FERC Approves Talen Energy’s Modified Mitigation Proposal

The Federal Energy Regulatory Commission (FERC) approved a request on December 7 by Allentown, Pennsylvania-based Talen Energy (Docket No. EC14-112-002) to modify required mitigation measures intended to address potential, horizontal competition issues in connection with the creation of the company.

Talen Energy was established last June when the competitive power generation business of PPL Corporation was spun off and immediately combined with the competitive generation business owned by private equity firm Riverstone Holdings. Its plants are located principally in the PJM (Mid-Atlantic) and ERCOT (Texas) transmission regions.

FERC ruled that Talen Energy’s alternative mitigation option is in the public interest and addresses competition concerns in a manner that is comparable to the company’s two previously approved proposals. As a result of the decision, Talen Energy would satisfy FERC’s requirement upon completion of previously announced power plant sales that are expected to close in the first quarter of 2016.

Background

In a December 2014 ruling that approved the transaction to establish Talen Energy, FERC ordered the company to sell some power plants in a sub-market of the PJM Interconnection that includes eastern Pennsylvania, New Jersey, and Maryland by divesting some generation facilities.

FERC accepted two divestiture options initially proposed by Talen Energy – each representing 1,300 megawatts (MW) to 1,400 MW of generating capacity.

However, in September, Talen asked FERC to consider a third option that involved a different mix of assets, but the same amount of generating capacity because of an issue that could affect one of the plants identified in both of the first two options.

The November 30 FERC order means that after the announced sales of the Ironwood, Holtwood, Lake Wallenpaupack and C.P. Crane plants are completed, Talen Energy would not be required to sell other plants – mainly natural gas-fired plants in New Jersey – to meet the mitigation requirement.