DYNEGY INC. (Form: 10-Q, Received: 05/05/2017 11:02:38)

Generation volumes hedged (1)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-33443

DYNEGY INC.

(Exact name of registrant as specified in its charter)



State of Incorporation		I.R.S. Employer Identification No.
Delaware		20-5653152

601 Travis, Suite 1400
Houston, Texas		77002
(Address of principal executive offices)		(Zip Code)

(713) 507-6400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ý		Accelerated filer o
Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)		Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

Indicate the number of shares outstanding of our class of common stock, as of the latest practicable date: Common stock, $0.01 par value per share, 131,345,529 shares outstanding as of April 12, 2017 .

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TABLE OF CONTENTS



		Page
DEFINITIONS		i

PART I. FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS:
	Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016	1
	Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016	3
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2017 and 2016	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016	5
	Notes to Consolidated Financial Statements	6

Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	39
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	68
Item 4.	CONTROLS AND PROCEDURES	69

PART II. OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	70
Item 1A.	RISK FACTORS	70
Item 4.	MINE SAFETY DISCLOSURES	70
Item 6.	EXHIBITS	71

SIGNATURE		73

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DEFINITIONS

As used in this Form 10-Q, the abbreviations contained herein have the meanings set forth below.



ATSI		American Transmission Service, Inc.
CAA		Clean Air Act
CAISO		The California Independent System Operator
CDD		Cooling Degree Days
COMED		Commonwealth Edison
CPUC		California Public Utility Commission
CT		Combustion Turbine
EBITDA		Earnings Before Interest, Taxes, Depreciation and Amortization
EMAAC		Eastern Mid-Atlantic Area Council
EPA		Environmental Protection Agency
ERCOT		Electric Reliability Council of Texas
FCA		Forward Capacity Auction
FERC		Federal Energy Regulatory Commission
FTR		Financial Transmission Rights
HDD		Heating Degree Days
IMA		In-market Asset Availability
IPCB		Illinois Pollution Control Board
IPH		IPH, LLC (formerly known as Illinois Power Holdings, LLC)
ISO		Independent System Operator
ISO-NE		Independent System Operator New England
kW		Kilowatt
LIBOR		London Interbank Offered Rate
MAAC		Mid-Atlantic Area Council
MISO		Midcontinent Independent System Operator, Inc.
MMBtu		One Million British Thermal Units
Moody’s		Moody’s Investors Service Inc.
MW		Megawatts
MWh		Megawatt Hour
NYISO		New York Independent System Operator
PJM		PJM Interconnection, LLC
PPL		PPL Electric Utilities, Corp.
PRIDE		Producing Results through Innovation by Dynegy Employees
RGGI		Regional Greenhouse Gas Initiative
RTO		Regional Transmission Organization
S&P		Standard & Poor’s Ratings Services
SEC		U.S. Securities and Exchange Commission

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PART I. FINANCIAL INFORMATION

Item 1—FINANCIAL STATEMENTS

DYNEGY INC.

CONSOLIDATED BALANCE SHEETS

(unaudited) (in millions, except share data)



	March 31, 2017		December 31, 2016
ASSETS
Current Assets
Cash and cash equivalents	$	467	$	1,776
Restricted cash	—		62
Accounts receivable, net of allowance for doubtful accounts of $1 and $1, respectively	394		386
Inventory	513		445
Assets from risk management activities	129		130
Intangible assets	31		38
Prepayments and other current assets	157		150
Total Current Assets	1,691		2,987
Property, plant and equipment, net	9,719		7,121
Investment in unconsolidated affiliate	149		—
Restricted cash	—		2,000
Assets from risk management activities	34		16
Goodwill	799		799
Intangible assets	63		23
Assets held-for-sale	451		—
Other long-term assets	174		107
Total Assets	$	13,080	$	13,053

See the notes to consolidated financial statements.

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DYNEGY INC.

CONSOLIDATED BALANCE SHEETS

(unaudited) (in millions, except share data)



	March 31, 2017			December 31, 2016
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	287		$	332
Accrued interest	205			81
Intangible liabilities	34			21
Accrued liabilities and other current liabilities	137			133
Liabilities from risk management activities	66			97
Asset retirement obligations	58			51
Debt, current portion, net	117			201
Total Current Liabilities	904			916
Liabilities subject to compromise (Note 18)	—			832
Debt, long-term portion, net	9,200			8,778
Liabilities from risk management activities	50			43
Asset retirement obligations	259			236
Deferred income taxes	35			5
Intangible liabilities	45			34
Other long-term liabilities	165			170
Total Liabilities	10,658			11,014
Commitments and Contingencies (Note 13)

Stockholders’ Equity
Preferred stock, $0.01 par value, 20,000,000 shares authorized:
Series A 5.375% mandatory convertible preferred stock, $0.01 par value; 4,000,000 shares issued and outstanding, respectively	400			400
Common stock, $0.01 par value, 420,000,000 shares authorized; 142,645,810 shares issued and 131,319,688 shares outstanding at March 31, 2017; 128,626,740 shares issued and 117,300,618 outstanding at December 31, 2016	1			1
Additional paid-in capital	3,321			3,547
Accumulated other comprehensive income, net of tax	34			21
Accumulated deficit	(1,330		)	(1,927		)
Total Dynegy Stockholders’ Equity	2,426			2,042
Noncontrolling interest	(4		)	(3		)
Total Equity	2,422			2,039
Total Liabilities and Equity	$	13,080		$	13,053

See the notes to consolidated financial statements.

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DYNEGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited) (in millions, except per share data)



	Three Months Ended March 31,
	2017			2016
Revenues	$	1,247		$	1,123
Cost of sales, excluding depreciation expense	(757		)	(545		)
Gross margin	490			578
Operating and maintenance expense	(232		)	(221		)
Depreciation expense	(200		)	(171		)
Impairments	(20		)	—
General and administrative expense	(40		)	(37		)
Acquisition and integration costs	(45		)	(4		)
Other	(2		)	—
Operating income (loss)	(49		)	145
Bankruptcy reorganization items (Note 18)	483			—
Earnings (losses) from unconsolidated investments	(1		)	2
Interest expense	(167		)	(142		)
Other income and expense, net	17			1
Income before income taxes	283			6
Income tax benefit (expense) (Note 14)	313			(16		)
Net income (loss)	596			(10		)
Less: Net loss attributable to noncontrolling interest	(1		)	—
Net income (loss) attributable to Dynegy Inc.	597			(10		)
Less: Dividends on preferred stock	5			5
Net income (loss) attributable to Dynegy Inc. common stockholders	$	592		$	(15	)

Earnings (Loss) Per Share (Note 16):
Basic earnings (loss) per share attributable to Dynegy Inc. common stockholders	$	4.00		$	(0.13	)
Diluted earnings (loss) per share attributable to Dynegy Inc. common stockholders	$	3.57		$	(0.13	)

Basic shares outstanding	148			117
Diluted shares outstanding	167			117

See the notes to consolidated financial statements.

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DYNEGY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited) (in millions)



	Three Months Ended March 31,
	2017			2016
Net income (loss)	$	596		$	(10	)
Other comprehensive income (loss) before reclassifications:
Actuarial gain and plan amendment (net of tax of zero and zero, respectively)	15			—
Amounts reclassified from accumulated other comprehensive income:
Amortization of unrecognized prior service credit (net of tax of zero and zero, respectively)	(2		)	(1		)
Other comprehensive income (loss), net of tax	13			(1		)
Comprehensive income (loss)	609			(11		)
Less: Comprehensive loss attributable to noncontrolling interest	(1		)	—
Total comprehensive income (loss) attributable to Dynegy Inc.	$	610		$	(11	)

See the notes to consolidated financial statements.

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DYNEGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in millions)



	Three Months Ended March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	596		$	(10	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation expense	200			171
Non-cash interest expense	20			10
Amortization of intangibles	11			14
Risk management activities	(20		)	(109		)
(Earnings) loss from unconsolidated investments	1			(2		)
Deferred income taxes	(313		)	16
Impairments	20			—
Change in value of common stock warrants	(12		)	(1		)
Bankruptcy reorganization items	(483		)	—
Other	16			13
Changes in working capital:
Accounts receivable, net	24			65
Inventory	33			18
Prepayments and other current assets	19			28
Accounts payable and accrued liabilities	38			43
Changes in non-current assets	—			(10		)
Changes in non-current liabilities	(1		)	3
Net cash provided by operating activities	149			249
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(31		)	(125		)
Acquisitions, net of cash acquired	(3,263		)	—
Distributions from unconsolidated investments	2			8
Net cash used in investing activities	(3,292		)	(117		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings, net of debt issuance costs	425			198
Repayments of borrowings	(299		)	(5		)
Proceeds from issuance of equity, net of issuance costs	150			—
Preferred stock dividends paid	(5		)	(5		)
Interest rate swap settlement payments	(4		)	(4		)
Acquisition of noncontrolling interest	(375		)	—
Payments related to bankruptcy financing	(119		)	—
Other financing	(1		)	(2		)
Net cash provided by (used in) financing activities	(228		)	182
Net increase (decrease) in cash, cash equivalents and restricted cash	(3,371		)	314
Cash, cash equivalents and restricted cash, beginning of period	3,838			544
Cash, cash equivalents and restricted cash, end of period	$	467		$	858

See the notes to consolidated financial statements.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 1—Basis of Presentation and Organization

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to interim financial reporting as prescribed by the SEC. The year-end consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by the Generally Accepted Accounting Principles of the United States of America (“GAAP”). The unaudited consolidated financial statements contained in this report include all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. Certain prior period amounts in our unaudited consolidated financial statements have been reclassified to conform to current year presentation. These interim financial statements should be read together with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2016 , filed with the SEC on February 24, 2017, which we refer to as our “Form 10-K.” Unless the context indicates otherwise, throughout this report, the terms “Dynegy,” “the Company,” “we,” “us,” “our,” and “ours” are used to refer to Dynegy Inc. and its direct and indirect subsidiaries.

We sell electric energy, capacity and ancillary services primarily on a wholesale basis from our power generation facilities. We also serve residential, municipal, commercial and industrial customers primarily in MISO and PJM through our Homefield Energy and Dynegy Energy Services retail businesses. We report the results of our power generation business as six segments in our unaudited consolidated financial statements: (i) PJM, (ii) ISO-NE/NYISO (“NY/NE”), (iii) ERCOT, (iv) MISO, (v) IPH, and (vi) CAISO. Our consolidated financial results also reflect corporate-level expenses such as general and administrative expense, interest expense, and income tax benefit (expense). All significant intercompany transactions have been eliminated. Please read Note 19—Segment Information for further discussion.

