Under a federal antitrust settlement, Calpine Corp. will divest ownership in several generation assets on the PJM and ERCOT grids as a condition for its acquisition by Constellation Energy.

If approved by a court, the resolution will clear the way for a $26.6 billion transaction that will make Constellation the largest U.S. wholesale power generator.

FERC and regulators in New York and Texas previously approved the deal.

On Dec. 5, Constellation and the Antitrust Division of the U.S. Department of Justice (DOJ) announced a proposed resolution to the final regulatory hurdle.

DOJ said it was concerned the acquisition could harm competition and raise prices in the PJM and ERCOT grids by more than $100 million a year. DOJ and the state of Texas simultaneously initiated a civil antitrust lawsuit (1:25-cv-04235) seeking to block the acquisition and a proposed divestiture settlement that would allow it to go forward.

The companies accepted the terms. DOJ said it was the first settlement consent decree the Antitrust Division had filed in a power industry merger in 14 years.

“This settlement includes a six-plant divestiture to an acquisition that risked harming tens of millions of electricity consumers in the mid-Atlantic and Texas,” Assistant Attorney General Abigail Slater said in a news release. “I am appreciative of the partnership with our co-plaintiff, the state of Texas, to secure relief for consumers.”

Constellation CEO Joe Dominguez hailed the agreement as clearing the way for a foundational step in the next era of American growth and innovation. “We thank the department for its professionalism and tireless work reviewing this transaction through these many months. It’s now time for us to complete the transaction, welcome our new colleagues from Calpine and together begin our journey to light the way to a brilliant tomorrow for all.”

FERC’s approval in July entailed Calpine selling 3,546 MW of generation, all of it in PJM: the 1,134-MW natural gas 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 simple cycle gas-fired Edge Moor Energy Center. (See FERC Approves Constellation Purchase of Calpine with Conditions.)

The proposed antitrust settlement entails sale of York Unit 2, an 828-MW natural gas-fired, combined-cycle plant in Pennsylvania; the Jack Fusco Energy Center, a 605-MW natural gas-fired combined-cycle facility outside Houston, Texas; and a minority ownership interest in the Gregory Power Plant, a 385-MW natural gas fired combined-cycle near Corpus Christi, Texas.

When it announced the Calpine deal Jan. 10, Constellation anticipated the need for some asset sales in PJM. (See Constellation to Acquire Calpine for $29.1B.)