Attorney General Ken Paxton, in partnership with President Donald Trump’s Department of Justice, announced a major antitrust settlement aimed at preserving competition in Texas’ electricity markets and preventing potential price hikes on Texans.
The agreement requires Constellation Energy Corporation and Calpine Corporation to divest two electricity-generating plants in Texas before completing their proposed $26.6 billion merger.
Texas and the Trump DOJ brought the case under Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition or tend to create a monopoly.
In a civil antitrust complaint filed in federal court, Texas and the Trump DOJ alleged that Constellation’s proposed acquisition of Calpine would significantly reduce competition in wholesale electricity markets, including the grid operated by the Electric Reliability Council of Texas (ERCOT).
The complaint states that combining the two companies’ fleets would make Constellation one of the largest generators in ERCOT, with the ability and incentive to “withhold” power from the market to drive up prices. Since wholesale prices in ERCOT are set market-wide, even small, targeted withholdings by a dominant player could translate into large, system-wide price increases for all Texans, not just customers directly served by Constellation or Calpine affiliates.
According to estimates from Paxton’s office, the merger, if left unchecked, could result in more than $100 million per year in higher electricity costs for Texas families and businesses through market-wide price increases.
To resolve those concerns, the settlement requires Constellation and Calpine to divest two natural gas–fired, combined-cycle plants that feed the ERCOT grid: the Jack A. Fusco Energy Center near Houston and Calpine’s interest in the Gregory Power Plant near Corpus Christi.
Those Texas assets are part of a broader, seven‑plant national divestiture package that also includes multiple facilities in the Mid‑Atlantic PJM market, ensuring the merger cannot concentrate market power in either region.
The divestiture package must include not just the physical plants, but associated contracts, records, and operational assets so that an approved buyer can immediately compete as a full-fledged rival in the Texas wholesale market.
Under the proposed final judgment, the plants must be sold to a buyer approved by the federal government after consultation with Texas, with a court-appointed trustee empowered to complete the sales if the companies fail to meet the deadlines.
“My responsibility is to protect Texans from any arrangement that threatens to raise prices, especially in our electric grid, which millions of Texans depend on every single day,” Paxton said. “This settlement means lower prices for Texans and helps ensure that no company can exploit its market position at the expense of our citizens.”
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