FERC conditionally approves Dynegy's $3.3B purchase of Engie fossil fuel plants

Dive Brief:

The Federal Energy Regulatory Commission has conditionally approved Dynegy's $3.3 billion deal for almost 9,000 MW of generation owned by Engie, though regulators say market mitigation measures will be necessary to ensure there are no competitive concerns.
SNL Energy reports FERC has concerns about the deal's impacts on competition in the PJM and ISO New England capacity markets.
Dynegy and Energy Capital Partners formed joint venture, Atlas Power, earlier this year, aimed at acquiring 8,731 MW in the deal, but Dynegy subsequently bought ECP out.

Dive Insight:

FERC has directed Dynegy to complete additional market analysis, largely over concerns about the upcoming 2020/2021 base residual auction in the Commonwealth Edison delivery area, but otherwise has said the deal can go through.

Importantly, the commission determined there would be no impact on power rates, noting that the applicants said that the deal "cannot affect any of the rates of applicants’ affiliates under their cost-based contracts."

Dynegy and Energy Capital Partners created a joint venture named Atlas Power to acquire the generating capacity, located in the ERCOT, PJM, and ISO-New England markets, representing all of Engie's entire fossil fuel portfolio.

Then, in June, Dynegy said it had agreed to buy out ECP’s 35% stake in the joint venture for $375 million, well below the original buyout floor price of $974 million. That buyout, however, did not impact ECP’s commitment to buy $150 million of Dynegy common stock at the close of the ENGIE transaction.

The deal would grow Dynegy's reach into regulated markets and gives it a 35,000 MW portfolio. Following completion of the deal, 43% of Dynegy's capacity would be in the PJM market, 15% in New England, 18% in the Midwest, and 13% in ERCOT. The company also has smaller amounts of generation in New York and California.

Dynegy President and CEO Robert Flexon has called the deal "a compelling value for our shareholders as it is the right assets, in the right markets, at the right price and unlocks considerable synergy value by utilizing our proven integration model and corporate platform."