By Rory D. Sweeney

Dynegy attorneys undoubtedly thought they were helping their case with FERC by volunteering rate information to expedite the sale of its gas-fired Lee Energy Facility, but the filing instead raised questions that last week prompted the commission to initiate an inquiry into the plant’s reactive service rate schedule.

The company had asked FERC to waive a requirement to provide 90 days’ notice of a change in ownership of the 692-MW, eight-turbine facility in Dixon, Ill. (ER17-2321). According to records, Dynegy struck a deal on July 10 to sell the facility to Bruce Power “as soon as possible” (EC17-162). The plant required commission approval to transfer ownership, which it received last Tuesday, but Dynegy had only filed for the approval on Aug. 16. The 90-day period would have lasted until Nov. 14.

Dynegy filed the waiver request the same day it filed for approval of the sale. In support of the request, the company made an informational filing that outlined its commission-approved reactive power revenue requirements, which PJM must pay the facility for providing reactive service.

FERC approved the waiver, but it noticed the revenue requirements were incomplete, including the absence of any leading reactive power test data and only some lagging test data, which the commission said “appear to show that there is degradation of the MVAR output of all eight generator units.” Dynegy’s filing noted that each of the eight units has a nameplate rating of 53.63 MVAR, but that test data supported site-rated gross capabilities ranging from 28.42 to 32.68 MVAR. As a result, the commission established a proceeding to examine the justness and reasonableness of Lee’s reactive power rates (EL17-91).

A settlement judge will be assigned to the proceeding by Oct. 29 and have 30 days to agree on a settlement. Failing that, FERC will assign a presiding judge who must make an initial decision within 180 days of last week’s order being published in the Federal Register. The commission expects it would then take up to eight months to issue a final decision but would set the refund date to the date of publication.

Houston-based Dynegy operates about 31,400 MW of generation in the Northeast, Mid-Atlantic and Midwest (including almost 1,800 MW from plants in which it shares ownership). The company has been fighting to save its coal-fired generation and was approached in May about a potential takeover. (See Report: Vistra Energy Suggests Takeover of Dynegy.)

Bruce Power is owned by Rockland Capital, based in The Woodlands, Texas. Rockland also owns about 10,000 MW of generation in the U.S. and England, along with the New Jersey-based Vineland Energy power marketer.