NRG, GenOn prod FERC for a merger approval by Dec. 13

NRG Energy (NYSE: NRG) and GenOn Energy (NYSE: GEN), nearing the finish line in their sprint to complete their merger, asked the Federal Energy Regulatory Commission on Dec. 5 for expedited consideration of their application for approval of the merger.

“Specifically, the Applicants request that the Commission issue an order ruling on their Application no later than December 13, 2012, which is the expected date for the issuance of a ruling on the Merger by the New York Public Service Commission (‘NYPSC’) – the last required state regulatory approval,” the independent power generators said. “No protests of the Application have been filed and, to the Applicants’ knowledge, there are no outstanding issues pending that would suggest that the proposed Merger will not be consistent with the public interest.”

Issuance of the federal commission’s decision by Dec. 13 will allow the applicants to close their merger with appropriate time to complete the manual accounting processes associated with closing in the middle of December, which will minimize the possibility of financial accounting errors, the companies noted. Allowing for a closing on or about Dec. 14 would also minimize the burden on employees during the holiday season.

Other approvals already in hand are:

  • On Sept. 21, the Department of Justice notified the applicants that it had terminated its review under the Hart-Scott-Rodino Act.
  • The Texas Public Utility Commission issued its approval on Oct. 25.
  • The Nuclear Regulatory Commission issued its “Threshold Determination” on Nov. 1, concluding that the proposed merger does not involve any direct or indirect transfer of control over NRC licenses that would require NRC approval.
  • The shareholders of NRG and GenOn each voted on Nov. 9 to approve the merger.

The companies have requested that the NYPSC issue its approval by the end of the year. Because the NYPSC acts only at its regularly scheduled meetings, this means that the NYPSC ruling is likely to occur at its Dec. 13 meeting, which is the last scheduled state commission meeting in 2012.

“Good cause exists for the Commission also to rule no later than December 13, 2012,” the companies told FERC. “The Applicants submitted their Application, including a detailed competition analysis, four months ago. The Application shows that the proposed Merger easily meets all standards established by the Commission for finding that a proposed transaction is consistent with the public interest. No protest has been filed asserting otherwise.”

The companies have said the merger will make the expanded NRG the nation’s largest owner of competitive generation with 47,000 MW, much of it coal-fired capacity.

Companies told FERC there are no market power issues involved

NRG and GenOn told FERC that their planned merger will create no market power issues, including in PJM, where GenOn in particularly controls a lot of capacity, much of it coal-fired. On Aug. 10, the two companies filed a request that the commission approve the merger and disposition by which NRG will acquire and combine with GenOn in a stock-for-stock transaction. This merger was first announced July 22.

“The merger of NRG and GenOn will form a strong competitive wholesale generation company with a diverse generation fleet located in the premier competitive wholesale energy markets in the United States,” the companies told FERC. “On top of the enhanced core generation business, the merger also will support the expansion of NRG’s retail business in the Northeast. The new company, which will continue to be known as NRG, also will benefit from the Applicants’ combined environmental expertise, experience and scale to successfully reduce total emissions.”

Although the merger will create a large independent power company, it does not raise any competitive issues, the companies said. They argued that:

  • their generation is spread throughout the United States rather than concentrated in any single market; although this generation overlaps in a number of markets, neither company has a significant market share in any market;
  • they pass each of the commission’s merger screens in each relevant market and submarket, and for each period of the year;
  • they do not own or control any electric transmission assets, natural gas transportation assets, or other inputs to the generation of electricity that would allow them to exercise vertical market power to affect wholesale electric markets.

Also, GenOn and NRG said they have no captive wholesale requirements or transmission customers served under regulated cost-based rates and, thus, the merger transaction cannot have any adverse effect on the rates of such customers. Nor does the transaction have any effect on the commission’s jurisdiction or the jurisdiction of any state commission. Finally, because neither of the applicants owns any traditional public utilities with captive customers, the transaction does not raise any cross-subsidization concerns, they added.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.