HOUSTON--(BUSINESS WIRE)--The Public Utilities Commission of Ohio (PUCO) staff has once again supported anti-market subsidies to a large investment grade company, the cost of which will be borne by Ohio residents and businesses in favor of AEP shareholders. PUCO staff today reached an eight-year agreement with AEP on an above market power purchase agreement (PPA) that guarantees power prices significantly higher than today’s market prices. This agreement, along with the one with FirstEnergy agreed to on December 1, 2015, will result in higher power costs for the citizens and businesses of Ohio for years to come.
Similar to FirstEnergy, recent publicly-available information reveals that AEP has been awarded more than $1.2 billion in revenues over the next three planning years through the PJM Capacity Auction, with all of the generating plants covered by the PPA agreement receiving awards. This amount is more than $660 million over and above the amount expected at the time of AEP’s original subsidy request. And, as part of the Capacity Auction results, AEP’s plants are now obligated to run through May 31, 2019 even without the PPAs, meaning the risks of near-term retirements at these facilities are virtually nonexistent.
Dynegy (NYSE: DYN) co-owns the Conesville, Stuart, and Zimmer Power Stations with AEP, which are included in AEP’s PPA agreement with the PUCO. Dynegy, while having an ownership share of these plants will not receive any of the above market revenues from the proposed AEP PPAs.
“Ohio has thrived through its competitive retail and wholesale markets, which AEP favored when they were adopted. This ill-advised action of the PUCO staff only hurts the citizens and competitive profile of Ohio in the long run,” said Robert C. Flexon, President and CEO, Dynegy Inc. “Dynegy will continue to fight for market-based policies that treat all forms of power generation equally through advocacy and litigation, if necessary, to prohibit these power purchase agreements from being enacted. Public policy should always put the interests of Ohioans first, not those of AEP shareholders. We continue to strongly encourage the PUCO commissioners to oppose and vote down this adverse anti-market public policy.”
We are committed to leadership in the electricity sector. With nearly 26,000 megawatts of power generation capacity and two retail electricity companies, Dynegy is capable of supplying 21 million homes with safe, reliable and economic energy. Homefield Energy and Dynegy Energy Services are retail electricity providers serving businesses and residents in Illinois, Ohio and Pennsylvania.
Forward Looking Statements
This press release contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” particularly those statements concerning Dynegy’s beliefs about PUCO’s relationship with Ohio residents and businesses, the proposed AEP PPAs, AEP’s obligations resulting from the Capacity Auction, Ohio’s retail and wholesale markets and Governor Kasich’s position. These statements are based on the current expectations of Dynegy’s management discussion of risks and uncertainties that could cause actual results to differ materially from current projections, forecasts, estimates and expectations of Dynegy is contained in Dynegy’s filings with the Securities and Exchange Commission (the “SEC”). Specifically, Dynegy makes reference to, and incorporates herein by reference, the section entitled “Risk Factors” in its 2014 Form 10-K and subsequent Form 10-Qs. In addition to the risks and uncertainties set forth in Dynegy’s SEC filings, the forward-looking statements described in this press release could be affected by the following, among other things, (i) the future benefits of the proposed AEP PPAs; (ii) the industry may be subject to future regulatory or legislative actions, including environmental, that could adversely affect Dynegy; and (iii) Dynegy may be adversely affected by other economic, business, and/or competitive factors. Any or all of Dynegy’s forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, many of which are beyond Dynegy’s control.