On February 2, 2017 (the “Emergence Date”), Illinois Power Generating Company (“Genco”) emerged from bankruptcy. Please read Note 18—Genco Chapter 11 Bankruptcy and Emergence for further discussion.

Note 2—Accounting Policies

The accounting policies followed by the Company are set forth in Note 2—Summary of Significant Accounting Policies in our Form 10-K. The accompanying unaudited consolidated financial statements include our accounts and the accounts of our majority-owned or controlled subsidiaries. Accounting policies for all of our operations are in accordance with GAAP. Except for the adoption of new policies as described below, there have been no significant changes to our accounting policies during the three months ended March 31, 2017 .

Use of Estimates. The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make informed estimates and judgments that affect our reported financial position and results of operations based on currently available information. Actual results could differ materially from our estimates. The results of operations for the interim periods presented in this Form 10-Q are not necessarily indicative of the results to be expected for the full year or any other interim period due to seasonal fluctuations in demand for our energy products and services, changes in commodity prices, timing of maintenance and other expenditures, and other factors.

Accounting Standards Adopted

Statement of Cash Flows. In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15-Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. To reduce current and future diversity in practice, the amendments in this ASU provide guidance for several cash flow classification issues identified where current GAAP is either unclear or does not include specific guidance. We adopted this ASU on January 1, 2017 and applied the amendments on a retrospective basis. The adoption of this ASU affected the classification of prepayments for future planned outage work performed under long-term service agreements. The majority of the cash prepayments required under these agreements will now be reflected as cash outflows from investing activities and the remainder will be classified as cash outflows from operating activities, based on whether they are anticipated to be expensed or capitalized. As a result of the retrospective application of this ASU, we reclassified approximately $60 million of cash prepayments from operating activities to investing activities in our unaudited consolidated statement of cash flows for the three months ended March 31, 2016.

In November 2016, the FASB issued ASU 2016-18-Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We adopted this ASU as of January 1, 2017 and applied the amendments on a retrospective basis. As a result of the retrospective application of this ASU, changes in restricted cash of $2 million previously reflected as cash flows from operating activities is now reflected in Net increase (decrease) in cash, cash equivalents, and restricted cash in our unaudited consolidated statement of cash flows for the three months ended March 31, 2016. Additionally, restricted cash of $39 million and $37 million are now reflected in the beginning of period and end of period cash, cash equivalents and restricted cash line items, respectively, of the statement of cash flow for the three months ended March 31, 2016. Please read Note 7—Cash Flow Information for further discussion.

Compensation. In March 2016, the FASB issued ASU 2016-09-Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. We adopted this ASU on January 1, 2017 with no material impact on our unaudited consolidated financial statements.

Goodwill. In January 2017, the FASB issued ASU 2017-04-Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measure of goodwill, the amendments in this ASU eliminate step two from the goodwill impairment test. An entity will no longer be required to calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination to determine the impairment of goodwill. The amendments in this ASU will now require goodwill impairment to be measured by the amount by which the carrying value of the reporting unit exceeds its fair value. The guidance in this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Upon adoption, an entity shall apply the guidance in this ASU prospectively with early adoption permitted for annual goodwill tests performed after January 1, 2017. We adopted this ASU on January 1, 2017 with no material impact on our unaudited consolidated financial statements.

Accounting Standards Not Yet Adopted

Leases. In February 2016, the FASB issued ASU 2016-02-Leases (Topic 842). The amendments in this ASU will mainly require lessees to recognize lease assets and lease liabilities, for those leases classified as operating leases under GAAP, in their balance sheet. The lease assets recognized in the balance sheet will represent a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The lease liability recognized in the balance sheet will represent the lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. The guidance in this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating this ASU and any potential impacts the adoption of this ASU will have on our unaudited consolidated financial statements.

Revenue from Contracts with Customers. In May 2014, the FASB issued ASU 2014-09-Revenue from Contracts with Customers (Topic 606). This ASU, and subsequently issued amendments to the standard, develop a common revenue standard by removing inconsistencies and weaknesses in revenue requirements, providing a more robust framework for addressing revenue issues, improving comparability of revenue recognition practices, providing more useful information to users of financial statements, and simplifying the preparation of financial statements. The guidance in this ASU and its amendments are effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted for interim and annual periods beginning after December 15, 2016. We have established an implementation team to assess the impact the new accounting standard will have on our financial statements upon adoption and have not identified a material change to the timing of our revenue recognition. Additionally, our implementation team is currently assessing the impact of the standard by reviewing revenue earned from contracts to determine if changes in our policies and controls are necessary. The implementation team has identified that we will need to expand our footnote disclosures to include a presentation of the source of our revenue. We believe this disclosure will include a regional presentation of our revenues, similar to our presentation of revenues by segment, disaggregated by revenue type - power sales, capacity sales, and ancillary services. We anticipate using the modified retrospective method, and, while our evaluation of the new accounting standard is still ongoing, we have not yet identified any significant changes to our existing policies and controls.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 3—Acquisitions and Divestitures

Acquisition

ENGIE Acquisition. On February 7, 2017 (the “ENGIE Acquisition Closing Date”), pursuant to the terms of the stock purchase agreement, as amended and restated on June 27, 2016, (the “ENGIE Acquisition Stock Purchase Agreement”), Dynegy acquired approximately 9,017 MW of generation from GDF SUEZ Energy North America, Inc. (“GSENA”) and International Power, S.A. (the “Seller”), including (i) 15 natural gas-fired facilities located in Illinois, Massachusetts, New Jersey, Ohio, Pennsylvania, Texas, Virginia, and West Virginia, (ii) one coal-fired facility in Texas, and (iii) one waste coal-fired facility in Pennsylvania for a base purchase price of approximately $3.3 billion in cash, subject to certain adjustments (the “ENGIE Acquisition”). On February 2, 2017, FERC issued an order accepting the December 27, 2016 Compliance Filing of Atlas Power Finance, LLC, Dynegy, and ECP (collectively, “Applicants”), which proposed mitigation measures in response to market power concerns identified by FERC in its December 22, 2016 order conditionally authorizing the ENGIE Acquisition. In this order, FERC accepted, among other commitments, Applicants’ proposal to divest at least 224 MW in the Southeast New England capacity zone in ISO-NE, and Applicants’ commitment to execute agreements to sell such capacity by August 7, 2017.

Stock Purchase Agreement-Terawatt and ECP Buyout. On February 24, 2016, Dynegy entered into a Stock Purchase Agreement with Terawatt Holdings, LP (“Terawatt”), an affiliate of the ECP Funds (the “PIPE Stock Purchase Agreement”), pursuant to which at the ENGIE Acquisition Closing Date, Dynegy issued to Terawatt 13,711,152 shares (the “PIPE Shares”) of Dynegy common stock for $150 million (the “PIPE Transaction”). In connection with the closing of the PIPE Transaction, Dynegy and Terawatt entered into an Investor Rights Agreement, (the “Investor Rights Agreement”). Under the Investor Rights Agreement, Terawatt is entitled to certain rights, including certain registration rights, rights of first refusal with respect to certain issuances of our equity and the designation of one individual to serve on our Board of Directors as long as Terawatt and its affiliates own at least 10 percent of our common stock. Further, the Investor Rights Agreement subjects Terawatt to certain obligations, including certain voting obligations and customary standstill and lock-up periods. Separately, Dynegy settled its payment obligation to Energy Capital Partners (“ECP”) of $375 million (the “ECP Buyout Price”). This payment is recorded as a reduction in additional paid-in capital in our unaudited consolidated balance sheet and is reflected as a purchase of a noncontrolling interest in financing activities in our unaudited consolidated statement of cash flows.

Business Combination Accounting. The ENGIE Acquisition has been accounted for in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date, February 7, 2017. A summary of the various techniques used to fair value the identifiable assets and liabilities, as well as their classification within the fair value hierarchy are listed below.


•	Working capital was valued using available market information (Level 2).


•	Acquired property, plant and equipment (“PP&E”), excluding those assets classified as held-for-sale, was valued using a discounted cash flow (“DCF”) analysis based upon a debt-free, free cash flow model (Level 3). The DCF model was created for each power generation facility based on its remaining useful life, and:


◦	for the years 2017 and 2018, included gross margin forecasts using quoted forward commodity market prices;


◦	for the years 2019 through 2026, we used gross margin forecasts based upon commodity and capacity price curves developed internally using forward New York Mercantile Exchange natural gas prices and supply and demand factors;


◦	for periods beyond 2026, we assumed a 2.5 percent growth rate.

We also used management’s forecasts of operations and maintenance expense, general and administrative expense, as well as capital expenditures for the years 2017 through 2021, and for years thereafter assumed a 2.5 percent growth rate. These cash flows were discounted using discount rates of approximately 9 percent to 13 percent for gas-fired, and approximately 13 percent to 14 percent for coal-fired, generation facilities, based upon the plant’s age, efficiency, region, and years until retirement.


•	Acquired PP&E classified as held-for-sale was valued based upon the sale price of the assets (Level 2).


•	Acquired derivatives were valued using the methods described in Note 6—Fair Value Measurements (Level 2 or Level 3).


•	Contracts with terms that were not at current market prices were also valued using a DCF analysis (Level 3). The cash flows generated by the contracts were compared with their cash flows based on current market prices with the resulting difference recorded as either an intangible asset or liability.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016


•	Asset retirement obligations (“AROs”) were recorded in accordance with ASC 410, Asset Retirement and Environmental Obligations (Level 3).

The following table summarizes the consideration paid and the provisional fair value amounts recognized for the assets acquired and liabilities assumed related to the ENGIE Acquisition, as of the acquisition date, February 7, 2017:



(amounts in millions)
Base purchase price	$	3,300
Working capital adjustments and other (1)	(32		)
Fair value of total consideration transferred	$	3,268

Cash	$	20
Accounts receivable	22
Inventory	101
Prepayments and other current assets	3
Assets from risk management activities (including current portion of $21 million)	25
Property, plant and equipment	2,751
Investment in unconsolidated affiliate	152
Intangible assets (including current portion of $7 million)	50
Assets held-for-sale	445
Other long-term assets	131
Total assets acquired	3,700

Accounts payable	24
Liabilities from risk management activities (including current portion of $13 million)	16
Asset retirement obligations	19
Intangible liabilities (including current portion of $16 million)	30
Deferred income taxes, net	342
Other long-term liabilities	1
Total liabilities assumed	432
Net assets acquired	$	3,268

__________________________________________


(1)	Includes a non-cash working capital adjustment of $15 million .

