Dynegy seeks transfer of railroads serving Ameren coal plants

Affiliates of Dynegy (NYSE: DYN) filed an Oct. 29 application at the U.S. Surface Transportation Board for approval of the transfer of rail segments that serve two Ameren (NYSE: AEE) coal plants in Illinois to Dynegy.

This application is part of a pending deal for Ameren to sell all of its operating coal-fired plants in Illinois to Dynegy. The closing of this deal has lately been hung up as the two companies seek a delayed approval from the Illinois Pollution Control Board for the transfer of a board-granted clean-air compliance break from Ameren to Dynegy. That board decision may come in November. The parties told the STB they hope to close the plant deal around Dec. 2.

Illinois Power Holdings LLC and Illinois Power Holdings II LLC, both affiliates of Dynegy, are seeking STB approval with respect to their acquisition of control of two Class III rail carriers – the Coffeen and Western Railroad Co. (CWRC) and the Joppa & Eastern Railroad (JERR) – as part of this broader corporate acquisition.

Illinois Power Holdings is the entity that will acquire Ameren Energy Resources Co. LLC (AER) and its subsidiaries.

The Coffeen and Western Railroad is a Class III rail carrier that owns and operates about 13 miles of rail line between Ameren’s Coffeen coal-fired plant near Coffeen, Ill., and separate connections with the Union Pacific Railroad and BNSF Railway near Walshville, Ill.

The Joppa and Eastern Railroad is a Class III rail carrier that owns and operates about 4.5 miles of track extending between Ameren subsidiary Electric Energy’s Joppa coal plant at Joppa, Ill., and a connection with the main line of the BNSF Railway. It also leases a portion of Missouri Pacific Railroad‘s line from milepost 359.5 to the end of the track at approximately milepost 362 in Massac County, Ill.

The following electric generating plants (all located in Illinois) are included in the overall Ameren-Dynegy transaction: Duck Creek, Coffeen, E.D. Edwards, Newton, and Joppa. Illinois Power Holdings will acquire 4,119 MW of generation and also AER’s marketing and Homefield Energy retail businesses.

The stock of CWRC is currently owned by Ameren Energy Generating. The stock of JERR is currently owned by Electric Energy, in which Ameren Energy Generating holds an 80% ownership interest, with the remaining 20% ownership interest being held by non-affiliated Kentucky Utilities. Following consummation of the transaction: AER will be wholly-owned by Illinois Power Holdings and AER’s name will be changed to Illinois Power Resources Co. LLC; and Ameren Energy Generating will be wholly-owned by Illinois Power Resources and its name will be changed to Illinois Power Generating.

“There will not be any material changes in the level of quality of the transportation service provided by CWRC and JERR,” Dynegy told the STB. “Moreover, the transaction will not have an adverse impact on rail competition, as CWRC and JERR’s assets are each located in proximity to a different power plant, located more than 150 miles apart.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.