Dynegy Inc. (NYSE: DYN), based in Houston, Texas, United States, is a large owner and operator of power plants and a player in the natural gas liquids and coal business. The corporate headquarters are in Suite 5800 in the Wells Fargo Plaza at 1000 Louisiana Street in Downtown Houston.[4]
Once known as "The Natural Gas Clearinghouse," Dynegy adopted the "New Economy" branding in 1998, after which the company structured itself in a manner similar to Enron, launching several business ventures, including an online trading platform and broadband communications services, which could be misconstrued of those of its larger rival.
The company was dubbed the "king of coal" by the National Environmental Trust.
Dynegy Inc. (Dynegy), incorporated in 2007, is a holding company and conducts the business operations through its subsidiaries. Dynegy’s primary business is the production and sale of electric energy, capacity and ancillary services from the fleet of 17 operating power plants in six states totaling approximately 11,800 megawatts of generating capacity. The Company sells electric energy, capacity and ancillary services on a wholesale basis from its power generation facilities. Its customers include Regional Transmission Organization (RTOs) and Independent System Operators (ISOs), integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial participants, such as banks and hedge funds, and other power generators. Dynegy operates in three business segments: Midwest segment (GEN-MW), West segment (GEN-WE) and Northeast segment (GEN-NE). Its wholly owned subsidiary is Dynegy Holdings Inc. (DHI).
Midwest Segment
GEN-MW consists of eight facilities in Illinois and one in Pennsylvania with a total generating capacity of 5,088 megawatts. As of December 31, 2010, GEN-MW operated entirely within the Midwest Independent Transmission System Operator (MISO) or the PJM Interconnection, LLC (PJM). The MISO market includes all of Wisconsin and Michigan and portions of Ohio, Kentucky, Indiana, Illinois, Nebraska, Kansas, Missouri, Iowa, Minnesota, North Dakota, Montana and Manitoba, Canada. As of December 31, 2010, the Company owned seven power generating facilities that sell into the MISO market and are located in Illinois, with an aggregate net generating capacity of 3,308 megawatts within MISO. MISO also manages the use of transmission lines to make sure that they do not become overloaded.
The PJM market includes all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. As of December 31, 2010, the Company owned two generating facilities that sell into the PJM market and are located in Illinois and Pennsylvania with an aggregate net generating capacity of 1,780 megawatts. PJM administers markets for wholesale electricity and provides transmission planning for the region.
West Segment
GEN-WE consists of three operating natural gas-fired power generation facilities located in California and Nevada and one fuel oil-fired power generation facility located in California, totaling 3,387 megawatts of electric generating capacity. The California Independent System Operator (CAISO) covers approximately 90% of the State of California. As of December 31, 2010, the Company owned three operating generation facilities in California within CAISO. The Oakland facility is designated as a Reliability Must Run (RMR) unit by the CAISO. The Company holds 50% indirect ownership interest in the Black Mountain facility, which is a Public Utility Regulatory Policies Act of 1978 (PURPA) Qualifying Facility (QF) located near Las Vegas, Nevada, in the Western Electricity Coordinating Council (WECC). Capacity and energy from this facility are sold to Nevada Power Company under a long-term PURPA QF contract. As of December 31, 2010, Dynegy’s 309 megawatts South Bay facility is out of operation and is in the process of being decommissioned.
Northeast Segment
GEN-NE consists of four facilities located in New York and Maine, with a total capacity of 3,297 megawatts. Dynegy owns and operates the Independence, Casco Bay and Danskammer Units 1 and 2 power generating facilities, and it operates the Roseton and Danskammer Units 3 and 4 facilities under long-term lease arrangements. The Company’s Roseton and Danskammer facility sites are adjacent and share common resources, such as fuel handling, a docking terminal, personnel and systems. It is characterized by two interconnected and actively traded markets: the New York Independent System Operator (NYISO) (an ISO) and the Independent System Operator-New England (ISO-NE) (an RTO). In addition to energy delivery, the NYISO and ISO-NE administer markets for installed capacity, ancillary services and Financial Transmission Rights (FTRs). As of December 31, 2010, it operated three facilities within NYISO with an aggregate net generating capacity of 2,757 megawatts.
The ISO-NE market includes the six New England states of Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island and Maine. ISO-NE is in the process of implementing a Forward Capacity Market (FCM). As of December 31, 2010, the Company owned and operated one power generating facility (Casco Bay) within the ISO-NE, with an aggregate net generating capacity of 540 megawatts.
Other
The other segment includes finance, accounting, commercial, risk control, tax, legal, regulatory, human resources, administration and information technology. Corporate general and administrative expenses, income taxes and interest expenses are also included, as are corporate-related other income and expense items.
