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FERC OKs Illinova-Dynegy Merger

FERC OKs Illinova-Dynegy Merger

FERC last week approved the proposed merger of Illinova Corp. and Dynegy Inc., saying the $2 billion deal posed no competitive concerns. It noted "there is insufficient 'overlap' between relevant upstream delivered gas and downstream electricity markets...to raise significant competitive concerns." Also, the transaction "does not enhance the merged company's incentive to raise its rivals' costs because it has a relatively small share of the relevant downstream electricity markets."

Before the merger can close, FERC still must okay the sale of Illinova's Clinton Power Station, a 930 MW nuclear facility, to AmerGen Energy; the Nuclear Regulatory Commission must approve the transfer of the plant's license; and "additional approvals" are needed from the Illinois Commerce Commission with respect to the gas aspect of the merger. Dynegy also has to complete the sale or restructuring of its interests in certain qualifying facilities. The companies expect to complete the transaction during the first quarter of next year.

The merged company, which will retain the Dynegy Inc. name, will have generation plants with more than 14,000 MW of capacity, natural gas sales in North America of 9.1 Bcf/d, and will serve more than 950,000 retail customers.

Susan Parker

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