Dynegy Inc. (NYSE: DYN) announced plans to retire the 465-MW Wood River coal-fired power plant in Illinois next year.
The units entered commercial operation in 1954 and 1964, respectively.
Dynegy said it would retire the units because the current market design of the Midcontinent Independent System Operator Inc. (MISO) capacity auction is flawed by allowing regulated utilities from surrounding states to bid their capacity into the auction at little to no cost while receiving higher guaranteed compensation from their respective state-regulated markets.
Market participants in central and southern Illinois operate in a state with a deregulated competitive framework and must rely on MISO capacity auction for fair compensation.
Dynegy said it will formally file a retirement notice with MISO by Dec. 1, which will trigger a reliability review by MISO expected to be completed in first quarter of 2016. If MISO determines the plant is not needed for reliability, it will shut down in mid-2016.
“Dynegy is committed to working with MISO, the state of Illinois, Union leadership and all stakeholders to redesign the MISO capacity market to one that properly functions and fairly compensates competitive generators or alternatively, to transition Illinois fully into PJM,” said Robert Flexon, president and CEO of Dynegy. “Otherwise, all generating plants in the MISO portion of Illinois will face a future of financial challenge. If Wood River was located in the PJM market, like Dynegy’s Northern Illinois generating units, it is unlikely this retirement would be occurring.”