Texas-based Vistra Corporation was hoping to get the go-ahead from the Federal Energy Regulatory Commission this month for its proposed acquisition of Energy Harbor’s nuclear assets, but on October 13, the agency issued an order extending its review of the deal (called “tolling the time” in bureaucratese) to April 11, 2024. Currently down one seat, the four-member FERC voted 3–1 for the time extension, with the lone dissent coming from commissioner James Danly.
According to federal law, FERC must grant or deny transaction applications within 180 days or else issue an order for an extension; otherwise, the transaction is deemed granted. The 180-day review period for the Vistra/Energy Harbor merger was nearly up, the companies having filed their application on April 17.
“On August 17, 2023, commission staff notified applicants that the application was deficient,” FERC stated in its order. “On September 18, 2023, applicants provided additional information in response. . . . We find that the commission requires additional time to fully analyze the application as supplemented on May 15, 2023, and September 18, 2023.”
Background: FERC’s “deficiency letter” on August 17 sought more information on potential market power issues surrounding the planned $6.3 billion asset purchase—a proposal that would see Vistra’s nuclear and retail businesses and its Vistra Zero renewables and storage projects merge with Energy Harbor’s nuclear and retail businesses under a new subsidiary holding company named Vistra Vision.
In the companies’ September 18 response, Vistra committed to divesting itself of two power generation assets to help alleviate concerns over the planned acquisition of the Energy Harbor facilities—Beaver Valley in Pennsylvania and Davis-Besse and Perry in Ohio.
Figuring prominently in those concerns is the PJM Interconnection’s ATSI transmission zone—the only zone in which Vistra and Energy Harbor both own generation assets. Included in ATSI are Davis-Besse and Perry and Vistra’s gas- and oil-fired Richmond facility and oil-fired Stryker unit.
“In an effort to put to rest any potential arguments to the contrary and provide for a quicker review process to allow applicants to close on the proposed transaction as soon as possible, including for customer, employee, and investor certainty, applicants are herein also including an affirmative commitment to divest the only generation facilities currently owned by Vistra in ATSI—the Richland and Stryker facilities,” the companies stated in their 101-page response. “These are the only generation facilities that could even arguably be considered as located in an overlapping ‘submarket’ in PJM with the Energy Harbor facilities. In addition . . . applicants will commit to offer the Richland and Stryker facilities at a level no greater than their cost-based offers, as determined pursuant to PJM rules, pending the completion of such divestiture.”
Critical wrath: Vistra’s divestiture offer seems not to have swayed many of the merger’s critics—certainly not Monitoring Analytics (PJM’s market monitor) or the Ohio Consumers’ Counsel (OCC), both of which filed comments with FERC on October 10. In its filing, Monitoring Analytics said that “even with the divestiture, Vistra would have market power with respect to local constraints in the PJM market” and that “exercise of that market power to raise prices would raise energy market revenues for the Energy Harbor nuclear units.”
OCC agreed, stating, “The proposed divestiture of generating plants (Vistra’s Richland and Stryker plants) that comprise less than 6 percent of the total generating capacity owned as a result of the merger will not mitigate the serious adverse effects the merger would have on competition in Ohio’s retail electricity markets and on the consumers who rely on that market for lower prices and greater innovation. . . . The likely outcome will be higher electricity prices for Ohio consumers.”