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Texas PUC Staff Recommends Conditions For Vistra Acquisition of Dynegy

February 06,2018

Staff of the Texas PUC submitted comments on the application of Vistra Energy to acquire Dynegy, and disagreed with the applicants on the appropriate inputs to be used in calculating the firms' market share.

"Staff recommends that the Commission find that the merger would cause Applicants and Dynegy (collectively, Combined Entity) to be over the 20 percent statutory requirement (the Cap) imposed by PURA § 39.154. Pursuant to PURA § 39.158, Staff believes the Commission has authority to approve the transaction with the adoption of reasonable modifications to mitigate potential market power abuses. Staff requests that the Commission conditionally approve the merger with certain mitigation requirements as proposed below. Staff notes that Applicants have indicated their agreement to some of Staff’s proposed mitigation requirements in the event that the Commission adopts Staff’s recommendation," Staff said

"In calculating the Combined Entity’s market share, Staff includes the power capable of import over the DC ties. In addition, now that Luminant is no longer affiliated with the electric utility, Oncor, Luminant should be treated just as all other power generation companies participating in ERCOT, as the exemption for any power generation companies affiliated with certain electric utilities no longer applies to Luminant," Staff said

See a further discussion of Staff's comments regarding the appropriate inputs for the market share calculation in Staff's comments (click here)

Staff recommended the adoption of the following changes to the transaction, the first two of which Luminant has already committed to implementing in the event that the Commission adopts Staff’s position:

1. As suggested by the Applicants in the Application, in the event that the Commission finds that the installed generation capacity exceeds the Cap, Luminant commits to the divestiture of at least 1,281 MW of installed generation capacity in ERCOT to get below the 20 percent threshold required in PURA § 39.154(a), prior to the closing of the Transaction;

2. An affidavit filed by an officer of the Combined Entity prior to the closing of the Transaction, certifying that the sales have been completed;

3. The termination of the voluntary mitigation plan approved on May 22, 2015 in Docket No. 44635 (to which the Applicants have already agreed, upon approval of the Transaction by the Commission);

4. The Applicants will continually self-monitor its compliance with the 20 percent statutory requirement;

5. The Applicants will file quarterly status reports regarding its compliance with the 20 percent statutory requirement in PURA § 39.154 until the latter of: (i) 24 months after the closing of the Transaction, or (ii) the Combined Entity has an installed generation capacity of less than 18.5 percent; and

6. In the event of non-compliance with the 20 percent statutory requirement, the Applicants will file a written report with the Commission within 30 days of the event. Both this report, should it ever be made, and the quarterly status reports regarding compliance with PURA § 39.154 should be filed in a project to be created for this purpose.

Staff recommends that the Applicants’ Application be conditionally approved, contingent upon the adoption of reasonable modifications to the transaction as described above

M&A   Texas   Vistra Energy   Dynegy  

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