Dynegy offers to build 6,300 MW of gas capacity in Ohio in place of AEP, FirstEnergy plans

Dynegy (NYSE: DYN) said Jan. 12 that it has made two counter-proposals that it believes will save Ohio consumers billions of dollars over the next eight years, promote and protect Ohio jobs, aid in Ohio’s compliance with the Clean Power Plan, and encourage consumer and business growth.

Each proposal is in response to separate plans offered by FirstEnergy (NYSE: FE) and American Electric Power (NYSE: AEP) to the Public Utilities Commission of Ohio that would protect the short-term futures of mostly coal-fired capacity (the FirstEnergy plan also includes the Davis-Besse nuclear plant in Ohio). Each company wants approval of a power purchase agreement where it would buy power from these plants for a fixed term on behalf of ratepayers in this deregulated state. The two utility giants say the PPAs would provide rate stability.

Dynegy said its first proposal saves Ohio consumers and businesses $5 billion by providing the same amount of power promised under the FirstEnergy and AEP power purchase agreements (PPAs) at lower prices, $2.5 billion each in the FirstEnergy and AEP territories, over the eight-year term of the proposed PPAs. The power provided by Dynegy will be generated by Ohioans, at Ohio plants, for Ohioans, the company pointed out. Dynegy owns approximately 5,400 MW at 10 different sites in Ohio, more than FirstEnergy’s 5,300 MW, employs hundreds of Ohio workers, and is the third largest retail electric provider in the state. Furthermore, Dynegy said its power plants use the region’s vast fuel supplies, including its abundant and clean natural gas, providing further benefits to the state.

Alternatively, if the PUCO agrees on paying the out-of-market rates requested by FirstEnergy and AEP, Dynegy believes that Ohioans should get something for their money. At the proposed rates, Dynegy said it could replace the plants being subsidized under the FirstEnergy and AEP PPAs by building 6,300 MW of new, clean natural gas-fired generation in Ohio, bringing new jobs to the state, increasing economic activity and development, and providing reliability and resource adequacy for decades. This new generation would use natural gas from Ohio’s plentiful supply to meet the state’s electricity needs. Further, this investment would help Ohio meet its obligations under the U.S. EPA’s greenhouse-gas-reducing Clean Power Plan and improve reliability rather than relying on assets staying around longer than their useful life.

“If the PUCO and other elected officials in the state are interested in protecting consumers’ and business’ long-term interests while ensuring long-term reliability and price stability, then in lieu of accepting FirstEnergy’s and AEP’s proposals for long term power purchase agreements, the PUCO should adopt one of the alternate, superior proposals Dynegy is putting forth,” said Robert C. Flexon, President and CEO of Dynegy. “The PUCO could also institute a request for proposal process containing the same arrangements in the AEP and FirstEnergy PPA proposals. Exelon’s recent proposal is also thoughtful, and Dynegy agrees with Exelon that this process should be competitive.”

Flexon added: “We believe the counter-proposals are uniformly better for Ohio consumers and businesses than the AEP and FirstEnergy PPAs, keeping and creating jobs in the state that stimulate economic growth and development rather than weakening Ohio’s competitive position. We ask for serious consideration from the PUCO and Ohio elected and state officials for our proposals.”

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.