
Minimum Capital Expenditure Commitments. A requirement that the acquirer commit to specified minimum levels of capital investment in utility infrastructure over a defined period post-closing. These commitments are intended to ensure that the utility's physical assets are maintained and upgraded to support safe and reliable service.
Workforce Retention and Collective Bargaining Continuity. Requirements that the acquirer maintain the utility's existing workforce at pre-transaction levels for a specified period and honor existing collective bargaining agreements. These conditions address concerns about potential workforce reductions or the erosion of labor protections following a change of ownership.
Ring-Fencing Provisions. Structural and financial protections designed to insulate the regulated utility from the financial risks of its unregulated affiliates and parent entities. Ring-fencing provisions may include prohibitions on commingling of assets, restrictions on intercompany loans and guarantees, requirements for separate books and records, and independent governance provisions for the utility.
Reporting Obligations. Requirements that the post-closing entity provide regular reports to the OPUC on financial performance, capital expenditures, service quality metrics, and compliance with the conditions of approval. Reporting obligations are typically quarterly or annual and extend for a specified period, usually three to five years post-closing.
Restrictions on Dividends or Distributions. Restrictions on the payment of dividends or distributions from the regulated utility to its parent entities during a transition period following the closing. These restrictions are intended to ensure that the utility retains sufficient financial resources to fund its operations, capital programs, and regulatory obligations.
Oregon-Based Management. Requirements that the utility maintain Oregon-based management and operational decision-making, rather than consolidating management functions at a distant corporate headquarters. This condition reflects the Commission's interest in ensuring that the utility remains responsive to local service needs and regulatory requirements.
Environmental Compliance Commitments. Commitments to comply with all applicable environmental laws, permits, and regulatory orders, and to fund any environmental remediation or mitigation obligations associated with the utility's operations. These conditions are particularly significant for transactions involving hydroelectric or other resource-intensive utility operations.
VII. Strategic Considerations for Ironside and ICM Co-Invest
A. Disclosure Obligations
The OPUC review process will require extensive disclosure regarding the identities, financial condition, and qualifications of all entities and individuals involved in the acquisition. As the investment adviser to ICM Co-Invest and the ultimate economic interest holder (through its affiliated limited partners) of a 28.57% equity interest in Acquisition Corp., Ironside Capital Management LP may be required to disclose its financial condition, investment history, and infrastructure management capabilities to the OPUC. While the primary filing responsibility rests with BSP as lead regulatory counsel, C&H should ensure that the disclosures relating to Ironside are accurate, complete, and presented in a manner that supports the applicants' case.
In particular, we recommend that the following information regarding Ironside be highlighted in the application to demonstrate financial fitness and infrastructure management competence:
(a) Ironside's total assets under management of approximately $14.8 billion as of the most recent reporting date, reflecting a diversified portfolio of alternative investments across multiple asset classes;
(b) Ironside's infrastructure-specific AUM of approximately $3.2 billion, deployed across three infrastructure investment vehicles, demonstrating a dedicated and experienced infrastructure investment platform;
(c) Ironside's track record of successful infrastructure investments, including prior investments in utility and utility-adjacent assets, transportation infrastructure, and essential services; and
(d) The qualifications and experience of Ironside's senior investment professionals, including Marcus J. Calloway, Founder and Chief Investment Officer, and Renata Obasi, Senior Managing Director responsible for infrastructure investments.
Marcus J. Calloway and Renata Obasi may be identified as key principals in the filing and may be asked to provide biographical information, professional credentials, and descriptions of their roles in the management and oversight of the Cascadia investment. We recommend that C&H prepare draft biographical summaries and credential packages for both individuals in advance of the filing.
B. Co-Invest Structural Considerations
The OPUC may inquire into the governance structure of ICM Co-Invest, and the applicants should be prepared to explain the allocation of rights and responsibilities between Meridian Infrastructure GP IV LLC (as general partner) and Ironside (as investment adviser and economic interest holder). Several aspects of the co-invest structure may warrant particular attention:
Governance and Decision-Making. Meridian Infrastructure GP IV LLC serves as general partner of ICM Co-Invest and holds investment decision-making authority with respect to the Vehicle's interest in Acquisition Corp. Ironside, through its affiliated limited partners, holds the economic interest but does not exercise direct control over investment decisions. This governance structure may require explanation to the OPUC, which will want to understand who is making management decisions with respect to Cascadia and how the interests of the co-invest limited partners are protected.
Dormancy Governance Provisions. Section 7.04 of the ICM Co-Invest LP Agreement contains dormancy governance provisions and wind-down election rights that allow the limited partners to trigger a wind-down of the Vehicle under specified circumstances. The OPUC may view these provisions as bearing on the stability and long-term commitment of the acquiring entity, and the applicants should be prepared to explain how these provisions operate and to provide assurances that the exercise of wind-down rights would not adversely affect the regulated utility.
Economics and Fee Structure. The carried interest structure of ICM Co-Invest—10% above an 8% preferred return, with no management fee—differs from the terms of Fund IV's main partnership (20% carried interest with customary management fees). The OPUC may inquire into these differences and may view the co-invest's fee structure as relevant to the alignment of interests between the acquiring entities and the regulated utility. We should be prepared to explain how the co-invest economics differ from those of Fund IV and why these differences do not raise concerns about the stability or commitment of the co-invest investment.
C. Concession Renegotiation Risk
Although the Portland Metropolitan Water District's renegot

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