Dive Brief:
- Dynegy's Illinois coal fleet is feeling financial pressure, and the company's CEO told Midcontinent ISO stakeholders that the grid operator is not properly valuing the generation.
- Coal facilities in Illinois, of which Dynegy owns nine, have been losing revenue to renewables and cheap natural gas, with some facilities requesting assistance from state lawmakers to remain profitable.
- Dynegy is under scrutiny after the results of a MISO auction revealed in April showed capacity prices had reached $150/MWd, significantly higher that the previous year.
Dive Insight:
Dynegy owns 7 GW of coal-fired generation in Illinois, but the company said the Midcontinent grid operator is not properly valuing its assets.
"Under the current [market] construct, we do not belong there. It does not value coal generation," Dynegy CEO Robert Flexon told stakeholders, Argus reported. With cheap gas and subsidized wind power cutting into revenues, "you have to get your compensation in other ways," Flaxon said.
The company is looking at shifting some of its generation into the PJM market, which recently revamped rules to provide higher payments to generators that meet strict performance and fuel supply standards.
Dynegy is also under scrutiny following MISO's capacity auction, which saw prices in Zone 4 rise from about $16.75 per megawatt-day to $150. The results prompted Illinois Attorney General Lisa Madigan and consumer advocate Public Citizen to ask federal regulators to halt a rate increase, believing Dynegy may have manipulated the market by withholding some capacity.
Dynegy has said it bid all of its capacity and did nothing to impact the auction results.
