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Chart Watch: MISO's latest capacity auction hurting Dynegy, helping others

The 'srecent annual Planning Resource Auction resultsfor the 2016-2017 year saw Zone 4 prices clear 52% lower than the 2015-2016 auctionat $72/MW-day, while the remaining upper Midwest zones saw significant increases.This could hurt the bottom line for merchant generators operating in MISO Zone 4,and possibly lead to additionalasset retirements. Zone 1 prices increased to $19.72/MW-day, from $3.48/MW-day inthe prior auction, and the other upper Midwest zones, excluding Zone 4, increasedto $72/MW-day from $3.48/MW-day in 2015-16.

The significantdrop in prices in Zone 4, where DynegyInc. has 6.5 GW of operating coal capacity, have led the company toannounce that it willshut down three coal-fired units in Illinois over the next year, adding another1,835 MW to the list of power plants the company says it has to close due to in the wholesale market runby MISO. The company cited in the release being unable to obtain enough paymentsfrom the recent MISO auction to cover the "basic operating costs" of theretiring units.

Of thetop owners of MISO operating and planned capacity scheduled to be operational in2017, NextEra Energy Inc.'sand CMS Energy Corp.'smerchant unregulated assets are positioned well to take advantage of higher clearingprices in the upper Midwest zones, excluding Zone 4.

NextEraEnergy has more than 3,907 MW of operating capacity, or more than 96% of the company'sMISO capacity, located in upper Midwest zones that saw increases in clearing pricefrom the prior period.  The 150-MW White OakWind Energy Center is NextEra's lone asset, with MISO reported as the ISO/RTO, locatedin MISO Zone 4.

All ofCMS Energy's 6,919-MW MISO operating capacity is located in Michigan, or MISO Zone7, which increased to $72/MW-day in the most recent auction from $3.48/MW-day in2015-2016. Of the 6,919 MW of capacity, 1,087 MW, or nearly 16% of the company'stotal owned MISO capacity, are merchant unregulated plants.

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