Dive Brief:
- Federal regulators have requested additional information on Duke Energy's sale of its Midwest generation fleet to Dynegy for $2.8 billion, slowing the deal and causing Duke to revise its timeline.
- Announced last summer, the companies had proposed to close the transaction in the first quarter of 2015 but FERC has signaled it has concerns about competitive impacts.
- Charlotte Business Journal reports FERC is largely concerned with Dynegy's side of the deal, and the consequences of the company's potential market share on the PJM Interconnection.
Dive Insight:
In a Jan. 16 letter, federal regulators said Dynegy's application to acquire Duke's retail electric business was "deficient" and would require more details, as would a bid by Dynegy to also acquire generation from Energy Capital Partners.
Following the deals, Dynegy would control 6.5% of the PJM generation. FERC said the companies had failed to show that 6.5% market share qualified as a minimal market impact and asked for a Delivered Price Test.
FERC also asked the companies to explain whether Duke's public utilities and the company's retail arm will continue to make sales exclusively under the terms of their market-based rate tariffs and other cost-based rate schedules after the deal closes. "Please explain how Dynegy’s customers will be protected from an adverse effect on rates from the Duke Transaction after that transaction closes," FERC said.
"It is not unusual for the FERC to request additional information in a deal of this sort," Duke spokesman Tom Williams told the Charlotte Business Journal. "We are confident that the sale will be approved, but the timing has been pushed back."
In August, Dynegy announced its intention to buy Duke Energy's retail electricity business in Ohio, Pennsylvania and Michigan and the utility's stake in 10 Midwest power plants totaling 6,100 MW in the PJM Interconnection's footprint. The companies had hoped to close the transaction late last year or in the first quarter of 2015.
