Everything about Dynegy totally explained
Dynegy Inc., based in
Houston,
Texas, is a large owner and operator of
power plants and a player in the
natural gas liquids and
coal business.
Once known as "The Natural Gas Clearinghouse," Dynegy adopted the "
New Economy" branding in 1998, after which the company structured itself in a manner similar to
Enron, launching several business ventures, including an online trading platform and
broadband communications services, which closely duplicated those of its larger rival.
While over 60 communities around the country have defeated coal plant proposals, Dynegy has more coal plant proposals than any other company in the country. Concerned about the
environmental effects of coal, the company has been targetted by a number of environmental groups including the
Sierra Club. CEO Bruce Williamson was recently a runner-up in the Energy Action Coalition's Fossil Fools award "... for its unceasing promotion of dirty coal power. Dynegy is proposing to build more dirty coal-fired power plants than any other power company in the United States. Known in some regions of the U.S. as "
LS Power,” Dynegy is currently proposing to build six new polluting
coal plants in the United States."
History
The Natural Gas Clearinghouse became better known by its later shortened name,
NGC Corporation in the early 1990s, when it became a publicly traded company listed on the New York Stock Exchange. NGC was an integrated natural gas services company, paying a cash
dividend to shareholders each year since 1994. By 1996 it had grown to US$550 million in assets, and carried US$525 million in long-term debt.
In June 1998, Dynegy Inc. was created from the merger of its predecessor, NGC Corp., with
Chevron Corporation's natural gas and natural gas liquids businesses.
In a merger completed
February 1,
2000, Illinova Corporation became a wholly-owned subsidiary of Dynegy Inc., a deal in which Chevron Corporation also took a 28% stake. Illinova, the utility holding company of Illinois Power Company, had grown to over US$415 million in assets and US$1.8 billion long-term debt.
Dynegy, along with Enron,
El Paso,
Reliant and several other energy companies, was accused of
price manipulation and other fraudulent practices during the
California electricity crisis in 2000. In 2001, the company made an unsuccessful takeover bid for Enron, pulling out at the last minute following an unexpected restatement of earnings by Enron. Shortly after the pull-out, Enron filed for
Chapter 11 bankruptcy and sued Dynegy. One aspect of the takeover deal that did survive, however, was Dynegy's acquisition of the
Northern Natural Gas Company pipeline, Enron's most lucrative pipeline asset.
Unfortunately for Dynegy's shareholders and employees, these events did nothing to prevent Dynegy itself from lapsing into a crisis similar to that of Enron in late 2002. Amid accusations of
accounting fraud and other misdoings, founder
Charles Watson resigned, and the company was forced to sell the Northern Natural Gas pipeline to a consortium of investors led by noted billionaire
Warren Buffett.
Following these incidents, the company hired
Bruce Williamson, a former
Duke Energy executive, who began a program of cost cutting, elimination of unprofitable businesses and financial
restructuring which was successful in averting a
bankruptcy filing. The company disposed of all of its businesses with the exception of its core merchant power and natural gas liquids businesses. Refocused on these core businesses, and managed with a strong emphasis on efficiency and cost control, Dynegy was able to stabilize its financial position. In the most recent quarter, Dynegy only lost $152 million (18 cents per share). While Williamson has helped the companies bottom line, his embrace of dirty coal has brought the company significant negative publicity.
In 2004, Dynegy sold the Illinois Power Company to
Ameren Corporation, the successor company of the IP Company's original partners from the 1952 Midwest Power Pool system.
In late 2005, Dynegy continued its restructuring by selling its natural gas liquids business to
Targa Resources, a company owned by private equity firm
Warburg Pincus.
The company is a member of ABEC,
Americans for Balanced Energy Choices an organization funded in part by the coal industry that touts the benefits of "
clean coal".
In the spring of 2008, the company received over 5,000 phone calls from across the country asking them to switch their considerable resources away from dirty coal to cleaner, greener,
renewable energy that would be better for public health, the environment, and the economy. Further actions are expected.
Further Information
Get more info on 'Dynegy'.
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