Duke Energy to sell non-regulated Midwest generation business to Dynegy

Duke Energy recently announced Dynegy will buy its non-regulated Midwest Commercial Generation Business for $2.8 billion in cash, which includes ownership interests in 11 power plants and Duke Energy Retail Sales, the company's competitive retail business in Ohio.

The completion of the transaction is conditioned on approval from the Federal Energy Regulatory Commission, the expiration of the waiting period under the Hart-Scott Rodino Act, and the release of certain credit support obligations. Closing is expected to occur in three to six months.

The Midwest generation business includes 11 merchant power plants with a capacity of approximately 6,100 MW. The plants are dispatched into the PJM wholesale power market and equipped with significant environmental controls. The plants are fully owned or partially-owned by Duke Energy Ohio and reported in the company's Commercial Power business unit. 

Nine of the power plants are located in Ohio; one is in Illinois and one in Pennsylvania. Dayton Power & Light and American Electric Power's ownership interest in some of the power plants is not included in this transaction.

Marc Manly, president of Duke Energy's Commercial Businesses said, “In the coming months, we will continue to safely operate these plants and work closely with Dynegy to obtain the regulatory approvals necessary to close the transaction. We will also be working with employees and community leaders to ensure a smooth transition for all stakeholders.”

Dynegy's President and CEO Robert C. Flexon said the Duke Energy employees at these plants “are committed, hardworking men and women” and the company is looking forward to engaging their expertise and talents. 

As a result of this announcement, in the third quarter Duke Energy will recognize an approximate $500 million pre-tax reversal of the $1.4 billion impairment previously recognized in 2014. The transaction is expected to be accretive to shareholders by 2016.