The Federal Energy Regulatory Commission Wednesday approved Constellation Energy’s proposal to buy Calpine from Energy Capital Partners in a deal valued at $16.4 billion, subject to conditions aimed at reducing the expanded company’s ability to exert market power.
With a proposed mitigation plan in place — which includes Constellation selling five power plants in the PJM Interconnection — “the proposed transaction will not have an adverse effect on competition,” FERC said.
An agreement between Constellation and Monitoring Analytics, PJM’s market monitor, imposes offer caps in the PJM capacity market on all of the independent power producer’s power plants selling into the PJM market through the 2035-36 delivery year, FERC said.
Although Constellation agreed not to enter into colocation data center deals until mid-2026 or until FERC issues an order clarifying PJM’s rules on the issue, Jefferies equity analysts said Thursday that the company will be free to enter into above-market data center transactions under the approved conditions.
In its decision, FERC dismissed arguments from Public Citizen, PennFuture and the Clean Air Council that Constellation could withdraw its nuclear capacity from the market to sell power directly to data centers, saying there was no evidence that would happen.
As part of the plan, Constellation will sell four power plants in the PJM Interconnection totaling 3,546 MW. They are the: 1,134-MW gas-fired combined cycle Bethlehem Energy Center; the 569-MW dual-fuel combined cycle York Energy Center Unit 1; the 1,136-MW dual-fuel combined cycle Hay Road Energy Center; and the 707-MW, gas-fired simple cycle Edge Moor Energy Center.
In its agreement with PJM’s market monitor, Constellation agreed not to sell any of the power plants to Dominion Energy and American Electric Power, which own the most capacity in PJM.
FERC rejected concerns raised by the Monitoring Analytics that PJM’s capacity market is structurally uncompetitive and that consolidation of power plant owners makes market power problems worse. PJM has rules to mitigate the ability of power plant owners to drive up capacity prices using their market power, FERC said.
The U.S. Department of Justice must approve the transaction before it can close, which Constellation expects will happen in the fourth quarter.
Under the deal, Constellation will own almost 60 GW of nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration and battery storage. Calpine currently owns 27 GW.