Having long stood in the shadow of its rival Enron, Dynegy jumped at the chance to play the white knight when Enron faced possible financial ruin in 2001. As the preeminent energy trader in the world, Enron was valued at $70 billion early in the year. Several high-level resignations and revelations about suspect accounting practices that may have inflated the company's bottom line sent Enron's stock plummeting. In November, Dynegy announced that it would save Enron by purchasing it for only $9 billion in Dynegy stock. Further nasty revelations about Enron's financial position kept its stock falling, until, only two weeks after Dynegy's offer, Enron's market capitalization was $270 million. Dynegy pulled out of the deal, sealing Enron's fate: its stock fell to below $1 a share and bankruptcy was inevitable.
The failed deal was not entirely a fiasco for Dynegy, however. Dynegy had invested $1.5 billion in Enron as part of the merger terms, in return for the right to acquire Enron's subsidiary Northern Natural Gas (NNG) if the merger fell through. The U.S. natural gas pipeline was valued at $2.25 billion before the deal, making it a nice consolation prize. Although Enron fought the transfer of the subsidiary, at the end of January 2002 Dynegy announced that it had completed its acquisition of NNG.
The spectacular collapse of Enron led to a closer scrutiny of its fellow energy traders, who seemed tainted by association. Although energy trading accounted for only 20 percent of Dynegy's revenues, compared with 80 percent at Enron, Dynegy saw its stock drop to $20 a share by January 2002. Falling oil and gas prices also hurt Dynegy's prospects early in 2002. CEO Watson promised to improve the company's liquidity and bolster its bottom line with a $1.25 billion restructuring plan. Asset sales and capital expense reductions would bring in about $750 million, and a stock offering was expected to raise another $500 million. Whether these measures would be enough to reassure nervous investors remained to be seen.
Principal Subsidiaries: Dynegy Canada; Dynegy Customer Care; Dynegy Europe Energy; Dynegy Europe Communications; Dynegy Global Communications; Dynegy Operating Company; Dynegy Midwest Generation; Dynegy Midstream Services; Dynegy Northeast Generation; Dynegy Storage Limited; Dynegy Technology Strategy & Ventures; Illinois Power Company; Northern Natural Gas Company; Wholesale Energy Network.
Principal Competitors: American Electric Power, Inc.; Aquila, Inc.; Duke Energy; Exxon Mobil Corporation; Reliant Energy.
VERALL
Beta: 1.15
Market Cap (Mil.): $785.22
Shares Outstanding (Mil.): 121.74
Annual Dividend: --
Yield (%): --
FINANCIALS
DYN Industry Sector
P/E (TTM): -- 22.42 21.65
EPS (TTM): 68.80 -- --
ROI: -2.69 0.98 1.26
ROE: -8.32 2.23 2.82
Statistics:
Public Company
Incorporated: 1984 as Natural Gas Clearinghouse
Employees: 6,700
Sales: $42.24 billion (2001)
Stock Exchanges: New York
Ticker Symbol: DYN
NAIC: 211112 Natural Gas Liquids (e.g., Ethane, Isobu- tane, Natural Gasoline, Propane) Recovered from Oil and Gas Field Gases; 221210 Natural Gas Distribution; 221112 Electric Power Distribution Systems
Key Dates:
1984: Natural Gas Clearinghouse is established as a natural gas broker.
1989: Company acquires Apache's Nagasco, Inc.
1992: Company is bought by Louisville Gas & Electric Company, British Gas, and management, each owning a third.
1995: Company merges with Trident NGL Holdings Inc.
1996: Company merges with most of Chevron Corporation's natural gas and gas liquids businesses, including Warren Petroleum.
1997: Company acquires Destec Energy.
1998: NGC changes its name to Dynegy Inc.
2000: Company purchases Illinova, including subsidiary Illinois Power.
2001: Company backs out of a deal to purchase troubled rival Enron.
Name Age Since Current Position
Hammick, Patricia 64 2011 Independent Interim Chairman of the Board
Harrison, E. Hunter 66 2011 Interim President and Chief Executive Officer, Director
Cook, Charles 46 2011 Interim Chief Financial Officer, EVP - Commercial Operations and Market Analytics
Stephenson, Kent 61 2011 Executive Vice President, General Counsel
Lednicky, Lynn 50 2009 Executive Vice President - Operations
Elward, Thomas 63 2011 Director
Intrieri, Vincent 54 2011 Director
Merksamer, Samuel 30 2011 Director
Biegler, David 64 2011 Independent Director
Trubeck, William 64 2003 Director
Sheppard, Howard 64 2008 Director
Grijalva, Victor 71 2006 Director
Address:
1000 Louisiana, Suite 5800
Houston, Texas 77002
U.S.A.
