AES Corp. (NYSE:AES) said July 14 that it has decided to retain DPL Inc.’s (DPL) 3,453 MW of generating assets, most of which is coal-fired capacity at several plants co-owned with other parties.
Of this capacity, 2,897 MW owned by the Dayton Power & Light (DP&L), a subsidiary of DPL, will be transferred to a separate affiliate of DPL by Jan. 1, 2017, as directed by the Public Utilities Commission of Ohio (PUCO) in DP&L’s Electric Security Plan (ESP). The commission had approved either the outright sale to a third party or parties of the Dayton assets, or a transfer of those assets to a non-regulated affiliate.
In light of a potential recovery of power prices, as well as PJM Interconnection capacity prices, AES said it believes that this business has additional value that can be captured by continuing to own and operate these generating assets. AES will provide additional details on its second quarter 2014 financial results conference call, scheduled for Aug. 7.
The Public Utilities Commission of Ohio on June 4 reversed itself and gave Dayton an extra year, to January 2017, to complete the sale of its capacity. The commission in September 2013 approved a deregulation plan for DP&L that set a May 31, 2017, deadline to sell the power plants. Then in March, the commission issued another order moving up that deadline to Jan. 1, 2016. But the utility protested, saying that the commission had misinterpreted its request and that a quick sale would harm its finances and potentially the value of the power plants.
Said the commission’s June 4 decision about why a schedule delay is needed: “The Commission notes that market conditions are inherently unpredictable and subject to significant fluctuations over time. We intend to provide DP&L with the flexibility to transfer its generation assets to an affiliate or to a third-party while retaining our oversight over the divestiture…. At the hearing in this case, DP&L witnesses testified that there are terms and conditions in certain bonds that significantly impede upon its ability to transfer its generation assets to an affiliate before Sept. 1, 2016, and, due to adverse market conditions, DP&L will not have sufficient cash flow to refinance the bonds before 2017. Therefore, a modified deadline of January 1, 2017, for the asset divestiture should alleviate any existing obstacles regarding the terms and conditions in DP&L’s bonds and its ability to refinance such bonds. Further, a deadline of January 1, 2017, should allow DP&L to obtain terms and conditions to divest its generation assets while ensuring that the assets are divested during the period of this electric security plan.”
DP&L owns outright the following plants – Tait Units 1-3 and diesels, Yankee Street, Yankee Solar, Monument and Sidney. DP&L’s jointly-owned coal plants/units are: Beckjord Unit 6, Conesville Unit 4, East Bend Unit 2, Killen, Miami Fort Units 7 and 8, Stuart and Zimmer. In addition, DP&L also owns a 4.9% equity ownership in Ohio Valley Electric, which has two coal-fired plants with a combined generation capacity of about 2,109 MW. DP&L’s share of this generation capacity is about 103 MW.
Duke Energy Kentucky (DEK) on June 16 requested Federal Energy Regulatory Commission approval to purchase DP&L’s 31% share of East Bend Unit 2. DEK is already the owner of the other 69% share. East Bend is a coal-fired facility with a single operating unit with a 600-MW summer rating. The unit is located in Boone County, Ky., and has been in commercial operation since 1981. DEK serves as the operator of the unit under the East Bend Unit 2 Operation Agreement, dated March 1981.