Duke Energy Will Exit Commercial Generation Market in Midwest

Duke Energy announced on Feb. 17 that it was preparing to sell its interests in 13 power plants in the Midwestern U.S. and exit the commercial generation market in that region.

“Our merchant power plants have delivered volatile returns in the challenging competitive market in the Midwest,” said Lynn Good, president, CEO, and vice chairman of Duke Energy. “This earnings profile is not a strategic fit for Duke Energy, and we have begun a process to exit the business. We will be working closely with employees and community leaders during this transition to ensure a smooth process for all stakeholders.”

The 13 plants total about 6.6 GW of capacity. Eleven are in Ohio, one is in Illinois, and one is in Pennsylvania. All sell their power into the PJM wholesale market and are either wholly or partly owned by Duke. About 600 plant employees and contractors will be affected.

Duke insists the plants are still competitive, despite the move. The transition process is expected to take 12 to 18 months, and Duke will take an estimated pre-tax impairment charge of $1 billion to $2 billion in the first quarter of 2014. The sale is expected to bring around $2 billion, according to analysts.

The move comes after Ohio regulators rejected a Duke request for a $729 million rate increase on Feb. 13. A Duke spokesmen told Bloomberg that the ruling contributed to the company’s decision, though it was not the only factor.  Duke began working with Citigroup on a possible sale last year.

The move will not affect Duke’s regulated utilities in Ohio and Kentucky. The affected plants are:

  • Beckjord Station (coal), New Richmond, Ohio
  • Beckjord Station (oil), New Richmond, Ohio
  • Conesville Station (coal), Conesville, Ohio
  • Dicks Creek (gas), Middletown, Ohio
  • Fayette Energy Facility (gas), Masontown, Penn.
  • Hanging Rock Energy Facility (gas), Ironton, Ohio
  • Killen Station (coal), Wrightsville, Ohio
  • Lee Energy Facility (gas), Dixon, Ill.
  • Miami Fort Station (coal), North Bend, Ohio
  • Miami Fort Station (gas), North Bend, Ohio
  • Stuart Station (coal), Aberdeen, Ohio
  • Washington Energy Facility (gas), Beverly, Ohio
  • Zimmer Generating Station (coal), Moscow, Ohio

—Thomas W. Overton, associate editor (@thomas_overton, @POWERmagazine)