Market Monitor: Behavioral Mitigation "Needed" to Address Market Power Issues from NRG Acquisition of Edison Mission

Behavioral mitigation measures are "needed" to address market power issues in the PJM regulation market which would arise from NRG Energy's acquisition of Edison Mission Energy, Monitoring Analytics, PJM's independent market monitor, said in updated comments to FERC.

As a result, Monitoring Analytics is now explicitly recommending that FERC condition approval of the acquisition on the applicants' adoption of mitigation in the form of behavioral rules applicable to applicants' participation in the PJM regulation market.

Although Monitoring Analytics had noted a similar concern in prior comments last month, at that time the market monitor only suggested that FERC "consider" behavioral mitigation, but did not make a specific recommendation that the merger be conditioned on such mitigation.

"The proposed merger would have a limited impact on the overall competitiveness of PJM markets, but would have a significant impact on one local energy market and a significant impact on the regulation market. The IMM recommends that the Commission require behavioral mitigation measures to address the issues identified in this report. Appropriate mitigation could resolve the identified concerns about competitive impacts. The IMM recommends that, if the merger is approved, the Commission require the merged company to make cost-based offers in the regulation market and that the Commission require the IMM to report after 12 months on any changes in behavior in the identified local energy market," the market monitor said.

"The Market Monitor also recommends that the merged company be required to continue to offer the same units and quantities historically offered into these markets because participation is voluntary and one way to exercise market power is simply not to offer."

Docket No. EC14-14