Dynegy (NYSE: DYN) and Energy Capital Partners (ECP) applied on Sept. 11 at the Federal Energy Regulatory Commission for approval of Dynegy’s buy of several ECP power plants under a deal first announced on Aug. 22.
“The Transaction will result in an overlap of generation between Dynegy and the ECP Utilities only within the very large ISO New England Inc. (‘ISO-NE’) and PJM Interconnection, L.L.C. (‘PJM) geographic markets,” said the application. “As explained in the attached affidavit and supporting studies prepared by Ms. Julie Solomon, Managing Director of Navigant Consulting, Inc., the ISO-NE market will remain unconcentrated after the Transaction, and the Competitive Analysis Screen is thus easily passed. In the PJM market the market share resulting from the Transaction and the change in market concentration will be very small (including after conservatively considering Dynegy’s pending transaction to acquire generation assets from Duke Energy Corporation), such that a Competitive Analysis Screen is not required. Thus, there are no horizontal market power concerns raised by the Transaction.”
The ECP companies that Dynegy would buy are:
- Dighton Power LLC, which owns and operates an approximately 180 MW (summer) natural gas-fired electric generating facility and related interconnection facilities located in Dighton, Massachusetts, within the ISO-NE balancing authority area (BAA).
- Elwood Energy LLC, which owns and operates an approximately 1,424 MW (summer) electric generating facility consisting of nine natural gas-fired turbine units and related interconnection facilities in Elwood, Illinois, within the PJM BAA.
- EquiPower Resources Management LLC, which is engaged as a power marketer in energy management and marketing activities throughout the United States. It does not own, operate, or control any generation or transmission facilities.
- Kincaid Generation LLC, which owns and operates an approximately 1,158 MW (summer) facility, consisting of two coal-fired units and related interconnection facilities located in Kincaid, Illinois, within the PJM BAA.
- Lake Road Generating Co. LP, which owns and operates an approximately 750 MW (summer) natural gas-fired, combined-cycle facility and related interconnection facilities located near Killingly, Connecticut, within the ISO-NE BAA.
- Liberty Electric Power LLC, which owns and operates an approximately 549 MW (summer) combined cycle, natural gas-fired facility and related interconnection facilities located in the Borough of Eddystone, Delaware County, Pennsylvania, within the PJM BAA.
- MASSPOWER, which owns and operates an approximately 255.6 MW (summer) gas- and oil-fired combined-cycle facility and related interconnection facilities located in Indian Orchard, Massachusetts, within the ISO-NE BAA.
- Milford Power Co. LLC, which owns and operates an approximately 507 MW (summer) gas- and oil-fired, combined-cycle facility and related interconnection facilities located in Milford, Connecticut, within the SWCT submarket of the ISO-NE BAA.
- Richland-Stryker Generation LLC, which owns and operates two facilities: the 447 MW (winter) Richland natural gas- and oil-fired facility in Defiance County, Ohio; and the 19-MW (winter) Stryker oil-fired facility in Williams County, Ohio. Both the Richland and Stryker facilities are located within the PJM BAA.
- Brayton Point Energy LLC, which owns and operates an approximately 1,544 MW (summer) facility consisting of three coal-fired units, one gas/oil-fired steam unit, four small diesel-fired units and related interconnection facilities located in Somerset, Massachusetts, within the ISO-NE BAA.
Companies say this deal not a concern in either relevant region
The application notes about this deal’s impact in the ISO-NE region: “Ms. Solomon concludes that the competitive effects of the Transaction in the ISO-NE market are very small and do not raise competitive concerns. This is not surprising given that Dynegy’s single generating facility represents only 1.6 percent of the approximately 31,000 MW of installed capacity in ISO-NE, and the ECP Assets represent roughly 10.2 percent of the installed capacity in ISO-NE.”
As for PJM, the application said: “As outlined in the Solomon Affidavit, Dynegy’s 1,606 MW of generation represents less than 0.9 percent of the approximately 184,000 MW of installed capacity in PJM. The ECP Utilities own 3,435 MW or only approximately 1.9 percent of installed capacity in PJM, and therefore the combined market share would be less than 2.8 percent.”
It added about PJM: “Ms. Solomon also considered whether there are any relevant submarkets in PJM that should be reviewed in connection with the Transaction. The only relevant submarket is PJM East where each of Dynegy and the ECP Utilities own a single generating plant. However, as shown in the table below, the combination of Dynegy’s 466 MW and the ECP Utilities’ 541 MW of capacity in PJM East together represent less than 3 percent of the approximately 39,000 MW of installed capacity in PJM East.”
The companies noted that new generation would ease any market concerns. “The entry of new generation in ISO-NE and PJM and the ownership of such generation by numerous independent entities show that market entry is not constrained. ISO-NE reports that there is more than 5,000 MW of ‘active’ generation in the interconnection queue. In PJM there is more than 40,000 MW of generation in the active interconnection queue, including almost 19,000 MW under construction. Almost 6,600 MW of new generation (including uprates at existing facilities) were offered into the PJM 2017/2018 Base Residual Auction.”
The interests in the ECP Utilities to be acquired by Dynegy in this transaction are currently owned by investment funds and entities controlled and managed by Energy Capital Partners II LLC.