Power company Dynegy (a mashup of "dynamic energy") has lost some of its dynamism in recent years, but is looking to get some of that energy back as a reorganized company. Dynegy provides wholesale power, capacity, and other services to a broad range of customers (utilities, cooperatives, municipalities and other energy operations) in about a dozen states in the Midwest, the Northeast, Texas, and on the West Coast. The company's power generation portfolio consists of about 50 power plants totaling about 27,000 MW of generating capacity. More than 60% of its power generation is from natural gas. In 2017 Dynegy agreed to be bought by Vistra Energy for $1.74 billion in an all-stock deal.
Change in Company Type
The purchase of Dynegy Energy by Vistra Energy unites two Texas-based power providers. Most of Vistra's generation capacity serves Texas, but Dynegy's plants are mostly in the Northeast and Midwest sections of the US. The companies are expected to save money and improve efficiency by combining their operations, which means reductions in headcount. The company is to be headquartered in Irving, Texas, where Vistra is based, while the Dynegy office in Houston will handle sales. The deal is expected to be finalized in 2018.
Dynegy has operated in six segments.
The PJM segment runs 23 power generation facilities in Ohio, Pennsylvania, Illinois, Virginia, West Virginia, and New Jersey totaling 13,510 MW of electric generating capacity. It accounts for more 50% of the company’s revenue.
The NY/NE segment has 11 power generation facilities in Massachusetts, Connecticut, Maine, and New York with some 6,500 MW of generating capacity. It generates about 20% of revenue.
Three generation facilities in Illinois comprise the MISO segment, which has about 1,900 MW of electric generating capacity. While operating in the MISO geography, the IPH unit runs five coal-fired power generation facilities with a generating capacity of about 3,500 MW. IPH accounts for about 20% of revenue while MISO generates about 10%.
In California, the CAISO segment, less than 5% of revenue, has two power generation facilities with about 1,200 MW of capacity.
The ERCOT segment, which came with the 2016 acquisition of Engie assets, operates six power generation facilities in Texas. They total about 4,700 MW of electric generating capacity.
Dynegy provides wholesale power, capacity and ancillary services to utilities, cooperatives, municipalities and other energy companies a dozen states in the Midwest, the Northeast, Texas, and the West Coast.
Sales and Marketing
Dynegy’s customers include RTOs and ISOs, integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial institutions, other power generators, and commercial end-users.
The company provides retail electricity to about 960,000 residential customers and about 42,000 commercial, industrial, and municipal customers.
Dynegy’s revenue rose for the fourth straight year in 2016, hitting $4.3 billion, a 12% increase from 2015. The company’s two biggest segments, PJM and NY/NE, posted gains of 28% and 20%, respectively, in 2016. Those increases were tempered by lower revenue in the MISO, IPH, and CAISO segments.
The company lost about $1.2 billion in 2016 compared to a $50 million profit in 2015. The difference came from about $760 million in higher impairment charges (related to the Baldwin and Stuart plants) in 2016 from and income in 2015 from a $460 million deferred tax valuation allowance, which the company could not claim in 2016.
Cash flow from operations jumped to more than $675 million in 2016 from $94 million in 2015.
In early 2017 Dynegy completed its $3.3 billion acquisition of Engie’s 9,000 MW power generation portfolio, which expanded its geographic reach and diversified its power generation capabilities. But with natural gas prices remaining low and a crushing debt load (some $9 billion), Dynegy sought refuge in its acquisition by Vistra Energy in a $1.7 billion all stock deal. The transaction, if finalized, would create a power generation of national scope while increasing its operations in Texas. The deal was expected to close in the second quarter of 2018.
Mergers and Acquisitions
In 2016 Dynegy acquired Energy Capital Partners' 35% interest in the Atlas joint venture which the two companies formed in February 2016 to purchase
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