A $16.4 billion merger that would create the nation’s largest provider of wholesale electricity cleared its final hurdle Friday with an announcement by the U.S. Department of Justice that Constellation Energy and Houston-based Calpine Energy had agreed to resolve antitrust concerns with the divestment of six power plants based in the Northeast and Texas.
The divestiture of two Texas generating plants involved in the Justice Department announcement — one in Houston and the other in Corpus Christi — come in addition to divestiture of four plants in the PJM utility region already conceded in a pact made earlier this year to gain approval by the Federal Energy Regulatory Commission.
The Texas plants involved include two ERCOT-grid natural gas combined cycle plants — the 22-year-old, 675.6-megawatt Jack A. Fusco Energy Center located southwest of Houston and the 25-year-old, 432-megawatt Gregory Power Plant, located northeast of Corpus Christi.
According to regulatory filings, the Fusco plant is wholly owned by Calpine. However, the Gregory Plant was purchased by Cheniere Energy from Houston’s NRG Energy in 2023 through an affiliate, Gregory Power Partners. As of June, Calpine held just a 5 percent stake in GPP.
The four divestments previously agreed-upon with FERC are all within the PJM Interconnection, which controls the primary electric grid across the Middle Atlantic states. They include:
- Bethlehem Power Plant, a 1,153-megawatt combined cycle gas turbine power plant in Bethlehem, Pennsylvania. The plant was commissioned in 2002 and is wholly owned by Calpine.
- York Energy Center, a 560-megawatt combined cycle gas turbine power plant in Delta, Pennsylvania. It is owned by Calpine, but Constellation subsidiaries are its primary power offtakes.
- Hay Road Energy Center, a 1,193-megawatt capacity plant in Delaware owned by Calpine and commissioned in 1989.
- Edge Moor Energy Center, a 697.8-megawatt steam turbine power plant in Wilmington, Delaware. Commissioned in 1954, the plant is wholly owned by Calpine.
According to the DOJ release, Baltimore-based Constellation controls more than 25,000 megawatts of electricity generation, including 5,000MW across ERCOT, the Texas grid provider. Calpine, controls 14,000 megawatts of generating capacity, 9,000MW of that in ERCOT, with the rest in PJM.
Regulators said they had been concerned that the mere size of a merger creating the nation’s largest wholesale generator of electricity would spark higher consumer prices in two regions already burdened by rapidly increasing energy demand.
According to several news accounts, lawyers for the two merging companies were set to meet with DOJ Antitrust lawyers in November to argue against the filing of a federal lawsuit to stop the merger; but the new divestment proposal, updated to include selling interests in the two Texas plants, ultimately satisfied the agency’s concerns.
“The price of electricity is a pocketbook issue to American consumers working hard to afford their monthly utility bills. When it comes to their electricity bills, Americans deserve the benefit of robust competition among electricity generators,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division.