Docket No. EC26-39-000
In today’s order, the Commission authorizes a proposed transaction through which Alpha Generation Brandywine, LLC will acquire all of the interests in KMC Thermo, LLC. The Commission also eliminates the 5004/5005 submarket in PJM Interconnection, L.L.C. (PJM) based upon updated analysis provided by the applicants. We write separately to emphasize the continued importance of thorough and updated submarket analysis to inform the Commission’s merger reviews, particularly in PJM.
Markets around the country are rapidly evolving via the arrival of new loads, the changing composition of both new and existing market participants, the retirement and addition of generation, and the construction of new transmission. These changes are particularly pronounced in PJM, which is seeing massive load growth and the need for substantial new generation and transmission infrastructure to meet it. As system topology changes, new transmission constraints can arise and create new submarkets, even as grid planners resolve existing constraints. These new constraints can, in turn, create potential market power issues that the Commission needs to monitor as it evaluates the competitive impacts of proposed mergers and acquisitions. It is therefore critical that the Commission’s FPA section 203 analysis be nimble enough to both identify new submarkets as they appear and retire submarket designations that no longer reflect actual system constraints.
However, because the Commission reviews the existence of submarkets in the context of individual transactions, we are informed by, and can only act on, the record before us. While applicants have an obligation to provide the Commission with information necessary to evaluate the competitive impacts of their transaction, they have limited incentive to identify the existence of new submarkets. Thus, the Commission and other parties are primarily tasked with that responsibility. Ensuring proper identification of submarkets is especially important right now, given the number and magnitude of merger transactions in the industry.
We therefore encourage intervenors – particularly independent market monitors – to provide the Commission with current and actionable information to identify new submarkets as they appear.[1] We will be looking for replicable data and analyses that help identify market areas with persistent congestion during peak or constrained periods. In turn, we expect that such information would inform the Commission’s assessment within the contours of our existing merger review framework[2] and better equip the Commission to protect the public interest by timely identifying new submarkets and eliminating outdated ones.
For these reasons, we respectfully concur.
[1] Providing analyses that deviate from the Commission’s longstanding merger review policy framework are not useful for that effort, particularly where the Commission has repeatedly declined to adopt those alternative analyses. E.g., KMC Thermo, LLC, 195 FERC ¶ 61,082, at PP 42, 63-64 (2026).
[2] For instance, the record in this proceeding does not contain targeted analysis of the transaction’s impact on competition within the PEPCO zone where the project is located, or whether the PEPCO zone, individually or in combination with other nearby zones, constitutes a relevant geographic market.