Market Monitor: PPL Energy Supply-Riverstone Combination Would Have "Anticompetitive Impact" Absent Mitigation Beyond That Proposed by Companies

The multi-step transaction that would essentially see PPL Energy Supply, LLC and RJS Power Holdings LLC combine to form Talen Energy, "would have an anticompetitive impact on several local energy markets," even with the companies' proposed mitigation measures, the PJM Independent Market Monitor said in comments to FERC seeking additional mitigation measures.

"The Transaction, even with the Applicants' proposed mitigation would have an anticompetitive impact on several local energy markets. The Market Monitor recommends that the Commission require behavioral mitigation measures to address the issues identified [by the IMM]. Appropriate mitigation could resolve the identified concerns about competitive impacts," the IMM said.

"The Market Monitor recommends that, if the Transaction is approved, the Commission require Talen to make cost-based offers in the energy and regulation market. The Market Monitor also recommends that Talen be required to continue to offer the same units and quantities historically offered into the regulation market because participation is voluntary and one way to exercise market power is simply not to offer," the IMM said.

"The IMM also recommends that any Option 1 or Option 2 assets [as defined in the companies' application] divested by the Applicants and kept separate from the Talen combination be precluded from being sold to any PJM market participant with more than three percent of the installed capacity in the overall PJM market, in the PJM MAAC submarket, or in the PJM 5004/5005 submarket. On this basis, Option 1 and Option 2 assets would be precluded from being sold to American Electric Power Company; Dominion Resources, Inc; Duke Energy Corp.; Exelon Corp.; First Energy Corp.; NRG Energy Inc.; Public Service Enterprise Group Incorporated; and Calpine Corp. or to any of their directly or indirectly held subsidiaries," the IMM said in an analysis.

Click here for the IMM's analysis