Talen Energy proposes third option to divest 1,300 MW

Dive Brief:

When the Federal Energy Regulatory Commission (FERC) approved the formation of Talen Energy in 2014, they required the new generator to shed about 1,300 MW of capacity and approved an order containing two packages of assets being considered, RTO Insider reports.
Talen, which was created by spinning off PPL Corp.'s generation assets and combining them with those belonging to Riverside Holdings, has now proposed a third option which involves the sale of 1,351 MW of capacity split between four plants.
The change is necessary, Talen told FERC, because the company was unable to extend its lease on a combined-cycle plant in Bayonne, N.J.

Dive Insight:

Talen, seeking to satisfy federal requirements that it divest more than 1,300 MW of capacity, told FERC last week that it had been unable to extend the lease at its New Jersey-based Bayonne facility and will instead take the plant out of service in 2018. The company attempted to renegotiate the lease, but said "negotiations proved futile."

The third divestiture option "provides greater flexibility for potential buyers to bid on units they value most, will facilitate the implementation of the mitigation ordered by the commission, and addresses the changed circumstances that affect the Bayonne facility," Talen told regulators.

The third option also "provides slightly better market power mitigation than the removal of the Bayonne facility from Option 1 and Option 2 that Talen Energy had previously considered," the company said. Talen is now proposing to divest four plants, including a 660-MW combined cycle plant and a 248-MW hydro facility.

Talen is still trying to comply with provisions in FERC's order allowing the company to combine the assets of PPL and Riverstone. It has been a five-year process that has resulted in Talen being 65% owned by PPL and 35% by Riverstone.