The following table summarizes certain information related to the ENGIE Acquisition, which is included in our unaudited consolidated statements of operations:



	Three Months Ended March 31,
(amounts in millions)	2017			2016
Acquisition costs	$	31		$	2
Revenues	$	78		N/A
Operating loss	$	(17	)	N/A

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Pro Forma Results. The unaudited pro forma financial results for the three months ended March 31, 2017 and 2016 assume the ENGIE Acquisition occurred on January 1, 2016. The unaudited pro forma financial results may not be indicative of the results that would have occurred had the acquisition been completed as of January 1, 2016, nor are they indicative of future results of operations.



	Three Months Ended March 31,
(amounts in millions)	2017		2016
Revenue	$	1,303	$	1,286
Net income (loss)	$	562	$	(33	)
Net income (loss) attributable to Dynegy Inc.	$	563	$	(33	)

Divestitures

On February 23, 2017, Dynegy reached an agreement with LS Power for the sale of two peaking facilities in PJM for $480 million in cash. The assets to be sold, which were recently acquired in the ENGIE Acquisition, include the Armstrong and Troy facilities totaling 1,269 MW. The sale is expected to close in the second half of 2017 with the proceeds to be allocated to debt reduction.

As a result, we classified the Armstrong and Troy facilities as long-term assets held-for-sale. A detail of assets held-for-sale as of March 31, 2017 is presented below, in millions:



Inventory	$	11
Property, plant & equipment	440
Assets held-for-sale	$	451

Note 4—Unconsolidated Investments

Equity Method Investments

NELP. In connection with the ENGIE Acquisition, we acquired a 50 percent interest in Northeast Energy, LP (“NELP”), a joint venture with NextEra Energy, Inc., which indirectly owns the Bellingham NEA facility and the Sayreville facility. At March 31, 2017 , our equity method investment in NELP included in our unaudited consolidated balance sheets was $149 million . Upon the acquisition of our NELP investment, we recognized basis differences in the net assets of approximately $14 million related to PP&E. These basis differences are being amortized over their respective useful lives. Our risk of loss related to our equity method investment is limited to our investment balance.

For the three months ended March 31, 2017 , we recorded $1 million in equity losses related to our investment in NELP, which is reflected in Earnings from unconsolidated investments in our unaudited consolidated statements of operations. For the three months ended March 31, 2017 , we received a distribution of $2 million , all of which was considered to be a return of investment using the cumulative earnings approach and reflected as Distributions from unconsolidated investments in our unaudited consolidated statements of cash flows.

Elwood. On November 21, 2016, Dynegy sold its 50 percent equity interest in Elwood Energy, LLC, a limited liability company (“Elwood Energy”) and Elwood Expansion LLC, a limited liability company (and together with Elwood Energy “Elwood”), to J-Power USA Development Co. Ltd. for approximately $173 million (the “Elwood Sale”).

For the three months ended March 31, 2016 , we recorded $2 million in equity earnings related to our investment in Elwood which is reflected in Earnings from unconsolidated investments in our unaudited consolidated statements of operations. For the three months ended March 31, 2016 , we received distributions of $8 million , all of which was considered to be a return of investment using the accumulated earnings approach and reflected as Distributions from unconsolidated investments in our unaudited consolidated statements of cash flows.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 5—Risk Management Activities, Derivatives and Financial Instruments

The nature of our business involves commodity market and financial risks. Specifically, we are exposed to commodity price variability related to our power generation business. Our commercial team manages these commodity price risks with financially and physically settled contracts consistent with our commodity risk management policy. Our treasury team manages our interest rate risk.

Our commodity risk management policy gives us the flexibility to sell energy and capacity and purchase fuel through a combination of spot market sales and near-term contractual arrangements (generally over a rolling one - to three -year time frame). Our commodity risk management goal is to protect cash flow in the near-term while keeping the ability to capture value longer-term.

Many of our contractual arrangements are derivative instruments and are accounted for at fair value as part of Revenues in our unaudited consolidated statements of operations. We have other contractual arrangements such as capacity forward sales arrangements, tolling arrangements, fixed price coal purchases, and retail power sales, which do not receive recurring fair value accounting treatment because these arrangements do not meet the definition of a derivative or are designated as “normal purchase, normal sale,” in accordance with ASC 815, Derivatives and Hedging. As a result, the gains and losses with respect to these arrangements are not reflected in the unaudited consolidated statements of operations until the delivery occurs.

Quantitative Disclosures Related to Financial Instruments and Derivatives

As of March 31, 2017 , we had net purchases and sales of derivative contracts outstanding in the following quantities:



Contract Type	Quantity		Unit of Measure	Fair Value (1)
(dollars and quantities in millions)	Purchases (Sales)			Asset (Liability)
Commodity contracts:
Electricity derivatives (2)	(71	)	MWh	$	(40	)
Electricity basis derivatives (3)	(19	)	MWh	$	(1	)
Natural gas derivatives (2)	432		MMBtu	$	54
Natural gas basis derivatives	139		MMBtu	$	(4	)
Physical heat rate derivatives	144/(16)		MMBtu/MWh	$	8
Emissions derivatives	10		Metric Ton	$	(13	)
Interest rate swaps	767		U.S. Dollar	$	(23	)
Common stock warrants (4)	24		Warrant	$	(6	)

__________________________________________


(1)	Includes both asset and liability risk management positions but excludes margin and collateral netting of $66 million .


(2)	Mainly comprised of swaps and physical forwards.


(3)	Comprised of FTRs and swaps.


(4)	Each warrant is convertible into one share of Dynegy common stock.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Derivatives on the Balance Sheet. The following tables present the fair value and balance sheet classification of derivatives in our unaudited consolidated balance sheets as of March 31, 2017 and December 31, 2016 . As of March 31, 2017 and December 31, 2016 , there were no gross amounts available to be offset that were not offset in our unaudited consolidated balance sheets.



			March 31, 2017
						Gross amounts offset in the balance sheet
Contract Type		Balance Sheet Location	Gross Fair Value			Contract Netting			Collateral or Margin Received or Paid		Net Fair Value
(amounts in millions)
Derivative assets:
	Commodity contracts	Assets from risk management activities	$	336		$	(173	)	$	—	$	163
	Total derivative assets		$	336		$	(173	)	$	—	$	163

Derivative liabilities:
	Commodity contracts	Liabilities from risk management activities	$	(332	)	$	173		$	66	$	(93	)
	Interest rate contracts	Liabilities from risk management activities	(23		)	—			—		(23		)
	Common stock warrants	Accrued liabilities, other current liabilities and other long-term liabilities	(6		)	—			—		(6		)
	Total derivative liabilities		$	(361	)	$	173		$	66	$	(122	)
Total derivatives			$	(25	)	$	—		$	66	$	41



			December 31, 2016
						Gross amounts offset in the balance sheet
Contract Type		Balance Sheet Location	Gross Fair Value			Contract Netting			Collateral or Margin Received or Paid		Net Fair Value
(amounts in millions)
Derivative assets:
	Commodity contracts	Assets from risk management activities	$	311		$	(165	)	$	—	$	146
	Total derivative assets		$	311		$	(165	)	$	—	$	146

Derivative liabilities:
	Commodity contracts	Liabilities from risk management activities	$	(329	)	$	165		$	54	$	(110	)
	Interest rate contracts	Liabilities from risk management activities	(30		)	—			—		(30		)
	Common stock warrants	Accrued liabilities and other current liabilities	(1		)	—			—		(1		)
	Total derivative liabilities		$	(360	)	$	165		$	54	$	(141	)
Total derivatives			$	(49	)	$	—		$	54	$	5

Certain of our derivative instruments have credit limits that require us to post collateral. The amount of collateral required to be posted is a function of the net liability position of the derivative as well as our established credit limit with the respective counterparty. If our credit rating were to worsen, the counterparties could require us to post additional collateral. The amount of additional collateral that would be required to be posted would vary depending on the extent of change in our credit rating as well as the requirements of the individual counterparty. As of March 31, 2017 , the aggregate fair value of all commodity derivative instruments containing credit-risk-related contingent features, in a liability position and not fully collateralized, is $9 million for which we have posted no collateral. Transactions with our clearing brokers are excluded as they are fully collateralized. Our

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

remaining derivative instruments do not have credit-related collateral contingencies as they are included within our first-lien collateral program.

The following table summarizes our cash collateral posted as of March 31, 2017 and December 31, 2016 , within Prepayments and other current assets in our unaudited consolidated balance sheets and the amount applied against short-term risk management activities:



Location on Balance Sheet	March 31, 2017		December 31, 2016
(amounts in millions)
Gross collateral posted with counterparties	$	101	$	116
Less: Collateral netted against risk management liabilities	66		54
Net collateral within Prepayments and other current assets	$	35	$	62

Impact of Derivatives on the Unaudited Consolidated Statements of Operations

We elect not to designate derivatives related to our power generation business and interest rate instruments as cash flow or fair value hedges. Thus, we account for changes in the fair value of these derivatives within our unaudited consolidated statements of operations.

