Dive Brief:

• Dynegy this week announced it was shuttering 1,835 MW of coal capacity in the MISO market and searching for another 500 MW to close, citing flaws in the wholesale market design. 
• While MISO is working to fix market issues in Zone 4, Dynegy CEO Robert Flexon said in the company's Q1 earnings call that the generator is "outnumbered, outgunned" by competition from different utilities.
• Flexon said he is not confident MISO market reforms will make a difference, and added that 2,000 MW of demand had vanished from capacity markets this year.

Dive Insight:

Dynegy is not waiting for MISO to complete its market reforms process, and is instead pressing to mothball more than 2,000 MW of coal capacity. So far it has identified more than 1,800 MW, including Units 1 and 3 at the Baldwin Power Station and Unit 2 at the Newton Power Station. Another 500 MW could be shuttered, but the generator must find units which are not currently committed to serve.

"While MISO is doing every attempt they can to improve the design structure, we’re at outnumbered outgunned," Flexon told analysts yesterday. "We’re not optimistic that [market reforms] are going to make a big difference."

Dynegy has argued that out-of-state utilities offer their capacity into the annual capacity auction at little to no cost "since they are more highly compensated through their home state regulatory process, putting competitive generators at a tremendous disadvantage."

Flexon also said there was significantly less in demand in this year's capacity auction than last.  "If we had the same level of demand as last year, all of our units could have cleared, but 2,000 megawatts demand disappeared," he told analysts.

"Every year, it's something else with the way this capacity auction works and you just can't keep getting zero," he said. "So it is one where we decided take matters into our own hands. Let's just right-size the portfolio."

Last year, Dynegy announced the 465 MW Wood River Power Station would retire in June. In total, 2,800 MW of generation from Illinois will be shuttered, about 30% of the power generation capacity in Southern Illinois, the generator said.