Talen Energy, within the first year of its creation, will sell off several power plants in order to achieve the market power “mitigation” that it has committed to under the Federal Energy Regulatory Commission approval for its creation.
Talen Energy noted in a March 18 prospectus filing with the SEC, its third overall and first since December, that the transactions that will create the company are conditioned on obtaining all approvals necessary under Section 203 of the Federal Power Act for the disposition of or change in control over FERC jurisdictional facilities and the merger or consolidation of FERC jurisdictional facilities with another entity. In July 2014, PPL Corp. (NYSE: PPL) and privately-held RJS Power filed a joint application with the FERC seeking all necessary approvals under Section 203 of the FPA. In December 2014, the FERC issued an order conditionally approving the transactions under Section 203 of the FPA, subject to satisfaction of certain market power mitigation measures. On Jan. 27, PPL and RJS Power filed a statement with the FERC agreeing to these mitigation measures.
“Pursuant to the FERC Order, we are required to sell or otherwise dispose of approximately 1,300 MW of generating capacity within one year of the completion of the Transactions,” the filing noted. “We proposed to the FERC two alternative divestiture packages: (1) our Bayonne, Camden, Newark Bay, Pedricktown, Elmwood Park, York and Ironwood plants or (2) our C.P. Crane, Bayonne, Camden, Newark Bay, Pedricktown, Elmwood Park, York, Holtwood and Wallenpaupack plants. Pursuant to the FERC Order, we have agreed to dispose of the assets in one of the divestiture packages described above and agree to cost-based price controls on electricity sold into certain markets by the generating facilities in the other divestiture package that are not sold.
“Prior to completing the divestitures required by the FERC Order, we are required to relinquish day-to-day control over the sales of electricity by the subject plants in both proposed packages to an independent energy manager. Management will continue to assess options for dispositions in compliance with the FERC Order and does not expect to dispose of any generating facilities prior to completion of the Transactions. The package chosen and the price and timing of such dispositions will depend on a number of factors, including market conditions and the offers received. As a result, Talen Energy’s generation portfolio will not include all of the plants that currently comprise the [PPL] Energy Supply business and the RJS Power business.”
The creation of Talen Energy is expected to be completed in the second quarter of this year, which is when the clock starts ticking on that one-year divestiture deadline.
Those named power plants are:
- Bayonne, gas/oil, 174 MW, New Jersey;
- Camden, gas/oil, 151 MW, New Jersey;
- Newark Bay, gas/oil, 129 MW, New Jersey;
- Pedricktown, gas/oil, 132 MW, New Jersey;
- Elmwood Park, gas/oil, 73 MW, New Jersey;
- York, gas, 52 MW, Pennsylvania;
- Ironwood, gas, 660 MW, Pennsylvania;
- C.P. Crane, coal, 399 MW, Maryland;
- Holtwood, hydro, 249 MW, Pennsylvania; and
- Wallenpaupack, hydro, 44 MW, Pennsylvania.