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Dynegy Selling Two PJM Peakers; Also Swaps Ownership Of Ohio Plants

February 24, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Dynegy announced several asset sales and other transactions in reporting earnings yesterday.

Dynegy has reached an agreement to sell two peaking facilities in PJM to LS Power for $480 million in cash ($378/kW). The assets to be sold include the Armstrong and Troy facilities totaling 1,269 MW. Proceeds will be used for debt reduction.

Dynegy separately reached an agreement with AEP to realign and consolidate the ownership of the Conesville and Zimmer Power Stations in Ohio. Dynegy agreed to sell its 40% ownership interest (312 MW) in Conesville Power Station and acquire AEP’s 25.4% ownership interest (330 MW)in Zimmer. No additional consideration will be paid to either party, however AEP will return a $58 million letter of credit previously posted by Dynegy to AEP. As a result, Dynegy will own 71.9% (971 MW) of the Dynegy-operated Zimmer Power Station, and will no longer have an ownership interest in Conesville. The overall capacity for the Conesville and Zimmer generating stations is 780 MW and 1,350 MW, respectively.

Concerning the transaction, AEP's CEO Nicholas Akins said, "AEP's long-term strategy has been to become a fully regulated, premium energy company focused on investments in infrastructure and energy innovations that benefit our customers. These transactions simplify the ownership structures for two of our remaining competitive generation assets as we continue the strategic evaluation to determine the future for those power plants."

AEP currently owns 2,725 MW of competitive generation in Ohio. After the transaction is complete, AEP would own 92 percent, or 1,461 MW, of the Conesville Plant; 595 MW of the Cardinal Plant; 603 MW of the Stuart Plant; and the 48 MW Racine Plant. Dayton Power & Light owns the remaining 129 MW of Conesville Unit 4.

Dynegy also said that the co-owner of Dynegy's Killen Station, AES, is involved in an electric security plan proceeding in Ohio in which AES has reached a settlement that, if approved, includes a plan to retire the Killen Station. Dynegy has agreed with AES to retire that plant by mid-2018. The Stuart Power Station, jointly owned by Dynegy, AES, and AEP, is also under advanced review for potential retirement. If both retirements occur, 2,900 MW of baseload coal generation would leave PJM. Dynegy continues to look to optimize its ownership structure in jointly owned units, Miami Fort and Zimmer Power Stations, Dynegy said

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