IMM Says Proposed Constellation-Exelon Divestiture Does Not Completely Eliminate Competitive Issues

The proposal from Constellation Energy and Exelon to divest three generating plants in PJM as part of their proposed merger would not eliminate the competitive issues of the merger, PJM's Independent Market Monitor said in comments at FERC (EC11-83).

As part of the merger, the applicants have proposed divesting Constellation's Brandon Shores, H.A. Wagner, and C.P. Crane facilities.

The IMM's analysis was limited to the effect on the PJM energy market, with further analyses to address the capacity, regulation, and spinning reserve markets.

The IMM said that divesting the Brandon Shores, H.A. Wagner and C.P. Crane facilities to a firm without an existing market presence in the constrained markets would, "reduce, but not eliminate, the competitive issues of the proposed merger."

The IMM did not offer any recommendations as to additional actions which would be required to completely eliminate such competitive issues, though the IMM agrees that, in principle, an effective mitigation plan could be implemented that would address the competitive issues identified.

Additionally, divestiture of the plants to one of the significant players in the constrained markets would exacerbate the competitive issues with the proposed merger, the IMM noted.