Talen Energy’s proposal to buy more than 2.5 GW of generation from Energy Capital Partners will lead to a more concentrated PJM market and more market power for the fourth-largest generator in the RTO, the PJM’s Independent Market Monitor said in comments filed with FERC on March 31 (EC26-59).
The deal for the Cornerstone Generation portfolio does not fail FERC’s Herfindahl-Hirschman Index (HHI) thresholds in a delivered price test Talen included in its application to buy the three power plants from ECP, which in turn bought them from ArcLight and Blackstone in 2025. The additional generation would increase Talen’s PJM generation portfolio from 13,139 MW to 15,684 MW.
While the deal does not break any HHI thresholds, Monitoring Analytics said the pivotal supplier test shows Talen already has market power and the deal would increase it.
“There are gaps in the market power mitigation rules for the PJM energy, capacity and ancillary services markets,” the IMM said. “The existence of pivotal suppliers in the PJM markets, along with insufficient market power mitigation, means that all increases in structural market power undermine the competitiveness of the PJM markets.”
The IMM said the deal should be approved only if Talen agrees to behavioral commitments, which would not burden the applicants because they only ensure competitive behavior. FERC should reject the initial application and require it be refiled with commitments, otherwise it would not be consistent with the public interest, the Monitor said.
“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 IMM said.
The current need for new generation in PJM is an opportunity for increased competition and new entry, but generation ownership is instead being consolidated in a small group of owners, it contended.
“Talen has been one of the largest owners of generation in PJM since its creation in 2015,” the IMM said. “Talen is one of the top five owners of PJM capacity and recently acquired two large gas fired combined cycle resources, the Moxie Freedom and Guernsey plants, in 2025. Other owners in the top five also have recent and/or pending transactions: Constellation, Vistra and ArcLight. The market power created by this ownership consolidation creates the potential for additional upward pressure on PJM energy and capacity prices, at a time when data center load growth is already resulting in noncompetitive prices.”
FERC needs to consider the consolidation trend in every merger application for assets in PJM that comes before the agency, the Monitor added.
‘Even Greater Risk’
The commission has been relying on HHI tests as its primary market power screen for decades. HHI is the sum of the squared market shares of all market participants, and even a supplier that passes the screen can still raise market prices above a competitive level.
The market power mitigation rules for the energy market rely on the assumption that enough competitive sellers exist so that if anyone tried to raise prices, another would underbid it at a competitive price.
“This assumption requires that the total demand for energy can be met without the supply from any individual supplier or without the supply from a small group of suppliers,” the IMM said. “This assumption is not correct when there are pivotal suppliers in the energy market. In 2025, there were pivotal suppliers in the aggregate energy market on 95.3 percent of days.”
The capacity market is extremely tight, and that is expected to continue for the foreseeable future, leading to prices above historical norms that only increase the impact of market power.
As far as specific behavioral requirements for Talen, the IMM said the firm should commit to keeping existing capacity in the market, instead of withdrawing it to serve data centers via colocation. Removing existing capacity would make the market less competitive and lead to higher rates for consumers.
“The fact that PJM is already short of its reliability target and that PJM faces very significant levels of forecast data center load makes this reliability impact an even greater risk,” the IMM said. “Allowing the removal of capacity to serve data center load shifts the costs and risks of data centers from data centers to all other PJM customers.”
The IMM also suggested several ways Talen should be limited in its market bids and a commitment to retire units only when they are uneconomic.
