The Department Justice earlier this week filed comments with the Federal Energy Regulatory Commission regarding Vistra Corporation’s proposed acquisition of Energy Harbor, the Ohio-based owner and operator of the Beaver Valley, Davis-Besse, and Perry nuclear plants. Echoing misgivings raised in June by PJM Interconnection’s market monitor Monitoring Analytics regarding the possible exercise of undue market power as a result of the deal, the DOJ Antitrust Division’s 16-page document urges FERC to carefully review the proposal to ensure it will not substantially lessen competition and increase wholesale electricity prices in the PJM region.
DOJ on the deal: “Vistra and Energy Harbor currently compete in auctions run by PJM Interconnection, a regional transmission organization that manages the electricity grid for more than 65 million consumers,” the DOJ writes in its filing. “In PJM’s auctions, market prices are determined by the prices offered by competing generators, including Vistra and Energy Harbor. The proposed acquisition would combine different generating units with different cost structures under the control of Vistra. This combination may enable Vistra to profitably withhold electricity from some of its generating units to raise market prices. After the transaction, Vistra would supply the same customers with electricity from nuclear plants, whose generating units usually offer low prices in the auctions, and natural gas plants, whose generating units usually offer higher prices. To increase the wholesale price it receives on the low-cost nuclear plants it acquires from Energy Harbor, it is possible that Vistra could withhold output from its higher-cost natural gas generating units. By combining these generating units, the transaction may therefore increase Vistra’s incentive or ability to raise electricity prices profitably.”
Background: One of the largest electric power generators in the United States, Texas-based Vistra owns approximately 9,200 MW of fossil fuel–fired electric generation in PJM’s service area, including in Ohio and Pennsylvania—home to the Beaver Valley, Davis-Besse, and Perry facilities. (The company also owns the Comanche Peak nuclear plant in Glen Rose, Texas.)
In March, Vistra announced the $3.43 billion deal to acquire Energy Harbor. The transaction would merge Vistra’s nuclear and retail businesses and its Vistra Zero renewables and storage projects with Energy Harbor’s nuclear and retail businesses under a new subsidiary holding company to be called Vistra Vision. With the addition of Energy Harbor’s four units (sporting a total net capacity of 4,053 MWe), the new firm would have the second-largest competitive nuclear fleet in the nation, according to Vistra.
Total compensation would consist of $3 billion in cash and a 15 percent equity interest in the new firm. Most Energy Harbor shareholders would receive cash at closing, and the two largest shareholders, Avenue Capital Group and Nuveen, would receive a combination of cash and the 15 percent ownership interest. Vistra Vision would assume some $430 million of net debt from Energy Harbor in the deal.
While the companies anticipate closing in the second half of 2023, the transaction must receive approval from FERC and the DOJ, as well as from the Nuclear Regulatory Commission.