On March 27, 2015, FERC issued two separate orders approving Dynegy Inc. and Dynegy Resource I, LLC’s (collectively, “Dynegy”) $6.25 billion acquisition of merchant generators from Duke Energy Corporation (“Duke”) and Energy Capital Partners LLC (“ECP”).  Upon consummation of the acquisitions, Dynegy will own 100 percent equity interest in several ECP subsidiaries, a 49.5 percent equity interest in Elwood Energy (an ECP subsidiary), and 100 percent equity interest in Duke Energy Commercial Asset Management, LLC and Duke Energy Retail Sales, LLC.

In August of 2014, Dynegy announced that it had signed separate agreements with Duke and ECP to acquire 12,500 MW of coal and gas generation.  In September 2014, Dynegy requested FERC approval of the transactions, arguing that the transactions were consistent with the public interest and would not result in adverse effects to rates or competition.

PJM Interconnection LLC’s (“PJM”) Independent Market Monitor (“PJM Market Monitor”) intervened and raised concerns that the acquisitions would result in adverse competitive impacts and “have a significant effect on the market for regulation service; and increase concentration in portions of the PJM Capacity Market.”  Thus, the PJM Market Monitor argued that FERC should require behavioral mitigation measures to address the potential adverse impacts.  Specifically, the PJM Market Monitor recommended that FERC require that: (1) Dynegy make cost-based offers in the energy, capacity, and regulation service markets in PJM; (2) continue to offer the same units and quantities historically offered into the PJM regulation service market; (3) to continue to offer its resources into the PJM Capacity Market; and (4) provide PJM with 18 months notice before a planned generator retirement.

As a result of the concerns and potential adverse impacts, Dynegy executed a settlement agreement with the PJM Market Monitor, agreeing to implement most of the PJM Market Monitor’s market power mitigation recommendations for seven years once Dynegy acquires the generation assets.  Upon execution of the settlement agreement, the PJM Market Monitor stated that it did not oppose the approval of the acquisitions, provided that Dynegy complied with the settlement agreement.

In approving both of Dynegy’s acquisitions, FERC concluded that, along with the Dynegy and the PJM Market Monitor’s settlement, Dynegy’s proposed acquisitions were consistent with its Merger Policy Statement criteria and would not result in adverse effects.

Copies of the orders approving the Duke acquisition and the ECP acquisition are available here and here, respectively.