Wednesday, December 28, 2005

Dynegy pulls out of California

At least one energy company has decided that the costs and risks of doing business in California were too high and is leaving the Golden State.

Dynegy Inc. DYN today announced that it has entered into an agreement with NRG Energy, Inc. NRG through which the companies will each simultaneously purchase the others' interest in two jointly held entities that own power generation facilities in Illinois and California, respectively.

Under the terms of the purchase and sale agreement for the Illinois interests, Dynegy will acquire NRG's 50 percent ownership stake in the jointly held entity that owns the Rocky Road power plant, a 330-megawatt natural gas-fired peaking facility near Chicago. Pursuant to the purchase and sale agreement for the California interests, Dynegy will sell its 50 percent stake in WCP (Generation) Holdings LLC, a joint venture between Dynegy and NRG with ownership in power plants totaling approximately 1,800 megawatts in southern California, to NRG. As a result of the two transactions, Dynegy will also receive net cash proceeds of $160 million from NRG, subject to certain purchase price adjustments at closing.