Our unaudited consolidated statements of operations for the three months ended March 31, 2017 and 2016 include the impact of derivative financial instruments as presented below:



Derivatives Not Designated as Hedges	Location of Gain (Loss) Recognized in Income on Derivatives	Three Months Ended March 31,
Derivatives Not Designated as Hedges		2017		2016
(amounts in millions)
Commodity contracts	Revenues	$	184	$	192
Interest rate contracts	Interest expense	$	2	$	(8	)
Common stock warrants	Other income and (expense), net	$	12	$	1

Note 6—Fair Value Measurements

We apply the market approach for recurring fair value measurements, employing valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We have consistently used the same valuation techniques for all periods presented. Please read Note 2 — Summary of Significant Accounting Policies — Fair Value Measurements in our Form 10-K for further discussion.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 , and are presented on a gross basis before consideration of amounts netted under master netting agreements and the application of collateral and margin paid:



	Fair Value as of March 31, 2017
(amounts in millions)	Level 1			Level 2			Level 3			Total
Assets:
Assets from commodity risk management activities:
Electricity derivatives	$	—		$	161		$	10		$	171
Natural gas derivatives	—			131			16			147
Physical heat rate derivatives	—			17			—			17
Emissions derivatives	—			1			—			1
Total assets from commodity risk management activities	$	—		$	310		$	26		$	336
Liabilities:										.
Liabilities from commodity risk management activities:
Electricity derivatives	$	—		$	(185	)	$	(27	)	$	(212	)
Natural gas derivatives	—			(79		)	(18		)	(97		)
Physical heat rate derivatives	—			(9		)	—			(9		)
Emissions derivatives	—			(14		)	—			(14		)
Total liabilities from commodity risk management activities	—			(287		)	(45		)	(332		)
Liabilities from interest rate contracts	—			(23		)	—			(23		)
Liabilities from outstanding common stock warrants	(6		)	—			—			(6		)
Total liabilities	$	(6	)	$	(310	)	$	(45	)	$	(361	)



	Fair Value as of December 31, 2016
(amounts in millions)	Level 1			Level 2			Level 3			Total
Assets:
Assets from commodity risk management activities:
Electricity derivatives	$	—		$	118		$	20		$	138
Natural gas derivatives	—			169			4			173
Total assets from commodity risk management activities	$	—		$	287		$	24		$	311
Liabilities:
Liabilities from commodity risk management activities:
Electricity derivatives	$	—		$	(245	)	$	(12	)	$	(257	)
Natural gas derivatives	—			(52		)	(10		)	(62		)
Emissions derivatives	—			(10		)	—			(10		)
Total liabilities from commodity risk management activities	—			(307		)	(22		)	(329		)
Liabilities from interest rate contracts	—			(30		)	—			(30		)
Liabilities from outstanding common stock warrants	(1		)	—			—			(1		)
Total liabilities	$	(1	)	$	(337	)	$	(22	)	$	(360	)

Level 3 Valuation Methods. The electricity derivatives classified within Level 3 include financial swaps executed in illiquid trading locations or on long dated contracts, capacity contracts and FTRs. The curves used to generate the fair value of the financial swaps are based on basis adjustments applied to forward curves for liquid trading points, while the curves for the capacity deals are based upon auction results in the marketplace, which are infrequently executed. The forward market price of FTRs is derived using historical congestion patterns within the marketplace and heat rate derivative valuations are derived using a Black-Scholes spread model, which uses forward natural gas and power prices, market implied volatilities, and modeled correlation

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

values. The natural gas derivatives classified within Level 3 include financial swaps, basis swaps, and physical purchases executed in illiquid trading locations or on long dated contracts.

Sensitivity to Changes in Significant Unobservable Inputs for Level 3 Valuations. The significant unobservable inputs used in the fair value measurement of our commodity instruments categorized within Level 3 of the fair value hierarchy include estimates of forward congestion, power price spreads, natural gas and coal pricing, and the difference between our plant locational prices to liquid hub prices. Power price spreads, natural gas and coal pricing, and the difference between our plant locational prices to liquid hub prices are generally based on observable markets where available, or derived from historical prices and forward market prices from similar observable markets when not available. Increases in the price of the spread on a buy or sell position in isolation would result in a higher/lower fair value measurement. The significant unobservable inputs used in the valuation of Dynegy’s contracts classified as Level 3 as of March 31, 2017 are as follows:



Transaction Type	Quantity		Unit of Measure	Net Fair Value			Valuation Technique	Significant Unobservable Input	Significant Unobservable Input Range
(dollars in millions)
Electricity derivatives:
Forward contracts—power (1)	(19	)	Million MWh	$	(17	)	Basis spread + liquid location	Basis spread	$4.25 - $6.25
FTRs	(12	)	Million MWh	$	—		Historical congestion	Forward price	$0 - $6.00
Natural gas derivatives (1)	119		Million MMBtu	$	(2	)	Illiquid location fixed price	Forward price	$2.50 - $3.00

__________________________________________


(1)	Represents forward financial and physical transactions at illiquid pricing locations and long-dated contracts.

The following tables set forth a reconciliation of changes in the fair value of financial instruments classified as Level 3 in the fair value hierarchy:



	Three Months Ended March 31, 2017
(amounts in millions)	Electricity Derivatives			Natural Gas Derivatives			Total
Balance at December 31, 2016	$	8		$	(6	)	$	2
Acquired derivatives	1			—			1
Total gains (losses) included in earnings	(46		)	11			(35		)
Settlements (1)	20			(7		)	13
Balance at March 31, 2017	$	(17	)	$	(2	)	$	(19	)
Unrealized gains (losses) relating to instruments held as of March 31, 2017	$	(46	)	$	11		$	(35	)



	Three Months Ended March 31, 2016
(amounts in millions)	Electricity Derivatives			Natural Gas Derivatives			Coal Derivatives			Total
Balance at December 31, 2015	$	(18	)	$	(32	)	$	2		$	(48	)
Total gains included in earnings	8			5			—			13
Settlements (1)	(7		)	9			(1		)	1
Balance at March 31, 2016	$	(17	)	$	(18	)	$	1		$	(34	)
Unrealized gains relating to instruments held as of March 31, 2016	$	8		$	5		$	—		$	13

_________________________________________


(1)	For purposes of these tables, we define settlements as the beginning of period fair value of contracts that settled during the period.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Gains and losses recognized for Level 3 recurring items are included in Revenues in our unaudited consolidated statements of operations for commodity derivatives. We believe an analysis of commodity instruments classified as Level 3 should be undertaken with the understanding that these items generally serve as economic hedges of our power generation portfolio. We did not have any transfers between Level 1, Level 2 and Level 3 for the three months ended March 31, 2017 and 2016 .

Nonfinancial Assets and Liabilities. Nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of such assets and liabilities and their placement within the fair value hierarchy.

During the three months ended March 31, 2017 , as a result of impairment testing, we measured our Killen facility at fair value using a discounted cash flow model classified as Level 3 within the fair value hierarchy. See Note 9—Property, Plant and Equipment for further discussion. During the three months ended March 31, 2017 , we fair valued the ENGIE Acquisition. See Note 3—Acquisitions and Divestitures for further discussion and for the fair value hierarchy classifications of the valuation.

Fair Value of Financial Instruments. The following table discloses the fair value of financial instruments which are not recognized at fair value in our unaudited consolidated balance sheets. Unless otherwise noted, the fair value of debt as reflected in the table has been calculated based on the average of certain available broker quotes as of March 31, 2017 and December 31, 2016 , respectively.



		March 31, 2017						December 31, 2016
(amounts in millions)	Fair Value Hierarchy	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Dynegy Inc.:
Tranche C-1 Term Loan, due 2024 (1)	Level 2	$	(2,130	)	$	(2,230	)	$	(1,994	)	$	(2,025	)
Tranche B-2 Term Loan, due 2020 (1)	Level 2	$	—		$	—		$	(219	)	$	(225	)
Revolving Facility (1)	Level 2	$	(300	)	$	(300	)	$	—		$	—
6.75% Senior Notes, due 2019 (1)	Level 2	$	(2,084	)	$	(2,163	)	$	(2,083	)	$	(2,137	)
7.375% Senior Notes, due 2022 (1)	Level 2	$	(1,732	)	$	(1,728	)	$	(1,731	)	$	(1,665	)
5.875% Senior Notes, due 2023 (1)	Level 2	$	(493	)	$	(456	)	$	(492	)	$	(431	)
7.625% Senior Notes, due 2024 (1)	Level 2	$	(1,236	)	$	(1,194	)	$	(1,237	)	$	(1,156	)
8.034% Senior Notes, due 2024 (1)	Level 2	$	(182	)	$	(171	)	$	—		$	—
8.00% Senior Notes, due 2025 (1)	Level 2	$	(738	)	$	(718	)	$	(738	)	$	(703	)
7.00% Amortizing Notes, due 2019 (TEUs) (1)	Level 2	$	(71	)	$	(75	)	$	(78	)	$	(90	)
Forward capacity agreement (1)	Level 3	$	(207	)	$	(207	)	$	(205	)	$	(205	)
Inventory financing agreements	Level 3	$	(61	)	$	(61	)	$	(129	)	$	(127	)
Equipment financing agreements (1)	Level 3	$	(83	)	$	(83	)	$	(73	)	$	(73	)
Genco:
Liabilities subject to compromise (2)	Level 3	$	—		$	—		$	(825	)	$	(366	)

__________________________________________


(1)	Carrying amounts include unamortized discounts and debt issuance costs. Please read Note 12—Debt for further discussion.


(2)	Carrying amounts represent the Genco senior notes that have been classified as liabilities subject to compromise as of December 31, 2016. The fair value of the senior notes was equal to the Genco Plan consideration and is a Level 3 valuation due to a lack of observable inputs that make up the consideration. Please read Note 22—Genco Chapter 11 Bankruptcy in our Form 10-K for further details.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 7—Cash Flow Information

The supplemental disclosures of our non-cash investing and financing information are as follows:



	Three Months Ended March 31,
(amounts in millions)	2017		2016
Change in capital expenditures included in accounts payable	$	5	$	1
Change in capital expenditures pursuant to an equipment financing agreement	$	9	$	1
Issuance of 2017 Warrants	$	17	$	—
Issuance of senior notes as part of the Genco restructuring	$	182	$	—
Non-cash working capital adjustment to purchase price of the ENGIE acquisition	$	15	$	—

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our unaudited consolidated balance sheets that sum to the total of the same such amounts shown in our unaudited consolidated statements of cash flows:



	Three Months Ended March 31,
(amounts in millions)	2017		2016
Cash and cash equivalents	$	467	$	821
Restricted cash included in current assets related to collateral	—		37
Total cash, cash equivalents and restricted cash	$	467	$	858

Note 8—Inventory

A summary of our inventories is as follows:



(amounts in millions)	March 31, 2017		December 31, 2016
Materials and supplies	$	247	$	182
Coal (1)	225		238
Fuel oil (1)	22		17
Gas	13		—
Emissions allowances (2)	6		8
Total	$	513	$	445

__________________________________________

(1)

At March 31, 2017 , approximately $3 million and $9 million of the coal and fuel oil inventory, respectively, are part of an inventory financing agreement. At December 31, 2016 , approximately $44 million and $12 million of the coal and fuel oil inventory, respectively, were part of an inventory financing agreement. Please read Note 12—Debt — Brayton Point Inventory Financing for further discussion.


(2)	At March 31, 2017 and December 31, 2016 , a portion of this inventory was held as collateral by one of our counterparties as part of an inventory financing agreement. Please read Note 12—Debt — Emissions Repurchase Agreements for further discussion.

