In today’s AUSenergy News Update: Dynegy’s $6.25 billion deal doubles its generating capacity, PJM proposes changes to capacity market, and EPA will not revise its backup generator rules.
Summary: Dynegy, Inc. will buy coal and gas generation assets from Duke Energy and Energy Capital Partners in two deals totaling $6.25 billion. The acquisitions will increase Dynegy’s generating capacity to approximately 26,000 MW nationally, allowing Dynegy to provide retail electricity to residents and businesses in Ohio, Pennsylvania, Michigan and Illinois, increasing its exposure to the PJM and New England markets.
AUS Comment: Dynegy’s acquisitions aim to minimize the company’s exposure to the volatile wholesale power market.
Summary: In response to the poor performance of generators in early January, when as much as 22% of PJM’s generating fleet was inoperable, PJM officials proposed changes to the capacity market; the most notable of which would be the addition of a new “Capacity Performance” product. The new product would supplement existing Annual Capacity, Extended Summer and Limited Demand Response (DR) offerings to improve reliability.
AUS Comment: If PJM’s proposed changes were to take effect, one of the results would be that annual DR providers would have to be available 24 hours a day all year and ensure reductions for 16 peak hours over three consecutive days. AUS would like to note that the Annual demand response program differs from the Limited demand response program through PJM – the Limited program being the common program for our end-use clients. This program structure will not be changing.
Summary: EPA’s rule currently allows backup generators to operate for up to 100 hours per year in response to demand response events. EPA also requires the use of ultra-low sulfur diesel (ULSD) fuel beginning in January, 2015. The EPA stated that it would not be revising these rules in response to three petitions for reconsideration.
AUS Comment: The EPA believes that ULSD backup generators help provide sufficient benefit in assisting demand response to allow for their increased use. The Clean Air Act already prohibits the use of natural gas generators for demand response in some states.
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