Dynegy Divests Assets as Part of Engie Deal

Dynegy this week announced it will sell three more power plants to reduce debt as it works to satisfy an agreement with the Federal Energy Regulatory Commission (FERC) reached after the company’s $3.3 billion purchase of French energy giant Engie’s U.S.-based assets earlier this year.

Houston, Texas-based Dynegy said it has agreed to sell its 625-MW Lee Energy Facility in Dixon, Ill., in the PJM ComEd region to an affiliate of The Woodlands, Texas-based Rockland Capital for $180 million. It also has agreed to sell two natural gas-fired plants totaling 310 MW in Dighton and Milford, Mass., in the Southeastern New England (SENE) capacity zone in ISO-NE to Starwood Energy Group Global of Greenwich, Conn., for about $119 million.

The July 12 announcement came just hours after Dynegy said it closed the sale of two other facilities to New York-based LS Power for $480 million, a transaction originally announced in February, a few weeks after the deal with Engie was completed. LS Power purchased Dynegy’s Armstrong Energy Facility in Shelocta, Penn., and the Troy Energy Facility in Luckey, Ohio. Both units are in the PJM territory, and together have a generation capacity of 1,269 MW.

Dynegy, based in Houston, Texas, has both sold and acquired several power plants in numerous deals over the past few months. Courtesy: Dynegy

Dynegy, based in Houston, Texas, has both sold and acquired several power plants in numerous deals over the past few months. Courtesy: Dynegy

Robert Flexon, Dynegy’s president and CEO, in a statement after the Engie deal said the agreement “[adds] strategic assets in key markets and leverages our low-cost scalable operating platform, furthering our position as the low-cost operator among our peers.” Dynegy originally announced in February 2016 it would purchase Engie’s U.S. assets as part of a joint venture with Energy Capital Partners (ECP). Dynegy and ECP formed the Atlas joint venture, though Dynegy later bought out ECP’s 35% interest in the JV.

FERC raised competitive concerns about capacity markets in PJM and ISO-NE in December 2016 regarding the Engie-Dynegy deal. The agency asked Dynegy to submit a plan to divest some capacity in those markets within six months of the deal’s closing as part of the agency’s approval process.

Dynegy’s acquisition of Engie’s U.S. assets adds 17 power plants, most of them natural gas-fired, and more than 9,000 MW of generation to its portfolio. The additions make Dynegy one of the nation’s largest independent producers of electricity.

Dynegy now owns more than 31,000 MW of generating capacity and has tripled its power output over the past four years.

-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)