CHICAGO (AP) -- Houston-based Dynegy took ownership of five Illinois coal-fired power plants as Ameren Corp. exited the merchant generation business to concentrate on its rate-regulated operations in Illinois and Missouri, the companies announced Monday.
Dynegy acquired the plants from St. Louis-based Ameren, which wanted to divest its so-called merchant business -- plants that sell electricity on the open market. Ameren Chairman and CEO Thomas R. Voss said the divestiture was important for the company's shareholders and customers because earnings and cash flow will be more predictable and the company can concentrate on strengthening and increasing its regulated electric, natural gas and transmission operations.
The deal was finalized almost two weeks after Dynegy, which already owned four Illinois coal plants, received a five-year pollution-control waiver from the Illinois Pollution Control Board for the Ameren plants. The company had said the deal hinged on getting permission to delay soot-control upgrades at the plants until 2020, arguing that doing so sooner posed an economic hardship.
Environmental groups opposed the waiver, saying the delay would hurt public health and that Dynegy knew the pollution controls were needed when it agreed to acquire the plants: Duck Creek in the Fulton County town of Canton, E.D. Edwards in Peoria County's Bartonville, Coffeen in Montgomery County, Newton in Jasper County, and Joppa in Massac County.
The companies have said the combined local economic impact of the five plants is more than $1 billion. Ameren got the original waiver after claiming financial hardship that could force it to close some of its plants.
Coal-fired plants have been affected by lower electricity prices driven in part by competition from natural gas-fired plants.
Illinois' plants sell power on the open market, making it difficult to pass on costs of pollution upgrades to customers.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.