Dive Brief:

• PPL Corp is negotiating the sale of its stake in generation subsidiary PPL Energy Supply LLC, which would merge with Riverstone Holdings, according to Bloomberg. 
• The utility may use a Reverse Morris Trust—where a subsidiary company is given to shareholders, but is a separate entity from the parent company in a tax free transaction. It can then merge with another company, which, if the shareholders retain more than 50% of the stake, essentially allows the parent company to make a tax-free acquisition.  
• Reportedly, the plan is to merge PPL Energy Supply with the smaller group of Riverstone-owned facilities in Texas and New Jersey, creating a combined company worth $3-4 billion and with 12,000 MW of generation.

Dive Insight:

The deal hasn't been confirmed by either PPL or Riverstone Holdings, but if it occurs it could be finalized with a month, according to Bloomberg. In an investor call last month following the utility's first quarter results, CEO William Spence had confirmed that PPL was looking at options to sell its generation facilities. Deregulated power fleets have become increasingly unprofitable for utilities, as environmental compliance raises costs and low-cost natural gas, solar and wind edges out traditional generation. Duke Energy has already announced its plans to sell its share of 13 plants in the Midwest due to their increasing unprofitability.