Dynegy's planned takeover of LS Power's power plants in and outside of California will create a "significant move up in earning power," according to Dynegy chief executive officer Bruce Williamson. In speaking to financial analysts September 27, Williamson said the 4,400 MW of generation in Northern and Central California are "megawatts in the right places." The California power plants are part of Dynegy's plans to grow its assets to 20,000 MW. Until this spring, Dynegy owned a 50 percent interest in several Southern California power plants with NRG Energy. The joint venture was known as West Coast Power. NRG bought out Dynegy's share in May. Those power plants were not well positioned, they had low heat rates, and the value of the facilities lay in their coastal real estate value, according to Williamson. If the current deal - which also involves a joint venture with LS Power to build new power projects - is approved, projected earnings are $470/kW. The transaction would diversify Dynegy's fuel sources geographically. Currently the company depends on coal and, to a lesser extent, fuel oil and natural gas. The LS acquisition would also increase Dynegy's dispatchability, according to Williamson, because it would include baseload power plants and peakers.
