Dynegy Inc. (NYSE: DYN) reported in its Nov. 2 quarterly Form 10-Q report that it recently retired one unit at the Newton coal plant in Illnois, with a big coal shutdown due next year at the 1,488-MW Brayton Point plant in Massachusetts.
On May 3, Dynegy had announced the shutdown of Units 1 and 3 at its coal-fired Baldwin facility in Baldwin, Illinois, over the next year. This decision was made after the units failed to recover their basic operating costs in the most recent Midcontinent ISO auction. On Oct. 17, it mothballed Baldwin Unit 3 (630 MW). Due to bilateral sales of incremental capacity for Planning Year 2017-2018, Dynegy will continue to operate Baldwin Unit 1 through the next Planning Year.
A plant value model resulted in a fair value of the Baldwin facility of $97 million, resulting in an impairment charge of $645 million recorded to Impairments in Dynegy’s unaudited consolidated statements of operations for the nine months ended Sept. 30, 2016.
For the coal-fired Wood River plant (465 MW) in Illinois, in the third quarter of 2015, Dynegy impaired the book value of the facility and recorded a charge of $74 million to Impairments in unaudited consolidated statements of operations for the three and nine months ended Sept. 30, 2015. As of June 1, 2016, the Wood River facility has been retired.
Dynegy retired the coal-fired Newton Unit 2 (615 MW) in Illinois on Sept. 15, 2016. The FGD systems construction project at Newton was terminated. “This decision was made after Newton failed to recover its basic operating costs in the most recent MISO auction, in addition to a low power pricing environment and significant maintenance and environmental expenditures required to appropriately maintain the facility,” said Dynegy.
The Brayton Point facility is expected to be retired in the ISO New England region in June 2017.
Upon the completion of the Hennepin to PJM pseudo-tie and the planned retirements and shutdowns, Dynegy’s Coal segment will include 5,799 MW of generation capacity, of which 1,653 MW will operate in MISO and 4,146 MW will operate in PJM.
As of Oct. 12, 2016, excluding Brayton Point, the non-operated jointly-owned generating units, and the planned shutdowns, Dynegy’s expected coal requirements for 2016 are fully contracted and 98% priced. Its forecasted coal requirements for 2017, excluding the planned retirements and shutdowns, as well as the non-operated jointly-owned generating units, are 80% contracted and 78% priced. Coal transportation requirements are fully contracted for 2016 and 99% contracted for 2017. Coal transportation requirements are approximately 69% contracted for 2018 to 2020. A new long-term coal transportation agreement for the Kincaid facility in Illinois was completed in 2015. The contract, which begins in 2017, reflects a reduction from the 2016 rate.