Note 9—Property, Plant and Equipment

A summary of our property, plant and equipment is as follows:



(amounts in millions)	March 31, 2017			December 31, 2016
Power generation	$	10,072		$	7,537
Buildings and improvements	1,184			944
Office and other equipment	117			98
Property, plant and equipment	11,373			8,579
Accumulated depreciation	(1,654		)	(1,458		)
Property, plant and equipment, net	$	9,719		$	7,121

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Impairments

Killen . On March 20, 2017, Dayton Power and Light Co., the partner and operator of Killen, announced the shutdown of its Killen generation facility by June 2018. We performed an impairment test which resulted in a negative fair value. As a result, we recorded an impairment charge of approximately $20 million recorded to Impairments in our unaudited consolidated statements of operations for the three months ended March 31, 2017 .

Note 10—Joint Ownership of Generating Facilities

We hold ownership interests in certain jointly owned generating facilities. We are entitled to the proportional share of the generating capacity and the output of each unit equal to our ownership interests. We pay our share of capital expenditures, fuel inventory purchases, and operating expenses, except in certain instances where agreements have been executed to limit certain joint owners’ maximum exposure to additional costs. Our share of revenues and operating costs of the jointly owned generating facilities is included within the corresponding financial statement line items in our unaudited consolidated statements of operations.

The following tables present the ownership interests of the jointly owned facilities as of March 31, 2017 and December 31, 2016 included in our unaudited consolidated balance sheets. Each facility is co-owned with one or more other generation companies.



	March 31, 2017
(dollars in millions)	Ownership Interest		Property, Plant and Equipment		Accumulated Depreciation			Construction Work in Progress		Total
Miami Fort	64.0	%	$	208	$	(44	)	$	4	$	168
Stuart (1)(2)	39.0	%	$	—	$	—		$	3	$	3
Conesville (1)	40.0	%	$	61	$	(3	)	$	6	$	64
Zimmer	46.5	%	$	116	$	(29	)	$	6	$	93
Killen (1)(2)(3)	33.0	%	$	—	$	—		$	—	$	—



	December 31, 2016
(dollars in millions)	Ownership Interest		Property, Plant and Equipment		Accumulated Depreciation			Construction Work in Progress		Total
Miami Fort	64.0	%	$	207	$	(39	)	$	4	$	172
Stuart	39.0	%	$	—	$	—		$	4	$	4
Conesville	40.0	%	$	61	$	(3	)	$	6	$	64
Zimmer	46.5	%	$	115	$	(25	)	$	6	$	96
Killen	33.0	%	$	19	$	(2	)	$	3	$	20

__________________________________________


(1)	Facilities not operated by Dynegy.


(2)	Scheduled to be retired by mid-2018.


(3)	Please read Note 9—Property, Plant and Equipment for further discussion of impairment recognized for the three months ended March 31, 2017.

On February 23, 2017, Dynegy reached an agreement with American Electric Power (“AEP”) to realign and consolidate each company’s ownership interests in the Conesville and Zimmer Power Stations in Ohio. Under the agreement, Dynegy will sell its 40 percent ownership interest in Conesville to AEP, and will acquire AEP’s 25.4 percent ownership interest in Zimmer. As a result, Dynegy will own 71.9 percent of the Zimmer facility and will no longer have an ownership interest in the AEP operated Conesville facility. No cash will be exchanged in the transaction and no additional debt will be incurred by either party. AEP will return a previously issued letter of credit totaling $58 million to Dynegy. The transaction is expected to close in the second half of 2017.

On April 21, 2017, Dynegy reached an agreement with AES Ohio Generation, LLC and The Dayton Power and Light Company (collectively, “AES”) under which Dynegy will purchase AES’ 28.1 percent interest in Zimmer and 36 percent interest

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

in Miami Fort for $50 million in cash and the assumption of certain liabilities, subject to customary adjustments. The transaction is expected to close in the second half of 2017.

Note 11—Intangible Assets and Liabilities

The following table summarizes the components of our intangible assets and liabilities as of March 31, 2017 and December 31, 2016 :



	March 31, 2017									December 31, 2016
(amounts in millions)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Intangible Assets:
Electricity contracts	$	293		$	(219	)	$	74		$	260		$	(206	)	$	54
Gas transport contracts	29			(9		)	20			13			(6		)	7
Total intangible assets	$	322		$	(228	)	$	94		$	273		$	(212	)	$	61

Intangible Liabilities:
Electricity contracts	$	(31	)	$	20		$	(11	)	$	(28	)	$	26		$	(2	)
Coal contracts	(49		)	44			(5		)	(49		)	42			(7		)
Coal transport contracts	(86		)	76			(10		)	(86		)	73			(13		)
Gas transport contracts	(60		)	9			(51		)	(41		)	8			(33		)
Gas storage contracts	(2		)	—			(2		)	—			—			—
Total intangible liabilities	$	(228	)	$	149		$	(79	)	$	(204	)	$	149		$	(55	)
Intangible assets and liabilities, net	$	94		$	(79	)	$	15		$	69		$	(63	)	$	6

The following table presents our amortization expense (revenue) of intangible assets and liabilities for the three months ended March 31, 2017 and 2016 :



	Three Months Ended March 31,
(amounts in millions)	2017			2016
Electricity contracts, net (1)	$	15		$	16
Coal contracts, net (2)	(2		)	(12		)
Coal transport contracts, net (2)	(2		)	(7		)
Gas transport contracts, net (2)	—			17
Total	$	11		$	14

__________________________________________


(1)	The amortization of these contracts is recognized in Revenues or Cost of sales in our unaudited consolidated statements of operations.


(2)	The amortization of these contracts is recognized in Cost of sales in our unaudited consolidated statements of operations.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

The following table summarizes the components of our contract based intangible assets and liabilities recorded in connection with the ENGIE Acquisition in February 2017:



(amounts in millions/months)	Gross Carrying Amount			Weighted-Average Amortization Period
Intangible Assets:
Electricity contracts	$	34		39
Gas transport contracts	16			47
Total intangible assets	$	50		41

Intangible Liabilities:
Electricity contracts	$	(11	)	32
Gas contracts	—			1
Gas transport contracts	(17		)	35
Gas storage contracts	(2		)	13
Total intangible liabilities	$	(30	)	33
Total intangible assets and liabilities, net	$	20

Amortization expense (revenue), net related to intangible assets and liabilities recorded in connection with the ENGIE Acquisition for the next five years as of March 31, 2017 is as follows: 2017 — $(7) million , 2018 — $8 million , 2019 — $17 million , 2020 — $4 million and 2021 — $(1) million .

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 12—Debt

A summary of our long-term debt is as follows:



(amounts in millions)	March 31, 2017			December 31, 2016
Secured Obligations:
Tranche C-1 Term Loan, due 2024 (1)	$	2,224		$	2,000
Tranche B-2 Term Loan, due 2020	—			224
Revolving Facility	300			—
Forward Capacity Agreements	230			219
Inventory Financing Agreements	61			129
Subtotal secured obligations	2,815			2,572
Unsecured Obligations:
7.00% Amortizing Notes, due 2019 (TEUs)	73			80
6.75% Senior Notes, due 2019	2,100			2,100
7.375% Senior Notes, due 2022	1,750			1,750
5.875% Senior Notes, due 2023	500			500
7.625% Senior Notes, due 2024	1,250			1,250
8.034% Senior Notes, due 2024 (2)	182			—
8.00% Senior Notes, due 2025	750			750
Equipment Financing Agreements	110			97
Subtotal unsecured obligations	6,715			6,527
Total debt obligations	9,530			9,099
Unamortized debt discounts and issuance costs	(213		)	(120		)
	9,317			8,979
Less: Current maturities, including unamortized debt discounts and issuance costs, net	117			201
Total Long-term debt	$	9,200		$	8,778

__________________________________________


(1)	At December 31, 2016, the $2.0 billion Tranche C Term Loan was held by Dynegy Finance IV. Upon the close of the ENGIE Acquisition, this debt obligation became Dynegy Inc.’s secured obligation.


(2)	On the Genco Emergence Date, we issued the $182 million , 8.034 percent seven -year unsecured senior notes due 2024.

Credit Agreement

As of March 31, 2017 , we had a $3.769 billion credit agreement, as amended, that consisted of (i) a $2.224 billion seven -year senior secured term loan facility (the “Tranche C-1 Term Loan”) and (ii) $1.545 billion in senior secured revolving credit facilities (the “Revolving Facility,” and collectively with the Tranche C-1 Term Loan the “Credit Agreement”). During the three months ended March 31, 2017 , we made the following changes to the Credit Agreement:


•	On January 10, 2017, we amended the Credit Agreement (Fourth Amendment) to increase the revolver capacity by $45 million and to extend the maturity date on $450 million in revolver capacity to 2021, which was effective upon the ENGIE Acquisition Closing Date.


•	On the ENGIE Acquisition Closing Date, we amended the Credit Agreement (Fifth Amendment) to (i) reduce the interest rate applicable to the Tranche C Term Loan by 75 basis points and (ii) extend the maturity to 2024 of the existing Tranche B-2 Term Loan through the exchange of the outstanding initial Tranche B-2 Term Loan for the $2.224 billion Tranche C-1 Term Loan.

At March 31, 2017 , there was $300 million drawn on the Revolving Facility. We also had outstanding letters of credit (“LCs”) of approximately $367 million , which reduce the amount available under the Revolving Facility. The Credit Agreement contains customary events of default and affirmative and negative covenants, subject to certain specified exceptions, including a

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Senior Secured Leverage Ratio (as defined in the Credit Agreement) calculated on a rolling four quarters basis. Under the Credit Agreement, if Dynegy utilizes 25 percent or more of its Revolving Facility, Dynegy must be in compliance with the Consolidated Senior Secured Net Debt to Consolidated Adjusted EBITDA ratio of 4.00 :1.00. Our revolver usage at March 31, 2017 was 43 percent of the aggregate revolver commitment due to outstanding LCs and revolver draws. Based on the calculation outlined in the Credit Agreement, we were in compliance with these covenants as of March 31, 2017 .

Under the terms of the Credit Agreement, existing balances under our Forward Capacity Agreement, Inventory Financing Agreements, and Equipment Financing Agreements are excluded from Net Debt.

Interest Rate Swaps. During 2017, we amended our interest rate swaps to more closely match the terms of our Tranche C-1 Term Loan. The swaps have an aggregate notional value of approximately $767 million at an average fixed rate of 3.03 percent and expire during the second quarter of 2020. In lieu of paying the breakage fees related to terminating the old swaps and issuing the new swaps, the costs were incorporated into the terms of the new swaps. As a result, any cash flows related to the settlement of the swaps are reflected as a financing activity in our unaudited consolidated statements of cash flows.

