NRG Energy told FERC that its purchase of generation and the CPower subsidiary from LS Power will not impact competition, despite some overlap in assets in New York and PJM. 

The deal announced in May would see NRG buying 13 GW of natural gas-fired power plants from LS along with the demand response aggregator for $12 billion. (See NRG to Buy 13 GW of Generation Capacity from LS Power.) 

NRG is paying for part of the deal with shares that are estimated to represent 11% of its shares at closing, which would exceed the 10% threshold for functional control in FERC’s merger reviews, the company said in the application filed with the commission June 12 (EC25-102). To avoid getting over that threshold, NRG will deliver only enough shares to LS Power’s shareholders to prevent them from owning 10% or more of NRG’s securities. 

The rest of the shares owed will be delivered to an independent trustee administering a voting trust, which is similar to a deal FERC accepted in 2019. The shareholders could direct the trustee’s vote only when or if the new NRG issues stock, liquidates the company, enters bankruptcy, agrees to a merger or a few other deals FERC previously has found are limited enough to render them “non-voting securities,” the application said. 

The deal will double NRG’s capacity, with most of LS Power’s gas generators being sold located in NYISO and PJM, but the application said standard market screens showed no significant increase in market power. 

“The transaction essentially flips the sizes of NRG and LS Power in both New York and PJM, with very little changes in market concentration,” said the market power analysis filed with the application. 

NRG currently owns 1,201 MW of capacity in NYISO and 2,081 MW in PJM, while LS Power has 1,947 MW and 11,552 MW, respectively, in the two markets. After the deal, NRG would have 2,163 MW in NYISO and 9,463 MW in PJM, while LS Power would have 985 MW and 4,170 MW in the two markets, respectively. 

NRG has only a few other assets in the two markets, including a tolling agreement expiring in 2029 for an 895-MW gas plant on Staten Island, and a contract for 175 MW of transmission capacity on the Linden VFT that can ship power between the two markets, which expires in 2028. It also holds 25% of the Bayonne Energy Center in an arrangement that ends in 2027. 

The analysis NRG conducted found the deal will not materially change market concentration in either the NYISO capacity market or the New York City submarket. The analysis found similar results for PJM and its submarkets. 

The transaction would have LS Power retaining control over 985 MW of the Ravenswood plant in New York City under a tolling agreement, with NRG controlling the rest. The Ravenswood deal will help eliminate any competitive impacts on the New York City submarket, the application said. 

In PJM, NRG will wind up with an additional 7,382 MW of additional capacity, but the dynamics of the deal makes the company’s Herfindahl-Hirschman Index score of market concentration actually fall slightly, according to the analysis.