Federal regulators should reject Talen Energy’s plan to buy about 2.6 GW from Energy Capital Partners because it would increase the power company’s market power in the PJM Interconnection market, according to the grid operator’s market monitor.
Monitoring Analytics said in its Tuesday filing that the Federal Energy Regulatory Commission should require Talen and ECP to refile their application for the transaction with commitments that would limit Talen’s ability to use market power to increase electricity and capacity prices.
For example, Talen should commit to keeping the ECP generation in the PJM capacity market instead of diverting it to serve data centers, it said.
Removing that capacity would negatively impact the rates PJM market customers pay, Monitoring Analytics said. “Removal of capacity from the capacity market would also make PJM less reliable.”
A “ratepayer protection pledge” signed by Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI and a set of principles the Trump administration and PJM governors issued state that data centers will acquire new generation to meet their power supply needs, the market monitor noted.
After buying 2.6 GW of gas-fired generation in November, Talen controls about 13.1 GW in PJM, making it the fourth-largest capacity owner in the region, according to the market monitor.
The top capacity owners in PJM at the end of 2025 were Dominion Resources, with 21.9 GW; Constellation Energy Generation, with 20.3 GW; and Vistra Energy, with 13.9 GW, according to a mid-March report from Monitoring Analytics. Since then, Constellation increased its capacity in PJM by buying Calpine, and Vistra plans to buy Cogentrix Energy, which owns about 3.2 GW in PJM.
“The current need for new generating capacity in PJM is an opportunity for increased competition and new entry,” Monitoring Analytics said. “Instead, ownership of generation is being consolidated in a small group of owners.”
The consolidation could push PJM energy and capacity prices higher when data center load growth is already resulting in noncompetitive prices, the market monitor said.
“The Commission’s consideration of this trend in consolidation with every [Federal Power Act section] 203 application review is necessary to ensure that the transactions are consistent with the public interest,” Monitoring Analytics said.
As proposed, the Talen deal would increase the company’s structural market power in PJM, according to Monitoring Analytics.
“Talen currently has market power in the PJM capacity market and in the PJM energy market and the transaction would increase that market power,” the market monitor said.
Gaps in the market power mitigation rules for PJM’s markets can undermine price competitiveness, the market monitor said.
Thus, FERC should consider the implications of ownership consolidation in the PJM market, according to Monitoring Analytics.
“The broader question for the commission’s merger policy is whether any transactions that result in incremental increases in market power in the PJM capacity market, or any PJM market, without clear behavioral conditions should be approved as consistent with the public interest given the fact that the PJM capacity market is already characterized by endemic market power,” the market monitor said.
Moody’s upgrades Talen outlook
Separately, Moody's Ratings on Wednesday upgraded its outlook on Talen Energy Supply to “stable” from “negative.”
“The PJM wholesale power market currently benefits from strong forward power prices and robust spark spreads, supporting plant margins and profitability,” the credit ratings agency said. “We expect that constraints on the pace of new capacity additions, amid rising data-center-driven demand, could continue to place upward pressure on already elevated prices and spreads.”
Moody’s revised Talen's outlook to stable because its funds from operations to debt ratio improved “significantly” last year to above 20% and it expects the company to sustain that ratio above a 13% downgrade threshold, Toby Shea, vice president, senior credit officer, said.