Amortizing Notes

On June 21, 2016, in connection with the issuance of the tangible equity units (“TEUs”), Dynegy issued the Amortizing Notes with a principal amount of approximately $87 million . The Amortizing Notes mature on July 1, 2019. Each installment payment per Amortizing Note will be paid in cash and will constitute a partial repayment of principal and a payment of interest, computed at an annual rate of 7 percent . Interest will be calculated on the basis of a 360 day year consisting of twelve 30 day months. Payments will be applied first to the interest due and payable and then to the reduction of the unpaid principal amount, allocated as set forth in the Indenture.

The Indenture limits, among other things, the ability of Dynegy to consolidate, merge, sell, or dispose all or substantially all of its assets. If a fundamental change occurs, or if Dynegy elects to settle the prepaid stock contracts (“SPCs”) early, then the holders of the Amortizing Notes will have the right to require Dynegy to repurchase the Amortizing Notes at a repurchase price equal to the principal amount of the Amortizing Notes as of the repurchase date (as described in the supplemental indenture) plus accrued and unpaid interest. The Indenture also contains customary events of default which would permit the holders of the Amortizing Notes to declare those Amortizing Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely installment payments on the Amortizing Notes or other material indebtedness, the failure to satisfy covenants, and specified events of bankruptcy and insolvency.

Letter of Credit Facilities

Dynegy has an LC Reimbursement Agreement with Macquarie Bank Limited (“Macquarie Bank”), for an LC in an amount not to exceed $55 million . The expiry date of the facility was extended in August 2016 to September 19, 2017. At March 31, 2017 , there was $55 million outstanding under this LC.

Illinois Power Marketing Company (“IPM”) has an LC and reimbursement agreement with an issuing bank in which the issuing bank agrees to issue standby LCs in stated amounts not to exceed $25 million to support performance obligations and other general corporate activities of IPM and Illinois Power Resources Generating, LLC. Upon the Emergence Date, the IPM LC facility was collateralized by an $18 million LC issued under the Revolving Facility, and previous cash collateral backing the facility was released and returned to Dynegy. As of March 31, 2017 , there were $14 million in LCs outstanding under this facility.

Following the ENGIE Acquisition Closing Date, Dynegy entered into a Letter of Credit Reimbursement Agreement with an issuing bank, pursuant to which the issuing bank agreed to provide LCs in an amount not to exceed $50 million . The facility has a one -year tenor and may be extended at the Lender’s discretion for up to four additional one -year terms. As of March 31, 2017 , there were $40 million in LCs outstanding under this facility.

Forward Capacity Agreement

On March 29, 2017, we replaced our existing bilateral contract with a financial institution to sell a portion of our forward cleared PJM capacity auction volumes from PJM during the Planning Year 2017-2018, in the amount of $110 million , with a contract to sell a portion of our forward cleared PJM capacity auction volumes from PJM during the Planning Year 2019-2020 in the amount of $121 million . Dynegy will continue to be subject to the performance obligations as well as any associated performance penalties and bonus payments for those planning years. Together with the previous sale of a portion, or $109 million , of our capacity payments from PJM during the Planning Year 2018-2019, which was unchanged, the transaction is accounted for as a debt issuance of $230 million with an implied interest rate of 4.7 percent .

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Inventory Financing Agreements

Brayton Point Inventory Financing. Our Brayton Point facility has an inventory financing agreement (the “Inventory Financing Agreement”) for coal and fuel oil inventories, consisting of a debt obligation for existing and subsequent inventories, as well as a $15 million line of credit. Balances in excess of the $15 million line of credit are cash collateralized.

As the materials are purchased and delivered to our facilities, our debt obligation and line of credit increase based on the then market rate of the materials, transportation costs, and other expenses. The debt obligation increases for 85 percent of the total cost of the coal and for 90 percent of the total cost of the fuel oil. The line of credit increases for the remaining 15 percent and 10 percent for coal and oil costs, respectively. We repay the debt obligation and line of credit from revenues received, at the then market price, for the amount of the materials consumed, on a weekly basis.

As of March 31, 2017 , there was $13 million outstanding under this agreement. Both the debt obligation related to coal and the base level of fuel oil, as well as the line of credit, bear interest at an annual interest rate of the 3 -month LIBOR plus 5.6 percent . An availability fee is calculated on a per annum rate of 0.25 percent . Additionally, we had no collateral postings. The Inventory Financing Agreement terminates, and the remaining obligation, if any, becomes due and payable on May 31, 2017.

Emissions Repurchase Agreements. In August 2015, we entered into two repurchase transactions with a third party in which we sold approximately $78 million of RGGI inventory and received cash. In February 2017, we repurchased approximately $30 million of the previously sold RGGI inventory. We are obligated to repurchase the remaining inventory in February 2018 at a specified price with an annualized carry cost of approximately 3.49 percent . As of March 31, 2017 , there was $48 million , in aggregate, outstanding under these agreements.

Equipment Financing Agreements

Under certain of our contractual service agreements in which we receive maintenance and capital improvements for our gas-fueled generation fleet, we have obtained parts and equipment intended to increase the output, efficiency, and availability of our generation units. We have financed these parts and equipment under agreements with maturities ranging from 2017 to 2025. The portion of future payments attributable to principal will be classified as cash outflows from financing activities, and the portion of future payments attributable to interest will be classified as cash outflows from operating activities in our unaudited consolidated statements of cash flows. The related assets were recorded at the net present value of the payments of $83 million . The $27 million discount is currently being amortized as interest expense over the life of the payments.

Note 13—Commitments and Contingencies

Legal Proceedings

Set forth below is a summary of our material ongoing legal proceedings. We record accruals for estimated losses from contingencies when available information indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. In addition, we disclose matters for which management believes a material loss is reasonably possible. In all instances, management has assessed the matters below based on current information and made judgments concerning their potential outcome, giving consideration to the nature of the claim, the amount, if any, the nature of damages sought, and the probability of success. Management regularly reviews all new information with respect to such contingencies and adjusts its assessments and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties including unfavorable rulings or developments, it is possible that the ultimate resolution of our legal proceedings could involve amounts that are different from our currently recorded accruals, and that such differences could be material.

In addition to the matters discussed below, we are party to other routine proceedings arising in the ordinary course of business. Any accruals or estimated losses related to these matters are not material. In management’s judgment, the ultimate resolution of these matters will not have a material effect on our financial condition, results of operations, or cash flows.

Gas Index Pricing Litigation. We, through our subsidiaries, and other energy companies are named as defendants in several lawsuits claiming damages resulting from alleged price manipulation and false reporting of natural gas prices to various index publications from 2000-2002. The cases allege that the defendants engaged in an antitrust conspiracy to inflate natural gas prices in three states (Kansas, Missouri, and Wisconsin) during the relevant time period. The cases are consolidated in a multi-district litigation proceeding pending in the United States District Court for Nevada. On March 30, 2017, the court denied Plaintiffs’ motion to certify a class action, which may be subject to an interlocutory appeal requested by the plaintiffs on April 14, 2017. At this time we cannot reasonably estimate a potential loss.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Advatech Dispute. On September 2, 2016, Genco terminated its Second Amended and Restated Newton Flue Gas Desulfurization System Engineering, Procurement, Construction and Commissioning Services Contract dated as of December 15, 2014 with Advatech, LLC. Advatech issued Genco its final invoice on September 30, 2016 totaling $81 million . Genco contested the invoice on October 3, 2016 and believes the proper amount is less than $1 million . On October 27, 2016, Advatech initiated the dispute resolution process under the Contract and filed for arbitration on March 17, 2017. Settlement discussions required under the dispute resolution process have been unsuccessful. We believe that the risk of a material loss related to this dispute to be remote.

Other Contingencies

MISO 2015-2016 Planning Resource Auction. In May 2015, three complaints were filed at FERC regarding the Zone 4 results for the 2015-2016 Planning Resource Auction (“PRA”) conducted by MISO. Dynegy is a named party in one of the complaints. The complainants, Public Citizen, Inc., the Illinois Attorney General, and Southwestern Electric Cooperative, Inc., have challenged the results of the PRA as unjust and unreasonable, requested rate relief/refunds, and requested changes to the MISO PRA structure going forward. Complainants have also alleged that Dynegy may have engaged in economic or physical withholding in Zone 4 constituting market manipulation in the 2015-2016 PRA. The Independent Market Monitor for MISO (“MISO IMM”), which was responsible for monitoring the MISO 2015-2016 PRA, determined that all offers were competitive and that no physical or economic withholding occurred. The MISO IMM also stated, in a filing responding to the complaints, that there is no basis for the proposed remedies. We filed our Answer to these complaints and believe that we complied fully with the terms of the MISO tariff in connection with the 2015-2016 PRA, disputed the allegations, and will defend our actions vigorously. In addition, the Illinois Industrial Energy Consumers filed a complaint at FERC against MISO on June 30, 2015 requesting prospective changes to the MISO tariff. Dynegy also responded to this complaint.

On October 1, 2015, FERC issued an order of non-public, formal investigation, stating that shortly after the conclusion of the 2015-2016 PRA, FERC’s Office of Enforcement began a non-public informal investigation into whether market manipulation or other potential violations of FERC orders, rules, and regulations occurred before or during the PRA (the “Order”). The Order noted that the investigation is ongoing, and that the order converting the informal, non-public investigation to a formal, non-public investigation does not indicate that FERC has determined that any entity has engaged in market manipulation or otherwise violated any FERC order, rule, or regulation.

On December 31, 2015, FERC issued an order on the complaints requiring a number of prospective changes to the MISO tariff provisions associated with calculating Initial Reference Levels and Local Clearing Requirements, effective as of the 2016-2017 PRA. The order did not address the arguments of the complainants regarding the 2015-2016 PRA, and stated that those issues remain under consideration and will be addressed in a future order.

New Source Review and CAA Matters.

New Source Review. Since 1999, the EPA has been engaged in a nationwide enforcement initiative to determine whether coal-fired power plants failed to comply with the requirements of the New Source Review and New Source Performance Standard provisions under the CAA when the plants implemented modifications. The EPA’s initiative focuses on whether projects performed at power plants triggered various permitting requirements, including the need to install pollution control equipment.

In August 2012, the EPA issued a Notice of Violation (“NOV”) alleging that projects performed in 1997, 2006, and 2007 at the Newton facility violated Prevention of Significant Deterioration, Title V permitting, and other requirements. The NOV remains unresolved. We believe our defenses to the allegations described in the NOV are meritorious. A decision by the U.S. Court of Appeals for the Seventh Circuit in 2013 held that similar claims older than five years were barred by the statute of limitations. This decision may provide an additional defense to the allegations in the Newton facility NOV. In September 2016, we retired Newton Unit 2.

