NRG Energy, Edison Mission seek quick FERC approval of asset deal

NRG Energy (NYSE: NRG) and Edison Mission Energy (EME) applied Oct. 25 at the Federal Energy Regulatory Commission for approval of the recently-announced buy by NRG of EME’s assets, which include a number of power plants across the U.S.

The companies asked for a FERC approval by Jan. 31, 2014, and a shortened comment period of 30 days in order to allow for approval by that date. Approval of this application will facilitate the timely reorganization of EME and certain of its subsidiaries under Chapter 11 of the U.S. Bankruptcy Code and certain payments to their creditors under a proposed plan of reorganization expected to be filed with the U.S. Bankruptcy Court for the Northern District of Illinois by mid November.

“The Transaction is the linchpin of the Plan, which would resolve issues in the Chapter 11 proceedings that commenced on December 17, 2012,” the companies told FERC. “Timely implementation of the Plan will allow the EME to make payments to creditors and to exit from bankruptcy during the first part of 2014. The Plan is supported by major stakeholders in the bankruptcy proceedings, including the Official Committee of Unsecured Creditors of EME (the ‘Committee’) and an ad hoc group of holders of the EME Debtors’ debt securities.”

Included in the application are long lists of NRG’s and EME’s power plants and an analysis of any market power implications of NRG controlling both sets of plants. A subsidiary of NRG provides operations and maintenance (O&M) services at the Homer City plant, an approximately 1,884 MW (summer rating) coal-fired facility near Indiana, Pa. This entity provides such O&M services at the direction of the station’s owner, Homer City Generation LP, which retains ultimate decision-making authority with respect to the operation of, and wholesale sales from, the station. Consequently, control of the Homer City plant cannot properly be attributed to NRG or any of its subsidiaries, the filing said. Notable is that the plant had been controlled by an EME affiliate under lease until last year, when EME had to give up the plant due to financial problems.

The sale of assets to NRG includes Midwest Generation, which leases and operates the Powerton Station and the Joliet Unit 7 and 8 coal facilities in Illinois, and that also in Illinois owns and operates:

  • Unit 6 at the Joliet Station, an approximately 290 MW (summer rating) coal-fired unit (PJM);
  • Waukegan Units 7, 8, 31, and 32 totaling approximately 797 MW (summer rating) of coal- and oil-fired generation in Waukegan, Illinois (PJM);
  • Fisk Units 31, 32, 33, and 34 totaling approximately 197 MW (summer rating) of oil-fired generation (Fisk Station) in Chicago, Illinois (PJM); and
  • Will County Units 3 and 4 totaling approximately 761 MW (summer rating) of coal-fired generation in Will County, Illinois (PJM).

Other EME affiliates include Mid-Set Cogeneration, which is partially owned by EME and that owns and operates an approximately 33 MW (summer rating) natural gas-fired generation facility in Fellows, Calif. (CAISO). And also Midway-Sunset Cogeneration, which is partially owned by EME and that owns and operates an approximately 225 MW (summer rating) natural gas-fired generation facility in Fellows, Calif. (CAISO).

The transaction presents no horizontal market power concerns, the companies said. The only FERC-jurisdictional markets in which both companies own or control generation are the Midcontinent ISO, PJM Interconnection and California ISO markets, and within these markets, there is no overlap in any recognized sub-market. The overlap is de minimis in the MISO market, and there are no evaluation screen failures in the PJM or CAISO markets, 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.