Once known as "The Natural Gas Clearinghouse," Dynegy adopted the "New Economy" branding in 1998, after which the company structured itself in a manner similar to Enron, launching several business ventures, including an online trading platform and broadband communications services, which could be misconstrued of those of its larger rival.
The company was dubbed the "king of coal" by the National Environmental Trust.
Dynegy Inc. (Dynegy), incorporated in 2007, is a holding company and conducts the business operations through its subsidiaries. Dynegy’s primary business is the production and sale of electric energy, capacity and ancillary services from the fleet of 17 operating power plants in six states totaling approximately 11,800 megawatts of generating capacity. The Company sells electric energy, capacity and ancillary services on a wholesale basis from its power generation facilities. Its customers include Regional Transmission Organization (RTOs) and Independent System Operators (ISOs), integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial participants, such as banks and hedge funds, and other power generators. Dynegy operates in three business segments: Midwest segment (GEN-MW), West segment (GEN-WE) and Northeast segment (GEN-NE). Its wholly owned subsidiary is Dynegy Holdings Inc. (DHI).
Midwest Segment
GEN-MW consists of eight facilities in Illinois and one in Pennsylvania with a total generating capacity of 5,088 megawatts. As of December 31, 2010, GEN-MW operated entirely within the Midwest Independent Transmission System Operator (MISO) or the PJM Interconnection, LLC (PJM). The MISO market includes all of Wisconsin and Michigan and portions of Ohio, Kentucky, Indiana, Illinois, Nebraska, Kansas, Missouri, Iowa, Minnesota, North Dakota, Montana and Manitoba, Canada. As of December 31, 2010, the Company owned seven power generating facilities that sell into the MISO market and are located in Illinois, with an aggregate net generating capacity of 3,308 megawatts within MISO. MISO also manages the use of transmission lines to make sure that they do not become overloaded.
The PJM market includes all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. As of December 31, 2010, the Company owned two generating facilities that sell into the PJM market and are located in Illinois and Pennsylvania with an aggregate net generating capacity of 1,780 megawatts. PJM administers markets for wholesale electricity and provides transmission planning for the region.
West Segment
GEN-WE consists of three operating natural gas-fired power generation facilities located in California and Nevada and one fuel oil-fired power generation facility located in California, totaling 3,387 megawatts of electric generating capacity. The California Independent System Operator (CAISO) covers approximately 90% of the State of California. As of December 31, 2010, the Company owned three operating generation facilities in California within CAISO. The Oakland facility is designated as a Reliability Must Run (RMR) unit by the CAISO. The Company holds 50% indirect ownership interest in the Black Mountain facility, which is a Public Utility Regulatory Policies Act of 1978 (PURPA) Qualifying Facility (QF) located near Las Vegas, Nevada, in the Western Electricity Coordinating Council (WECC). Capacity and energy from this facility are sold to Nevada Power Company under a long-term PURPA QF contract. As of December 31, 2010, Dynegy’s 309 megawatts South Bay facility is out of operation and is in the process of being decommissioned.
Northeast Segment
GEN-NE consists of four facilities located in New York and Maine, with a total capacity of 3,297 megawatts. Dynegy owns and operates the Independence, Casco Bay and Danskammer Units 1 and 2 power generating facilities, and it operates the Roseton and Danskammer Units 3 and 4 facilities under long-term lease arrangements. The Company’s Roseton and Danskammer facility sites are adjacent and share common resources, such as fuel handling, a docking terminal, personnel and systems. It is characterized by two interconnected and actively traded markets: the New York Independent System Operator (NYISO) (an ISO) and the Independent System Operator-New England (ISO-NE) (an RTO). In addition to energy delivery, the NYISO and ISO-NE administer markets for installed capacity, ancillary services and Financial Transmission Rights (FTRs). As of December 31, 2010, it operated three facilities within NYISO with an aggregate net generating capacity of 2,757 megawatts.
The ISO-NE market includes the six New England states of Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island and Maine. ISO-NE is in the process of implementing a Forward Capacity Market (FCM). As of December 31, 2010, the Company owned and operated one power generating facility (Casco Bay) within the ISO-NE, with an aggregate net generating capacity of 540 megawatts.
Other
The other segment includes finance, accounting, commercial, risk control, tax, legal, regulatory, human resources, administration and information technology. Corporate general and administrative expenses, income taxes and interest expenses are also included, as are corporate-related other income and expense items.
