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FERC approves Dynegy, ECP plan to address market power resulting from Engie deal

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FERC approves Dynegy, ECP plan to address market power resulting from Engie deal

FERC on Feb. 2 accepted Atlas Power Finance LLC's proposal for addressing market power concerns stemming from its plan to purchase thousands of megawatts of mostly natural gas-fired generating plants in the U.S. from Engie.

The commission found that a commitment by Atlas — a joint venture of Dynegy Inc. and Energy Capital Partners LLC — to divest at least 224 MW of generation in the Southeast New England, or SENE, zone adequately mitigates any market power in the ISO New England region.

The agency did not, however, require any additional mitigation in the PJM Interconnection. It agreed with Atlas that Dynegy's recent sale of its 50% interest in the Elwood Energy plant sufficiently alleviated any competitive concerns in the Commonwealth Edison Co. load delivery area, or ComEd LDA, resulting from the transaction.

FERC's order clears the way for the transaction, which involves Atlas' acquisition of a 9,017-MW generation portfolio in the Electric Reliability Council of Texas, PJM and ISO-NE electricity markets, to close Feb. 7, according to a Dynegy news release.

Under the deal, Atlas will purchase Engie subsidiary GDF SUEZ Energy North America, or GSENA, and its public utility subsidiaries for $3.3 billion. When FERC conditionally signed off on the transaction in December 2016, it directed the company to file a plan for mitigating the market power it would have in the ComEd LDA and SENE zone following the deal's consummation.

But Atlas insisted that Dynegy's recent sale of its 50% interest in the 1,350-MW Elwood facility, which was completed in November 2016, more than offsets the 327 MW that Dynegy will add to its existing capacity in the ComEd LDA once Atlas has acquired GSENA's Calumet power plant.

As for the SENE zone, Atlas committed to divest an amount of generation equal to or greater than the amount Dynegy and ECP currently own in that zone. Specifically, the company said it would sell one or more units from the 164-MW Dighton, 29.7-MW Wheelabrator North Andover, 30.1-MW Wheelabrator Saugus, 138.8-MW Bellingham, 501.1-MW ANP Bellingham, 484.5-MW ANP Blackstone or 149-MW Milford Power CC facilities.

Finding that Atlas' proposal addresses the competitive concerns identified in the earlier order, FERC agreed that Dynegy and ECP will "have smaller market share in the ComEd LDA than they did before the consummation" of the GSENA and Elwood transactions.

In the SENE zone, FERC noted, Atlas agreed to divest enough capacity that it "will own or control no more generation than GSENA controlled pre-transactions, thus maintaining the status quo." Within six months of the instant deal's closing, Atlas is to enter into binding agreements to divest the generation to an entity that is not, or would not become, pivotal in the relevant zone or whose market share following the transaction would not trigger any market power screen failures. FERC also accepted Atlas' interim mitigation plan, which includes a commitment not to retire any generation in the SENE zone until the required amount of generation is sold.

FERC rejected a request that Dynegy be required to divest its Brayton Point power plant, noting that the company did not consider that facility in its market power analysis because the plant is to be retired in May. "If applicants decide not to retire the Brayton Point facility, [they] must inform the commission of this decision as it would be a material change in circumstances that departs from the representations upon which the commission relied," the order said. (FERC dockets EC16-93-001 and EC16-94-001)