Dynegy Completes Termination of Sterlington Power Tolling Contract
Posted on: Tuesday, 7 March 2006, 12:00 CST
Dynegy Inc. (NYSE:DYN) today announced that it has completed the termination of the Sterlington long-term wholesale power tolling contract with Quachita Power LLC. The company previously announced its agreement to terminate the arrangement on Dec. 27, 2005.
Dynegy paid Quachita Power LLC, a joint venture of GE Energy Financial Services and Cogentrix Energy, Inc., approximately $370 million to terminate the toll after securing lender consents and satisfying other conditions. As a result, Dynegy eliminated approximately $456 million in capacity payment obligations through 2012 and approximately $295 million in additional capacity payment obligations that would have arisen if Quachita Power exercised its option to extend the contract through 2017.
"By eliminating the Sterlington toll, we have substantially exited the power tolling activities associated with our Customer Risk Management business," said Bruce A. Williamson, Chairman and Chief Executive Officer of Dynegy Inc. "Our ongoing focus is on safe, reliable and efficient operations to meet market demands for electricity, capacity and ancillary services in our key business regions of the Midwest, Northeast and South."
The contract, which was entered into in 2000, required Quachita Power to sell the electricity produced at its 835-megawatt Sterlington, La. natural gas-fired power generating station to Dynegy. Dynegy recorded a fourth quarter 2005 pre-tax charge of approximately $364 million (approximately $235 million after-tax) associated with this termination.
Dynegy Inc. provides electricity to markets and customers throughout the United States. The company's fleet of power generation facilities consists of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. Located in 12 states, the portfolio is well-positioned to capitalize on regional differences in power prices and weather-driven demand. DYNC.
Source: Business Wire
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