Dive Brief:
- Dynegy and Vistra Energy Corp. have completed their merger following "overwhelming approval" from investors, and the combined entity now has more than 40,000 MW of installed capacity.
- The company will operate as Vistra Energy Corp., and claims to be the lowest-cost integrated power company in the industry.
- Vistra, which is the parent company of TXU Energy and Luminant, last year announced it would acquire Dynegy in an all stock deal that worked out to about a $1.74 billion offer. The deal was a sign of growing consolidation among independent power producers facing growing pressure in organized markets from more efficient combined-cycle facilities.
Dive Insight:
With coal, nuclear and even some older gas plants under pressure from more efficient combined-cycle facilities, companies have turned to economies of scale. Vistra Energy's combined presence stretches 12 states and serves 2.7 million residential customers.
More than 60% of the new company's generation is natural gas-fueled, and 84% is located in the major competitive markets of the Electric Reliability Council of Texas (ERCOT), PJM Interconnection and the New England ISO.
In a statement, the company said the the combination of Dynegy’s generation capacity and existing retail footprint with Vistra Energy’s integrated ERCOT model "creates the lowest-cost integrated power company in the industry and positions the combined company as the leading integrated retail and generation platform throughout key competitive power markets in the United States."
Vistra said it expects to produce approximately 50% of gross margin from more stable capacity payments and retail operations, as well as approximately 50% of adjusted EBITDA from the ERCOT market.
Earlier this year, Texas regulators had said the companies would need to sell 1,281 MW of Texas generation in order to win approval for the merger. However, the Public Utilities Commission recently gave conditional approval after altering the proposed order to avoid the divestment requirement.
