Private Equity Buys Huge Ohio Gavin Coal Power Plant

November 26, 2024

By Tyson Slocum

On September 27, the private equity firm Energy Capital Partners and Javelin Global Commodities filed a joint application with the Federal Energy Regulatory Commission (Docket No. EC24-125) to acquire a fleet of power plants and marketing entities from Blackstone and ArcLight, including the acquisition of several large electric generation units within PJM:

• Darby, a six-unit, 480MW natural-gas-fired generating station located near Mount Sterling, Ohio.
• Gavin, a two-unit, 2,722MW coal-fired power plant in Cheshire, Ohio.
• A 1,190MW natural gas-fueled facility in Lawrenceburg, Indiana.
• A 875MW natural-gas power plant in Waterford, Ohio.

The application’s description of Javelin Global Commodities is sparce, only noting that it is based in the United Kingdom; that Javelin is controlled by three individuals (Peter Bradley, Spencer Sloan and Peter Pritchard); and it does not own or control any inputs to electric power production in the United States.[1]

The application’s description of Javelin’s upstream ownership appears to be incomplete. In August 2024, ITOCHU Corporation announced it had made an equity investment in Javelin Global Commodities.[2] ITOCHU appears to control public utilities with market-based authorization subject to Commission jurisdiction.[3]

The application is deficient, as it fails to provide necessary detail on Javelin Global Commodities’ status as one of America’s largest coal suppliers, with Javelin controlling the movement and sales of millions of tons of coal in the United States each year, and accounts for one-fifth of all U.S. coal exports.[4] Javelin has numerous financial arraignments with both U.S. coal producers and coal fired power plants that provide it with control over significant volumes of U.S. coal. The Application reveals in a footnote that “Javelin may obtain contractual rights to the economics and management of Gavin”,[5] which appears to indicate that Javelin intends, among other things, to direct fuel supply decisions for the Gavin facility. Javelin’s role as one of the largest physical coal traders in the United States should raise vertical competition concerns. These facts appear to contradict the application’s claim that Javelin lacks ownership or control of “inputs to electric power production in the United States.”

The Affidavit of Julie R. Solomon and Jeffrey J. Opgrand claims at page 20 that “Javelin’s affiliate, Bluegrass Natural Resources, produces, stores and sells coal, but makes no coal sales to any electric generation facilities.” This is categorically false. An affiliate of Bluegrass Natural Resources, Bluegrass Commodities, has been an active seller of coal to power facilities in the United States.[8]

The Proposed Transaction May Result In Unjust And Unreasonable Capacity Auction Prices

The proposed acquisition of additional generation capacity in PJM doubles Energy Capital Partners’ total capacity within PJM. The PJM independent market monitor has concluded that the PJM capacity market is structurally uncompetitive.[9] Allowing Energy Capital Partners to double its existing capacity within the PJM capacity risks creating increased opportunities for the exercise of market power and leaves customers more vulnerable to unjust and unreasonable rates.

Application is Silent On Relationship To ECP’s AI Data Center Deal

 Last month, Energy Capital Partners announced a $50 billion partnership with the private equity firm KKR to invest and own power and transmission infrastructure to support artificial intelligence data centers.[10] The Commission should require applicants to detail what relationship, if any, exists between the acquisition of power assets in this transaction with its announced AI deal with KKR and whether there is a possibility Energy Capital Partners is contemplating affiliate agreements for behind-the-meter generation that might reduce the availability of capacity from these resources into the PJM market.

Read the full filing here: GavinECP

[1] Application, at pages 16-17.

[2] www.prnewswire.com/news-releases/itochu-takes-equity-stake-in-javelin-global-commodities-302216859.html

[3] Application for authorization under Section 203 of the Federal Power Act of Hickory Run Energy, LLC under EC24-97, at page 8. https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20240701-5440

[4] Alastair Marsh, Archie Hunter, Todd Gillespie and Jack Farchy, “Ex-Goldman Bankers Make a Fortune With Controversial Bet on Coal,” September 20, 2023, www.bloomberg.com/news/articles/2023-09-20/how-2-ex-goldman-bankers-built-a-1-billion-coal-business

[5] Footnote 63, at page 18.

[6] At pages 19-20.

[7] Fuel Receipts and Costs, www.eia.gov/electricity/data/eia923/

[8] Fuel Receipts and Costs, www.eia.gov/electricity/data/eia923/

[9] Analysis of the 2025/2026 RPM Base Residual Auction, September 20, 2024www.monitoringanalytics.com/reports/Reports/2024/IMM_Analysis_of_the_20252026_RPM_Base_Residual_Auction_Part_A_20240920.pdf

[10] Allison McNeely, KKR and Energy Capital Partners Form $50 Billion AI Partnership, October 30, 2024, www.bloomberg.com/news/articles/2024-10-30/kkr-and-energy-capital-partners-form-50-billion-ai-partnership