Having long stood in the shadow of its rival Enron, Dynegy jumped at the chance to play the white knight when Enron faced possible financial ruin in 2001. As the preeminent energy trader in the world, Enron was valued at $70 billion early in the year. Several high-level resignations and revelations about suspect accounting practices that may have inflated the company's bottom line sent Enron's stock plummeting. In November, Dynegy announced that it would save Enron by purchasing it for only $9 billion in Dynegy stock. Further nasty revelations about Enron's financial position kept its stock falling, until, only two weeks after Dynegy's offer, Enron's market capitalization was $270 million. Dynegy pulled out of the deal, sealing Enron's fate: its stock fell to below $1 a share and bankruptcy was inevitable.
The failed deal was not entirely a fiasco for Dynegy, however. Dynegy had invested $1.5 billion in Enron as part of the merger terms, in return for the right to acquire Enron's subsidiary Northern Natural Gas (NNG) if the merger fell through. The U.S. natural gas pipeline was valued at $2.25 billion before the deal, making it a nice consolation prize. Although Enron fought the transfer of the subsidiary, at the end of January 2002 Dynegy announced that it had completed its acquisition of NNG.
The spectacular collapse of Enron led to a closer scrutiny of its fellow energy traders, who seemed tainted by association. Although energy trading accounted for only 20 percent of Dynegy's revenues, compared with 80 percent at Enron, Dynegy saw its stock drop to $20 a share by January 2002. Falling oil and gas prices also hurt Dynegy's prospects early in 2002. CEO Watson promised to improve the company's liquidity and bolster its bottom line with a $1.25 billion restructuring plan. Asset sales and capital expense reductions would bring in about $750 million, and a stock offering was expected to raise another $500 million. Whether these measures would be enough to reassure nervous investors remained to be seen.
Principal Subsidiaries: Dynegy Canada; Dynegy Customer Care; Dynegy Europe Energy; Dynegy Europe Communications; Dynegy Global Communications; Dynegy Operating Company; Dynegy Midwest Generation; Dynegy Midstream Services; Dynegy Northeast Generation; Dynegy Storage Limited; Dynegy Technology Strategy & Ventures; Illinois Power Company; Northern Natural Gas Company; Wholesale Energy Network.
Principal Competitors: American Electric Power, Inc.; Aquila, Inc.; Duke Energy; Exxon Mobil Corporation; Reliant Energy.
VERALL
Beta: 1.15
Market Cap (Mil.): $785.22
Shares Outstanding (Mil.): 121.74
Annual Dividend: --
Yield (%): --
FINANCIALS
DYN Industry Sector
P/E (TTM): -- 22.42 21.65
EPS (TTM): 68.80 -- --
ROI: -2.69 0.98 1.26
ROE: -8.32 2.23 2.82
Statistics:
Public Company
Incorporated: 1984 as Natural Gas Clearinghouse
Employees: 6,700
Sales: $42.24 billion (2001)
Stock Exchanges: New York
Ticker Symbol: DYN
NAIC: 211112 Natural Gas Liquids (e.g., Ethane, Isobu- tane, Natural Gasoline, Propane) Recovered from Oil and Gas Field Gases; 221210 Natural Gas Distribution; 221112 Electric Power Distribution Systems
Key Dates:
1984: Natural Gas Clearinghouse is established as a natural gas broker.
1989: Company acquires Apache's Nagasco, Inc.
1992: Company is bought by Louisville Gas & Electric Company, British Gas, and management, each owning a third.
1995: Company merges with Trident NGL Holdings Inc.
1996: Company merges with most of Chevron Corporation's natural gas and gas liquids businesses, including Warren Petroleum.
1997: Company acquires Destec Energy.
1998: NGC changes its name to Dynegy Inc.
2000: Company purchases Illinova, including subsidiary Illinois Power.
2001: Company backs out of a deal to purchase troubled rival Enron.
Name Age Since Current Position
Hammick, Patricia 64 2011 Independent Interim Chairman of the Board
Harrison, E. Hunter 66 2011 Interim President and Chief Executive Officer, Director
Cook, Charles 46 2011 Interim Chief Financial Officer, EVP - Commercial Operations and Market Analytics
Stephenson, Kent 61 2011 Executive Vice President, General Counsel
Lednicky, Lynn 50 2009 Executive Vice President - Operations
Elward, Thomas 63 2011 Director
Intrieri, Vincent 54 2011 Director
Merksamer, Samuel 30 2011 Director
Biegler, David 64 2011 Independent Director
Trubeck, William 64 2003 Director
Sheppard, Howard 64 2008 Director
Grijalva, Victor 71 2006 Director
Address:
1000 Louisiana, Suite 5800
Houston, Texas 77002
U.S.A.