Dynegy Inc. (NYSE:DYN) said April 2 that has finalized its acquisition of Duke Energy’s (NYSE: DUK) commercial generation assets and retail business in the Midwest.
The Duke assets include a seven million megawatt-hour (MWhr) retail portfolio and 11 generating stations, capable of generating 6.1 GW into the PJM Interconnection power market. The acquisition price was $2.8 billion in cash at closing.
The company on April 1 had completed its acquisition of EquiPower Resources Corp. and Brayton Point Holdings LLC from Energy Capital Partners. With all of these transactions now completed, Dynegy now owns nearly 26,000 MW of generating capacity in eight states.
“The EquiPower and Duke acquisitions are transformational for Dynegy, ushering in a new era of substantial scale, and geographic and fuel diversity,” said Dynegy President and Chief Executive Officer Robert C. Flexon. “We now have a meaningful presence in three of the best markets in the country and substantial fuel diversity across our portfolio. Additionally, our PJM retail business is now fully backed by generation, providing a platform for growth.”
Dynegy has raised its projection for synergies from $40 million to $100 million and announced it was allocating $100 million of capital to reduce the equity that would have been issued under the original Energy Capital Partners transaction terms.
The transactions have doubled Dynegy’s generating capacity and are expected to increase annual generation from about 60 million MWhrs to an estimated 115 million MWhrs. Scale will drive productivity gains for the Dynegy platform, and overhead costs per MWh generated are expected to fall by 35%. With the higher levels of capacity contracting in PJM and ISO New England, the company will also benefit from improved visibility and predictability of cash flows. PJM and ISO-NE capacity payments will represent 25% of the combined company’s gross margin in 2015 compared to 11% today as a result of quadrupling the size of the PJM fleet and increasing the size of the New England fleet seven-fold.
The newly-acquired Duke assets are:
- Conesville Unit 4, Conesville, Ohio, 312 MW (40% ownership), coal;
- Dicks Creek, Monroe, Ohio, 153 MW, gas;
- Fayette, Masontown, Pa., 649 MW, gas;
- Hanging Rock, Ironton, Ohio, 1,296 MW, gas;
- Killen, Manchester, Ohio, 204 MW (33% ownership), coal;
- Lee, Dixon, Ill., 712 MW, gas;
- Miami Fort Units 7 and 8, North Bend, Ohio, 653 MW (64% ownership), coal;
- Miami Fort CT, North Bend, Ohio, 68 MW, gas;
- Stuart, Aberdeen, Ohio, 904 MW (39% ownership), coal;
- Washington, Beverly, Ohio, 648 MW, gas; and
- Zimmer, Moscow, Ohio, 628 MW (47% ownership), coal.