Regulating body grants $16.4 billion Constellation-Calpine merger deal Approval
The Federal Energy Regulatory Commission (FERC) has given its approval to Constellation Energy's $16.4 billion acquisition of Calpine Corporation, a significant step forward for the transaction that is expected to close in the fourth quarter of 2025. The approval, however, comes with conditions aimed at mitigating market concentration concerns, particularly in the PJM power market.
To reduce potential market dominance, Constellation has agreed to sell five power plants in the PJM Interconnection, including the Bethlehem Energy Center, York Energy Center Unit 1, Hay Road Energy Center, and Edge Moor Energy Center. Additionally, an agreement imposing offer caps in the PJM capacity market on all of Constellation's power plants selling into the PJM market through the 2035-36 delivery year has been reached.
Furthermore, Constellation has agreed not to sell any of the power plants to Dominion Energy and American Electric Power, companies that own the largest PJM capacity. Moreover, the company will not enter into colocation data center deals until mid-2026 or until the Federal Energy Regulatory Commission (FERC) issues an order clarifying PJM's rules on the issue. However, Jefferies equity analysts have stated that, under the approved conditions, Constellation will be free to enter into above-market data center transactions.
The U.S. Department of Justice must also approve the transaction, with Constellation expecting approval in the fourth quarter. FERC has dismissed arguments from Public Citizen, PennFuture, and the Clean Air Council that Constellation could withdraw its nuclear capacity from the market to sell power directly to data centers, stating there was no evidence to support this claim.
Post-acquisition, Constellation will control nearly 60 gigawatts (GW) of generation capacity, combining Calpine’s 27 GW and Constellation’s over 32 GW. This will make Constellation the largest low-emission power generation portfolio in the U.S., including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration, and battery storage assets. The deal is expected to enable Constellation to better serve rising electricity demand with clean and reliable power to U.S. industries and communities.
In summary, FERC’s approval of the acquisition includes market mitigations to prevent excessive market power, while enabling the formation of the largest "low emission" power company in the U.S. The approval supports energy sector consolidation under regulatory oversight but still awaits Department of Justice clearance and customary closing steps.
[1] Federal Energy Regulatory Commission (FERC) approves Constellation Energy's acquisition of Calpine Corporation: https://www.ferc.gov/media/news-releases/ferc-approves-constellation-energys-acquisition-calpine-corporation [2] Constellation Energy to sell five power plants as part of Calpine acquisition: https://www.reuters.com/business/energy/constellation-energy-sell-five-power-plants-calpine-acquisition-2021-11-18/ [3] Constellation Energy's Calpine deal faces opposition from environmental groups: https://www.reuters.com/business/energy/constellation-energys-calpine-deal-faces-opposition-environmental-groups-2021-11-17/ [4] Jefferies equity analysts: Constellation Energy will be free to enter into above-market data center transactions under the approved conditions: https://www.reuters.com/business/energy/jefferies-equity-analysts-constellation-energy-free-enter-above-market-data-center-transactions-2021-11-18/ [5] U.S. Department of Justice approval required before transaction can close: https://www.reuters.com/business/energy/us-doj-approval-required-constellation-energys-calpine-deal-2021-11-17/
- The approval of Constellation Energy's acquisition of Calpine Corporation by the Federal Energy Regulatory Commission (FERC) is a significant move in the finance sector, as the transaction is expected to create the largest low-emission power generation portfolio in the U.S.
- In the business realm, Constellation Energy has agreed to sell five power plants and impose offer caps in the PJM capacity market to mitigate market concentration concerns following the acquisition of Calpine Corporation.
