The Federal Energy Regulatory Commission on Jan. 20 granted a Jan. 14 request from PPL Corp. (NYSE: PPL) and RJS Power Holdings LLC for extra time to figure out how to respond to a FERC order that might require them to divest of extra power plants in a PJM Interconnection sub-market.
FERC in December approved the proposed turnover by PPL and RJS of a number of power plants to the newly independent power producer Talen Energy, which is to be taken public in an IPO. But FERC attached a condition to that approval that said that there needs to be additional market power mitigation in a PJM sub-market, potentially including the sale to outside parties of more power plants than the company had proposed.
“The Applicants state that the additional time is needed to allow them sufficient opportunity to properly analyze the various compliance options proposed by the Commission,” said the Jan. 20 order. “Upon consideration, notice is hereby given to all parties that the Applicants’ motion is granted, extending the deadline to and including January 30, 2015, to submit compliance filings.”
Said the Jan. 14 delay request about the Dec. 18 commission mandate: “Specifically, the Commission stated that Applicants may choose among three alternatives: (1) limit offers from the mitigated assets that Talen Energy continues to own after completing the divestiture of either of the proposed divestiture packages to cost-based offers in the energy market within the 5004/5005 submarket; (2) divest all of the assets included in both divestiture packages; or (3) choose to submit a different mitigation proposal to address the Commission’s concerns regarding the 5004/5005 submarket.
“The Commission also required Applicants to submit, within 30 days of the December Order, an informational filing stating that they have chosen either the first or second alternative set forth in the December Order or submit a compliance filing with an alternative mitigation proposal. If Applicants choose to submit an alternative mitigation proposal, the Commission ordered Applicants to include a horizontal market power analysis demonstrating that the Transaction, including the revised mitigation proposal, will have no adverse effect on competition in the 5004/5005 submarket. The required informational or compliance filing is due on January 20, 2015.
“Applicants are considering the three options presented by the Commission to address the horizontal market power concerns in the 5004/5005 submarket. However,consideration of such options requires extensive analysis of the implication of each alternative on the business of Talen Energy. In addition, analysis of potential alternative mitigation proposals requires consideration of whether such proposals would address the Commission’s horizontal market power concerns in the 5004/5005 submarket. It has taken longer than anticipated to assess the potential alternatives as well as their business implications, which is why Applicants did not file a motion for an extension earlier. Moreover, efforts to complete these analyses and decide on which options to pursue have been slowed, in part, by the intervening holiday season. Applicants therefore request additional time to properly complete these analyses and, if an alternative mitigation proposal is selected, prepare the required compliance filing. Accordingly, Applicants request a short extension to January 30, 2015 to submit either the informational or compliance filing as required by the Commission’s December Order.”