Duke seeks FERC clearance related to power plant sale to Dynegy

Duke Energy Ohio asked the Federal Energy Regulatory Commission in a Sept. 11 filing to declare that Section 305(a) of the Federal Power Act is not a bar to an internal corporate reorganization that will be done just ahead of a sale of several power plant interests to Dynegy (NYSE: DYN).

This internal reorganization will result in the upstream distribution of ownership interests in Duke Energy SAM LLC (Duke SAM) from Duke Energy Ohio to Cinergy Corp. Duke Energy Ohio requested an order by Nov. 10, so it can complete the next step, which is the sale of the related power plant interests to Dynegy.

Duke Energy Commercial Asset Management LLC (DECAM) is a power marketer authorized to make wholesale sales of electric capacity, energy, and certain ancillary services at market-based rates. DECAM owns all of the membership interests in the “Project Companies” through DECAM Coal Gen FinCo LLC (DECAM Coal) and DECAM Gas Gen FinCo LLC (DECAM Gas).

DECAM Coal owns all of the membership interests of these Project Companies:

  • Duke Energy Conesville LLC, which owns a 40% interest in Unit 4 at the Conesville coal plant, a 780-MW (summer rating) facility in Ohio;
  • Duke Energy Killen LLC, which owns a 33% interest in the Killen Station, an approximately 618 MW (summer rating) coal-fired facility in Ohio;
  • Duke Energy Miami Fort LLC, which owns: a 64% interest in Units 7 and 8 at the Miami Fort Station in Ohio, which are coal-fired units with a combined capacity of about 1,020 MW (summer rating); and the Miami Fort CT Station, an approximately 57 MW (summer rating) oil-fired facility at the same site;
  • Duke Energy Stuart LLC, which owns a 39% interest in the Stuart Station, an approximately 2,317 MW (summer rating) coal-fired facility in Ohio; and
  • Duke Energy Zimmer LLC, which owns a 46.5% interest in the W. H. Zimmer Generating Station, an approximately 1,300 MW (summer rating) coal-fired facility in Ohio.

DECAM Gas owns all of the membership interests of these Project Companies:

  • Duke Energy Dicks Creek LLC, which owns and operates an approximately 136 MW (summer rating) natural gas-fired facility in Ohio;
  • Duke Energy Fayette II LLC, which owns and operates an approximately 628 MW (summer rating) natural gas-fired facility in Pennsylvania;
  • Duke Energy Hanging Rock II LLC, which owns and operates an approximately 1,252 MW (summer rating) natural gas-fired facility in Ohio;
  • Duke Energy Lee II LLC, which owns and operates an approximately 568 MW (summer rating) natural gas-fired facility in Illinois; and
  • Duke Energy Washington II LLC, which owns and operates an approximately 626 MW (summer rating) natural gas-fired facility in Ohio.

“The internal corporate reorganization that is the subject of this petition will occur shortly before a related transaction, which we describe here for context,” said the Sept. 11 filing. “The related transaction is the subject of a concurrent application, which is being filed under Section 203(a) of the FPA by DECAM and the Project Companies, together with Duke Energy Retail Sales, LLC (‘Duke Retail’), and Dynegy Resource I, LLC (‘Dynegy Resource I’). That related transaction will result in the acquisition by Dynegy Resource I of all of the membership interests of DECAM from Duke SAM and all of the membership interests of Duke Retail from Duke Energy Commercial Enterprises, Inc. (the ‘Related Transaction’). Upon consummation of the Related Transaction, Duke Retail, DECAM and the Project Companies will be indirect wholly owned subsidiaries of Dynegy Inc., while Duke SAM will remain a subsidiary of Cinergy.”

Dynegy and Duke Energy (NYSE: DUK) had announced on Aug. 22 that Dynegy will acquire Duke’s non-regulated Midwest Commercial Generation Business for $2.8bn in cash, which includes ownership interests in 11 power plants and Duke Energy Retail Sales, the company’s competitive retail business in Ohio.

“This transaction is an important milestone in our strategy to exit the merchant generation business,” said Marc Manly, president of Duke Energy’s Commercial Businesses, at the time. “In the coming months, we will continue to safely operate these plants and work closely with Dynegy to obtain the regulatory approvals necessary to close the transaction. We will also be working with employees and community leaders to ensure a smooth transition for all stakeholders.”

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.