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Dynegy Proposes Divestiture Of Plants In Response To FERC Order Requiring Mitigation To OK Acquisition of GDF Suez Generation

December 29, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Dynegy has proposed to divest generation in response to a FERC order requiring mitigation of Dynegy's proposed acquisition of 8,731 megawatts of generation capacity from Engie (f/k/a GDF Suez)

See background here on what was originally the acquisition of the Engie plants by a Dynegy-Energy Capital Partners (Atlas) JV here. Dynegy since entered into a transaction to acquire Energy Capital Partners' interest in Atlas (details here)

EnergyChoiceMatters.com was first to report last week that FERC ordered mitigation in conditionally approving the acquisition, due to concentrations that would result within the COMED LDA in the PJM capacity market and within the SENE capacity zone in the ISO-NE capacity market

While Dynegy said in a response to FERC's order that FERC erred in its conclusions that the resulting concentrations raised competitive concerns, to the extent FERC is unpersuaded, Dynegy proposed certain divestitures as mitigation, including divestiture of generation capacity equal to or greater than the increase in its combined capacity in the COMED and SENE zones, and interim mitigation prior to the consummation of the divestiture of generation capacity, in the form of cost-based offer caps and/or restrictions on the retirement of units.

Dynegy did not propose specific plants that it intends to divest in its response to FERC

Regarding the SENE zone, Dynegy said that it would divest an amount of generation equal to or greater than the amount of capacity that Dynegy and ECP own in SENE, which is 224 MW.

Regarding the COMED LDA, Dynegy said that FERC's order did not take into account the recent sale of Dynegy's 50% interest in the 1,350 MW Elwood facility, which Dynegy said more than offsets the increase in capacity added through the acquisition of the GDF assets (which adds 327 MW in the zone)

While Dynegy said that FERC has previously said that Dynegy could rely on the sale of the Elwood facility as part of any required mitigation, to the extent FERC concludes that additional divestiture is required, Dynegy commits to divest at least 327 MW, equivalent to the capacity of the Calumet facility being acquired from GDF Suez, located in the COMED LDA. Dynegy did not propose any specific assets to divest to reach 327 MW

Dynegy committed that any divestitures would not be to any entities whose acquisition of such capacity would make them pivotal suppliers or which would result in screen violations for such zones.

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