Supplying power to the tenant without becoming a utility
Does a landlord that passes power through to its tenant risk regulation as a utility?
In a powered-shell lease the landlord buys electricity and furnishes it to the tenant. The Helios lenders took a representation that buying power at retail and furnishing it to a tenant as an incident of the tenancy will not bring the lenders or the borrower under federal or state utility regulation. The borrower also confirmed it buys only from the named supplier, not a competitive retailer.
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What the filed contracts say
Contract
What the filed wording says
Galaxy Helios credit agreement
Buying power at retail and furnishing it to a tenant as an incident of the tenancy will not subject the lenders or the borrower to utility regulation under the Federal Power Act, PUHCA or state law.
Galaxy Helios credit agreement
Power comes through the data centre substation from the named supplier under the power agreement, not from a competitive retailer.
The filed wording
solely as a result of the construction, ownership, leasing or operation of the Project, the retail sale of electric energy to Borrower and Borrower’s furnishment of electric service to a Tenant as an incident of tenancy, or the entering into of any Transaction Document or any transaction contemplated hereby or thereby, would cause or deem (1) any of the Secured Parties or any Affiliate of any of them to be subject to, or not exempted from, regulation under the FPA or PUHCA or under any State laws and regulations respecting the rates or the financial or organizational regulation of electric utilities, or (2) Borrower or any Affiliate of a Borrower to be subject to, or not exempted from, regulation under any State laws and regulations respecting the rates or the financial or organizational regulation of electric utilities;
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
InfraCompute Weekly
The week in compute finance, read from the filings.
Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
