Dive Brief:

• Generation company Dynegy Inc. has announced plans to retire its coal-fired 465-MW Wood River Power Station in Alton, Ill., in the middle of next year.
• The Wood River station includes two coal-fueled units placed into commercial operation in 1954 and 1964.
• Dynegy cited a "poorly designed wholesale capacity market" in parts of Illinois as the reason for the move. The generator says the market design is keeping competitive plants from recovering costs when they compete against regulated utilities in the Midcontinent ISO.

Dive Insight:

Dynegy's statement announcing the closure of Wood River includes an interesting if-then statement:

"If Wood River was located in the PJM market, like Dynegy’s Northern Illinois generating units, it is unlikely this retirement would be occurring,” President and CEO Robert Flexon said in a statement.

Dynegy said the decision largely rests on market design in the Central and Southern Illinois areas, which are MISO territory. These markets, Dynegy said, do not allow competitive generators to recover costs. The company said MISO's capacity auction 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." 

Central and Southern Illinois market participants operate in a state with a deregulated competitive framework and must rely on the MISO capacity auction for fair compensation, unlike their regulated counterparts, Dynegy said. 

"Mixing these two regulatory regimes together in the same capacity auction puts all generating units in Central and Southern Illinois at financial risk, regardless of fuel type, shifting jobs and the economic benefits of hosting generating plants from Central and Southern Illinois to neighboring states," the company said.

​Dynegy's Flexon thanked the plant's staff for decades of service, and said the company remains committed to working with MISO and Illinois to redesign the capacity market. "Otherwise, all generating plants in the MISO portion of Illinois will face a future of financial challenge," Flexon said. 

According to SNL data, Dynegy has 10 coal-fired plants in Illinois totaling more than 8,000 MW of capacity.

Dynegy will file a retirement notice with MISO by Dec. 1, which should trigger a reliability review. If MISO determines the plant is not needed for reliability, Dynegy said it will shutter the plant in mid-2016.