CAA Section 114 Information Requests. In 2014, we received an information request from the EPA concerning our Wood River facility’s compliance with the Illinois State Implementation Plan (“SIP”) and associated permits. We responded to the EPA’s request and believe that there are no issues with Wood River’s compliance, but we are unable to predict the EPA’s response, if any. As of June 1, 2016, our Wood River facility has been retired.

In April 2017, we received an information request from the EPA concerning CAA compliance, including New Source Review requirements, at the Armstrong facility, which we acquired in February 2017. We are in the process of responding to that request.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

CAA Notices of Violation. In December 2014, the EPA issued an NOV alleging violation of opacity standards at the Zimmer facility, which we co-own and operate. The EPA previously had issued NOVs to Zimmer in 2008 and 2010 alleging violations of the CAA, the Ohio SIP, and the station’s air permits involving standards applicable to opacity, sulfur dioxide, sulfuric acid mist, and heat input. The NOVs remain unresolved. The EPA also issued NOVs in December 2014 for Killen and Stuart, and in February 2017 for Stuart, alleging violations of opacity standards. We jointly own but do not operate the Killen and Stuart facilities.

Edwards CAA Citizen Suit. In April 2013, environmental groups filed a CAA citizen suit in the U.S. District Court for the Central District of Illinois alleging violations of opacity and particulate matter limits at our IPH segment’s Edwards facility. In August 2016, the District Court granted the plaintiffs’ motion for summary judgment on certain liability issues. We filed a motion seeking interlocutory appeal of the court’s summary judgment ruling. In February 2017, the appellate court denied our motion for interlocutory appeal. The District Court has scheduled the remedy phase trial for October 2018. We dispute the allegations and will defend the case vigorously.

Ultimate resolution of any of these CAA matters could have a material adverse impact on our future financial condition, results of operations, and cash flows. A resolution could result in increased capital expenditures for the installation of pollution control equipment, increased operations and maintenance expenses, and penalties. At this time we are unable to make a reasonable estimate of the possible costs, or range of costs, that might be incurred to resolve these matters.

Stuart National Pollutant Discharge Elimination System (“NPDES”) Permit Appeal. In January 2013, the Ohio EPA reissued the NPDES permit for the jointly owned Stuart facility. The operator of Stuart, The Dayton Power and Light Company, appealed various aspects of the permit, including provisions regarding thermal discharge limitations, to the Ohio Environmental Review Appeals Commission. Depending on the outcome of the appeal, the effects on Stuart’s operations could be material. At this time we are unable to make a reasonable estimate of the possible costs, or range of costs, that might be incurred to resolve this matter.

MISO Segment Groundwater . In 2012, the Illinois EPA (“IEPA”) issued violation notices alleging violations of groundwater standards onsite at our Baldwin and Vermilion facilities.

At Baldwin, with approval of the IEPA, we performed a comprehensive evaluation of the Baldwin Coal Combustion Residuals (“CCR”) surface impoundment system beginning in 2013. Based on the results of that evaluation, we recommended to the IEPA in 2014 that the closure process for the inactive east CCR surface impoundment begin and that a geotechnical investigation of the existing soil cap on the inactive old east CCR surface impoundment be undertaken. We also submitted a supplemental groundwater modeling report that indicates no known offsite water supply wells will be impacted under the various Baldwin CCR surface impoundment closure scenarios modeled. In 2016, the IEPA approved our closure and post-closure care plans for the Baldwin old east, east, and west fly ash CCR surface impoundments. We are working towards implementation of the closure plan.

We initiated an investigation at Baldwin in 2011 at the request of the IEPA to determine if the facility’s CCR surface impoundment system impacts offsite groundwater. Results of the offsite groundwater quality investigation, as submitted to the IEPA in 2012, indicate two localized areas where Class I groundwater standards were exceeded. Based on the data and groundwater flows, we do not believe that the exceedances are attributable to the Baldwin CCR surface impoundment system.

At our retired Vermilion facility, which is not subject to the CCR rule, we submitted proposed corrective action plans for two CCR surface impoundments (i.e., the old east and the north CCR surface impoundments) to the IEPA in 2012. Our hydrogeological investigation indicates that these two CCR surface impoundments impact groundwater quality onsite and that such groundwater migrates offsite to the north of the property and to the adjacent Middle Fork of the Vermilion River. The proposed corrective action plans recommend closure in place of both CCR surface impoundments and include an application to the IEPA to establish a groundwater management zone while impacts from the facility are mitigated. In 2014, we submitted a revised corrective action plan for the old east CCR surface impoundment. We await IEPA action on our proposed corrective action plans. Our estimated cost of the recommended closure alternative for both the Vermilion old east and north CCR surface impoundments, including post-closure care, is approximately $10 million .

If remediation measures concerning groundwater are necessary in the future at either Baldwin or Vermilion, we may incur significant costs that could have a material adverse effect on our financial condition, results of operations, and cash flows. At this time we cannot reasonably estimate the costs, or range of costs, of remediation, if any, that ultimately may be required.

IPH Segment Groundwater. Groundwater monitoring results indicate that the CCR surface impoundments at each of the IPH segment facilities potentially impact onsite groundwater. In 2012, the IEPA issued violation notices alleging violations of groundwater standards at the Newton and Coffeen facilities’ CCR surface impoundments. In 2015, we submitted an assessment

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

monitoring report to the IEPA that identifies the Newton facility’s inactive unlined landfill as the likely source of groundwater quality exceedances at the facility’s active CCR landfill. In August 2016, the IEPA approved the report. We are monitoring groundwater in accordance with IEPA’s approval.

If remediation measures concerning groundwater are necessary at any of our IPH facilities, IPH may incur significant costs that could have a material adverse effect on its financial condition, results of operations, and cash flows. At this time we cannot reasonably estimate the costs, or range of costs, of remediation, if any, that ultimately may be required.

Dam Safety Assessment Reports. In response to the failure at the Tennessee Valley Authority’s Kingston plant, the EPA initiated a nationwide investigation of the structural integrity of CCR surface impoundments in 2009. The EPA assessments found all of our surface impoundments to be in satisfactory or fair condition, with the exception of the surface impoundments at the Baldwin and Hennepin facilities.

In response to the Hennepin report, we made capital improvements to the Hennepin east CCR surface impoundment berms and notified the EPA of our intent to close the Hennepin west CCR surface impoundment. The preliminary estimated cost for closure of the west CCR surface impoundment, including post-closure monitoring, is approximately $5 million , which is reflected in our AROs. We performed further studies needed to support closure of the west CCR surface impoundment, submitted those studies to the IEPA in 2014 and await IEPA action.

In response to the Baldwin report, we notified the EPA in 2013 of our action plan, which included implementation of recommended operating practices and certain recommended studies. In 2014, we updated the EPA on the status of our Baldwin action plan, including the completion of certain studies and implementation of remedial measures and our ongoing evaluation of potential long-term measures in the context of our concurrent evaluation at Baldwin of groundwater corrective actions. At this time, to resolve the concerns raised in the EPA’s assessment report and as a result of the CCR rule, we plan to initiate closure of the Baldwin west fly ash CCR surface impoundment in 2017, which is reflected in our AROs.

Other Commitments

In conducting our operations, we routinely enter into long-term commodity purchase and sale commitments, as well as agreements that commit future cash flow to the lease or acquisition of assets used in our businesses. These commitments have been typically associated with commodity supply arrangements, capital projects, reservation charges associated with firm transmission, transportation, storage and leases for office space, equipment, design and construction, plant sites, and power generation assets.

Indemnifications and Guarantees

In the ordinary course of business, we routinely enter into contractual agreements that contain various representations, warranties, indemnifications and guarantees. Examples of such agreements include, but are not limited to, service agreements, equipment purchase agreements, engineering and technical service agreements, asset sales agreements and procurement and construction contracts. Some agreements contain indemnities that cover the other party’s negligence or limit the other party’s liability with respect to third party claims, in which event we will effectively be indemnifying the other party. Virtually all such agreements contain representations or warranties that are covered by indemnifications against the losses incurred by the other parties in the event such representations and warranties are false. While there is always the possibility of a loss related to such representations, warranties, indemnifications, and guarantees in our contractual agreements, and such loss could be significant, in most cases management considers the probability of loss to be remote. We have accrued no amounts with respect to the indemnifications as of March 31, 2017 because none were probable of occurring, nor could they be reasonably estimated.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 14—Income Taxes

We compute our quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to our year-to-date income or loss, except for significant, unusual, or extraordinary transactions. Income taxes for significant, unusual, or extraordinary transactions are computed and recorded in the period that the specific transaction occurs. The income taxes related to income (loss) from continuing operations were as follows:



	Three Months Ended March 31,
(amounts in millions)	2017		2016
Income tax benefit (expense) (1)	$	313	$	(16	)

______________________________________

(1)

The three months ended March 31, 2017 include a $317 million benefit for a partial release of our valuation allowance as a result of the ENGIE Acquisition. The benefit was offset by a $4 million expense due to tax exposures in jurisdictions in which we do not have an offsetting deferred tax asset. The three months ended March 31, 2016 include a $15 million charge to deferred state income tax expense as a result of a change to our corporate tax structure.

As of March 31, 2017 , we continued to maintain a valuation allowance against our net deferred tax assets in each jurisdiction as they arise as there was not sufficient evidence to overcome our historical cumulative losses to conclude that it is more-likely-than-not our net deferred tax assets can be realized in the future.

We have also increased our unrecognized tax benefits by $66 million as a result of the ENGIE Acquisition for uncertain tax positions included in GSENA’s tax returns prior to our ownership.

Note 15—Pension and Other Post-Employment Benefit Plans

We sponsor and administer defined benefit plans and defined contribution plans for the benefit of our employees and also provide other post-employment benefits to retirees who meet age and service requirements, which are further described in Note 19—Employee Compensation, Savings, Pension and Other Post-Employment Benefit Plans in our Form 10-K.

In the first quarter of 2017, the Dynegy pension and other post-employment plans were amended as a result of negotiations with former Duke Midwest union participants, IBEW Local 1347. As part of these amendments, the participants’ previous pension plan accrued benefits will be frozen as of December 31, 2017 and will begin accruing on January 1, 2018 with a minimum interest crediting rate of 4 percent . Other post-employment plans were amended to provide retiree medical plan benefits to only certain participants as of January 1, 2018. As a result of these amendments, we remeasured our benefit obligations and funded status of the affected plans and recorded a net-of-tax gain of approximately $15 million through accumulated other comprehensive income.

