Stingy credit markets and high regulatory hurdles have spurred Houston-based Dynegy to step back from new coal-fired power plant projects by ending a joint venture with LS Power Associates.
Dynegy will keep the right to expand its 27 existing coal, natural gas and oil-fired plants in 13 states, and it retains stakes in a pair of Texas and Arkansas coal projects.
But Dynegy will pay New York-based LS Power $19 million as part of the split and let it take full ownership of new projects under consideration in Arkansas, Georgia, Iowa, Michigan and Nevada.
Shares of Dynegy closed up 38 cents, or 19 percent, to $2.38 on Friday.
Dynegy Chairman and CEO Bruce Williamson said the power plant development landscape has changed since the company entered into the joint venture with LS in the fall of 2006. Funding new projects is much more difficult given the worldwide credit crunch and the possibility of new climate change legislation under the Obama administration.
"In light of these market circumstances, Dynegy has elected to focus development activities and investments around our own portfolio where we control the option to develop and can manage the costs being incurred more closely," Williamson said in a statement.
