CHARLOTTE, N.C., Aug. 22, 2014 /PRNewswire/ -- Duke Energy today 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.
"This transaction is an important milestone in our strategy to exit the merchant generation business," said Marc Manly, president of Duke Energy's Commercial Businesses. "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."
"These power plants have been important to Duke Energy and our Midwest customers for many years, and I am proud of the employees who have operated these plants well in challenging market conditions," said Lynn Good, president, CEO and vice chairman of Duke Energy.
"The Duke Energy employees at these plants are committed, hardworking men and women and we look forward to engaging their expertise and talents as we grow our company," said Dynegy's President and CEO Robert C. Flexon. "In addition, we intend to honor the terms of the collective bargaining agreements at the plants."
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 megawatts. 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.
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. Use of the proceeds is being evaluated. The transaction is expected to be accretive to shareholders by 2016.
The Duke Energy Ohio and Kentucky and Duke Energy Indiana regulated utilities are not a part of the transaction.
The company began the process to exit its Midwest Commercial Generation Business in February 2014.
Duke Energy's financial advisors are Citigroup and Morgan Stanley. Bracewell & Giuliani is the company's legal advisor.
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