Dynegy delayed on power plant buys as it provides extra data to FERC

Dynegy Inc. (NYSE: DYN) said Jan. 19 that the Federal Energy Regulatory Commission has requested additional information to process the applications filed with FERC in September 2014 for approval of Dynegy’s acquisition of Duke Energy Midwest Generation assets and retail business, and also the EquiPower Resources and Brayton Point Holdings assets.

“The company plans to respond fully within the 30-day period however, due to this request for additional information, we do not expect the transactions to close by the end of the first quarter 2015,” the company added. “Dynegy, Duke and Energy Capital Partners remain committed to closing the transactions as quickly as possible. The only regulatory approval remaining is from FERC.” Duke Energy Midwest is a subsidiary of Duke Energy (NYSE: DUK).

The addition of the Duke Energy Midwest, EquiPower and Brayton Point generation assets will bring Dynegy’s existing portfolio to nearly 26,000 MW.

Dynegy and Duke Energy had announced in August 2014 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, many of them coal-fired, and Duke Energy Retail Sales, the company’s competitive retail business in Ohio.

Dynegy in August 2014 also announced that it would buy various assets of Equipower and Brayton Point in a separate transaction from Energy Capital Partners, including these facilities: Milford, Lake Road, Dighton, Masspower, Liberty, Elwood, Richland, Stryker, Kincaid and Brayton Point.

FERC said in its Jan. 16 letter to Dynegy that it needs to perform and submit a Delivered Price Test for the PJM Interconnection market and the following submarkets: AP South; 5004/5005; and PJM East. In performing this Delivered Price Test, it should analyze the proposed transactions as occurring simultaneously and address the following:

  • The Delivered Price Test used in the model for studying the ISO New England (ISO-NE) market for the ECP Transaction was based on the mathematic average of eight nodes in ISO-NE. Provide a justification or explanation for any deviation from actual price data in the requested PJM model. Any price developed for PJM should be a reasonable representative for the PJM market.
  • Do not include, in the generation data set, generating units that have been canceled or will not be in service.
  • Provide support for the estimated marginal heat rates.
  • Clearly identify the source of the load data used, and note and justify any adjustments.

Also, provide a justification or explanation for the assertion that a 6.5% share of the PJM market is a de minimis market share, FERC told Dynegy.

Dynegy’s current subsidiaries produce and sell electric energy, capacity and ancillary services. The Dynegy Power LLC portfolio consists of about 6,078 MW of primarily intermediate and peaking facilities. The Dynegy Midwest Generation LLC portfolio consists of about 2,980 MW of primarily baseload plants. The Illinois Power Holdings LLC portfolio consists of around 4,062 MW of primarily baseload power plants.

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.