Dynegy Inc., owner of power plants in 12 U.S. states, will record $235 million in fourth-quarter costs to end an unprofitable contract with a Louisiana power plant, completing the company's exit from multiple-year agreements with generators.
Houston-based Dynegy, in a statement today, said it will pay Quachita Power LLC about $370 million in cash to end a ``tolling'' agreement to supply fuel for a natural-gas-fired power plant in Sterlington, Louisiana, and buy the plant's output. Quachita is a joint venture of General Electric Co. (GE:US) and Cogentrix Energy Inc., which is owned by Goldman Sachs Group Inc. (GS:US)
Dynegy Chief Executive Bruce Williamson has been buying out such tolling accords after a surge in prices for natural gas used to fuel plants made the contracts unprofitable. Dynegy said it was obligated to pay Quachita fees of $455 million through 2012 and was liable for an additional $300 million in fees if the agreement were extended through 2017.
Natural-gas futures have averaged about $9 per million British thermal this year on the New York Mercantile Exchange, more than double the average in 2000, when the tolling agreement with Quachita began.
``During the course of the last three years, we have canceled or otherwise eliminated in whole or in part the financial statement impact of all of our long-term tolling agreements, with related obligations of approximately $3.2 billion,'' Williamson said in the statement.
Shares of Dynegy fell 16 cents to $4.91 in New York Stock Exchange composite trading. The stock has risen 6.3 percent this year.
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