Dynegy CEO Chuck Watson attributed his company’s improved secondquarter performance to stronger margins in the wholesale gas andelectric businesses despite weaker margins in the company’s liquidsbusiness.

Dynegy reported net income for the second quarter of $23.4million, or $0.14 per share, compared with $17.5 million, or $0.10per share, on a normalized basis in the second quarter of 1997.Results for the 1997 period were $32.1 million, or $0.19 per share,which included certain prior period adjustments totaling $14.6million, or $0.09 per share. This year’s second quarter had noone-time charges or gains.

The current quarter’s financial results reflect a significantincrease in operating margin from Dynegy’s wholesale gas andelectric businesses, offset in part, by lower operating margin fromthe gas liquids business. Dynegy’s second quarter consolidatedoperating margin totaled $107.9 million, compared with $97.8million reported in the second quarter of 1997. Excludingadjustments, operating margins for last year’s quarter were $75.3million.

“The company’s strategy of developing not only power marketingand trading expertise but also of owning generation capacity isserving us well during the volatile power markets being experiencedin parts of the U.S. this summer,” said CEO Chuck Watson. Dynegy’scommitment to tight credit controls, which confirmed the integrityof our contracts through this volatile period, combined with theoutstanding delivery performance of our power generation and themarketing of services to our customers, heightens Dynegy’sconfidence in capturing value in the wholesale gas and powerbusiness.”

Gas volumes sold in North America were 7.6 Bcf/d compared with7.8 Bcf/d for last year’s second quarter. Average unit salesmargins in North America were about $0.041/Mcf for the quartercompared with an average of $0.026/Mcf (normalized) for the secondquarter of 1997. The company sold 26.6 million MWh during thequarter compared with 16.6 million MWh for the same quarter of1997.

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