PPL Corp. and Riverstone Holdings LLC affiliate RJS Power Holdings LLC filed a joint response with the Federal Energy Regulatory Commission accepting additional market power mitigation measures required for FERC approval of the previously announced spinoff of PPL Energy Supply and its combination with competitive generation assets owned by RJS Power Holdings. The combination is expected to establish a new independent power producer called Talen Energy.
The additional mitigation measures address competitiveness issues in a specific region of the PJM Interconnection that includes eastern Pennsylvania, New Jersey and Maryland. PPL and RJS Power Holdings proposed divesting either of two groups of assets in that region. Each group has about 1,300 MW of power generation capacity. The two groups include common assets with about 650 MW of power generation capacity.
In an order issued Dec. 18, 2014, FERC conditionally approved the transaction pending additional measures that would satisfy concerns it expressed with the original mitigation proposal.
PPL and RJS Power Holdings have agreed that within 12 months after closing of the transaction, Talen Energy will divest generating assets identified in one of the groups, and limit PJM energy market offers from assets it would retain from the other group to cost-based offers.
After full evaluation, both parties believe the enhanced mitigation will not have a materially different impact on the future operating results of Talen Energy than the original proposal.
The response to FERC does not identify which group of generating assets is to be divested. That decision is not expected until after closing.
The parties are continuing with other regulatory reviews to obtain approvals needed to complete the transaction. These include the Nuclear Regulatory Commission, U.S. Department of Justice and Pennsylvania Public Utility Commission. The transaction is expected to close in the second quarter of 2015.