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Industry News

Dynegy Announces Plan to Retire Coal-Fired Power Plant in Illinois

LCG, November 6, 2015-Dynegy Inc. announced Wednesday its plan to retire its 465-MW Wood River Power Station in Alton, Illinois in mid-2016. Dynegy stated that the retirement of the two, coal-fired units is driven by plant economics that result from a poorly designed wholesale capacity market in Central and Southern Illinois that does not allow competitive generators to recover costs.

Dynegy plans to file a retirement notice with Midcontinent Independent System Operator, Inc. (MISO) by next month. Dynegy anticipates that MISO will complete its reliability review in the first quarter of next year. If MISO determines the plant is not needed for reliability, Dynegy expects the retirement to occur in mid-2016. The two units entered commercial operation in 1954 and 1964.

Dynegy believes the MISO capacity auction is flawed because it allows regulated utilities from surrounding states to bid their capacity into the auction at little to no cost, as these regulated utilities receive higher guaranteed compensation from their respective state-regulated markets. In contrast, Central and Southern Illinois market participants operate in a deregulated, competitive market and must rely on the MISO capacity auction for fair compensation. Combining generating assets from these two different regulatory regimes into the same capacity auction puts all generating units in Central and Southern Illinois at financial risk, regardless of fuel type.

Dynegy's president and CEO stated, "Dynegy is committed to working with MISO, the state of Illinois, Union leadership and all stakeholders to redesign the MISO capacity market to one that properly functions and fairly compensates competitive generators or alternatively, to transition Illinois fully into PJM. Otherwise, all generating plants in the MISO portion of Illinois will face a future of financial challenge. If Wood River was located in the PJM market, like Dynegy's Northern Illinois generating units, it is unlikely this retirement would be occurring."
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