Components of Net Periodic Benefit Cost (Gain). The components of net periodic benefit cost (gain) were as follows:



	Pension Benefits						Other Benefits
	Three Months Ended March 31,
(amounts in millions)	2017			2016			2017			2016
Service cost benefits earned during period	$	4		$	4		$	—		$	—
Interest cost on projected benefit obligation	5			5			—			1
Expected return on plan assets	(6		)	(6		)	—			(1		)
Amortization of prior service credit	—			—			(1		)	(1		)
Net periodic benefit cost (gain)	$	3		$	3		$	(1	)	$	(1	)

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Note 16—Stockholders' Equity

Preferred Stock

We pay quarterly dividends on our mandatory convertible preferred stock on February 1, May 1, August 1, and November 1 of each year, if declared by our Board of Directors. For the three months ended March 31, 2017 and 2016 , we paid $5 million in dividends on February 1, 2017 and 2016, respectively.

Stock Purchase Agreement-Terawatt

On February 24, 2016, Dynegy entered into the PIPE Stock Purchase Agreement with Terawatt, pursuant to which at the ENGIE Acquisition Closing Date, Dynegy issued to Terawatt 13,711,152 common shares for $150 million . Please read Note 3—Acquisitions and Divestitures for further discussion.

ECP Buyout

As noted in Note 3—Acquisitions and Divestitures , Dynegy paid the ECP Buyout Price to ECP. This payment is reflected as a reduction in additional paid-in capital in our unaudited consolidated balance sheet as of March 31, 2017.

Earnings (Loss) Per Share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding during the period. Diluted earnings (loss) is based on the weighted average number of common shares used for the basic earnings (loss) per share computation, adjusted for the incremental issuance of shares of common stock assuming (i) our stock options and warrants are exercised, (ii) our restricted stock units and performance stock units are fully vested under the treasury stock method, and (iii) our mandatory convertible preferred stock and the SPCs are converted into common stock under the if converted method. Please read Note 18—Capital Stock and Note 13—Tangible Equity Units in our Form 10-K for further discussion.

The following table reflects significant components of our weighted average shares outstanding used in the basic and diluted loss per share calculations for the three months ended March 31, 2017 and 2016 :



	Three Months Ended March 31,
(in millions)	2017	2016
Shares outstanding at the beginning of the period (1)	140	117
Weighted-average shares outstanding during the period of:
Shares issued under the PIPE Transaction	8	—
Basic weighted-average shares outstanding	148	117
Dilution from potentially dilutive shares (2)	19	—
Diluted weighted-average shares outstanding	167	117

_________________________________________

(1)

The minimum settlement amount of the TEUs, or 23,092,460 shares, are considered to be outstanding since the issuance date of June 21, 2016, and are included in the computation of basic earnings (loss) per share for the three months ended March 31, 2017 . No such amounts were considered outstanding for the three months ended March 31, 2016 . Please read Note 13—Tangible Equity Units in our Form 10-K for further discussion.


(2)	Shares included in the computation of diluted earnings (loss) per share for the three months ended March 31, 2017 consist of:


•	5,425,700 additional shares upon settlement of the TEUs - which reflects the difference between the minimum settlement amount included in basic weighted-average shares outstanding and the maximum settlement amount ( 28,518,160 shares);


•	12,903,200 additional shares consisting of the maximum settlement amount of shares which can be converted from our outstanding mandatory convertible preferred stock; and


•	484,216 additional shares attributable to restricted stock units and performance stock units.

Entities with a net loss from continuing operations are prohibited from including potential common shares in the computation of diluted per share amounts. Accordingly, we have utilized the basic shares outstanding amount to calculate both basic and diluted loss per share for the three months ended March 31, 2016 .

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

For the three months ended March 31, 2017 and 2016 , the following potentially dilutive securities were not included in the computation of diluted per share amounts because the effect would be anti-dilutive:



	Three Months Ended March 31,
(in millions of shares)	2017	2016
Stock options	2.8	2.8
Restricted stock units	—	1.3
Performance stock units	—	1.2
2012 Warrants	15.6	15.6
2017 Warrants	8.7	—
Series A 5.375% mandatory convertible preferred stock	—	12.9
Total	27.1	33.8

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income, net of tax, by component, are as follows:



	Three Months Ended March 31,
(amounts in millions)	2017			2016
Beginning of period	$	21		$	19
Other comprehensive income before reclassifications:
Actuarial gain and plan amendments (net of tax of zero and zero, respectively)	15			—
Amounts reclassified from accumulated other comprehensive income:
Amortization of unrecognized prior service credit (net of tax of zero and zero, respectively) (1)	(2		)	(1		)
Net current period other comprehensive income (loss), net of tax	13			(1		)
End of period	$	34		$	18

__________________________________________


(1)	Amounts are associated with our defined benefit pension and other post-employment benefit plans and are included in the computation of net periodic pension cost (gain). Please read Note 15—Pension and Other Post-Employment Benefit Plans for further discussion.

Note 17—Condensed Consolidating Financial Information

Dynegy’s senior notes are guaranteed by certain of our wholly owned subsidiaries. Not all of Dynegy’s subsidiaries guaranteed the senior notes. The following condensed consolidating financial statements present the financial information of (i) Dynegy (“Parent”), which is the parent and issuer of the senior notes, on a stand-alone, unconsolidated basis, (ii) the guarantor subsidiaries of Dynegy, (iii) the non-guarantor subsidiaries of Dynegy, and (iv) the eliminations necessary to arrive at the information for Dynegy on a consolidated basis. The 100 percent owned subsidiary guarantors, jointly, severally, fully, and unconditionally, guarantee the payment obligations under the senior notes. Please read Note 12—Debt for further discussion.

These statements should be read in conjunction with the unaudited consolidated financial statements and notes thereto of Dynegy. The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements. The inclusion of Dynegy’s subsidiaries as either guarantor subsidiaries or non-guarantor subsidiaries in the condensed consolidating financial information is determined as of the most recent balance sheet date presented. On February 2, 2017, upon Genco’s emergence from bankruptcy, IPH (excluding Electric Energy, Inc.) became a guarantor to the senior notes. Accordingly, condensed consolidating financial information previously reported has been retroactively adjusted to reflect the status of Dynegy’s subsidiaries as either guarantor subsidiaries or non-guarantor subsidiaries as of March 31, 2017 .

For purposes of the unaudited condensed consolidating financial statements, a portion of our intercompany receivable, which we do not consider to be likely of settlement, has been classified as equity as of March 31, 2017 and December 31, 2016 .

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Condensed Consolidating Balance Sheet as of March 31, 2017

(amounts in millions)



	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current Assets
Cash and cash equivalents	$	321	$	110		$	36	$	—		$	467
Accounts receivable, net	143		2,910			25		(2,684		)	394
Inventory	—		443			70		—			513
Other current assets	10		403			7		(103		)	317
Total Current Assets	474		3,866			138		(2,787		)	1,691
Property, plant and equipment, net	—		9,393			326		—			9,719
Investment in affiliates	16,557		—			—		(16,557		)	—
Investment in unconsolidated affiliates	—		149			—		—			149
Goodwill	—		799			—		—			799
Assets held-for-sale	—		451			—		—			451
Other long-term assets	7		229			35		—			271
Intercompany note receivable	96		8			—		(104		)	—
Total Assets	$	17,134	$	14,895		$	499	$	(19,448	)	$	13,080
Current Liabilities
Accounts payable	$	2,294	$	396		$	281	$	(2,684	)	$	287
Other current liabilities	286		306			128		(103		)	617
Total Current Liabilities	2,580		702			409		(2,787		)	904
Debt, long-term portion, net	8,930		239			31		—			9,200
Intercompany note payable	3,042		96			—		(3,138		)	—
Other long-term liabilities	156		355			51		(8		)	554
Total Liabilities	14,708		1,392			491		(5,933		)	10,658
Stockholders’ Equity
Dynegy Stockholders’ Equity	2,426		16,549			8		(16,557		)	2,426
Intercompany note receivable	—		(3,042		)	—		3,042			—
Total Dynegy Stockholders’ Equity	2,426		13,507			8		(13,515		)	2,426
Noncontrolling interest	—		(4		)	—		—			(4		)
Total Equity	2,426		13,503			8		(13,515		)	2,422
Total Liabilities and Equity	$	17,134	$	14,895		$	499	$	(19,448	)	$	13,080

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Condensed Consolidating Balance Sheet as of December 31, 2016

(amounts in millions)



	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current Assets
Cash and cash equivalents	$	1,529	$	221		$	26	$	—		$	1,776
Restricted cash	21		41			—		—			62
Accounts receivable, net	141		2,604			39		(2,398		)	386
Inventory	—		326			119		—			445
Other current assets	12		408			2		(104		)	318
Total Current Assets	1,703		3,600			186		(2,502		)	2,987
Property, plant and equipment, net	—		6,772			349		—			7,121
Investment in affiliates	12,175		—			—		(12,175		)	—
Restricted cash	2,000		—			—		—			2,000
Goodwill	—		799			—		—			799
Other long-term assets	2		109			35		—			146
Intercompany note receivable	—		8			—		(8		)	—
Total Assets	$	15,880	$	11,288		$	570	$	(14,685	)	$	13,053
Current Liabilities
Accounts payable	$	1,990	$	443		$	297	$	(2,398	)	$	332
Other current liabilities	143		377			168		(104		)	584
Total Current Liabilities	2,133		820			465		(2,502		)	916
Liabilities subject to compromise	—		832			—		—			832
Debt, long-term portion, net	8,531		216			31		—			8,778
Intercompany note payable	3,042		—			—		(3,042		)	—
Other long-term liabilities	132		313			51		(8		)	488
Total Liabilities	13,838		2,181			547		(5,552		)	11,014
Stockholders’ Equity
Dynegy Stockholders’ Equity	2,042		12,152			23		(12,175		)	2,042
Intercompany note receivable	—		(3,042		)	—		3,042			—
Total Dynegy Stockholders’ Equity	2,042		9,110			23		(9,133		)	2,042
Noncontrolling interest	—		(3		)	—		—			(3		)
Total Equity	2,042		9,107			23		(9,133		)	2,039
Total Liabilities and Equity	$	15,880	$	11,288		$	570	$	(14,685	)	$	13,053

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Condensed Consolidating Statements of Operations for the Three Months Ended March 31, 2017

(amounts in millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	1,139		$	161		$	(53	)	$	1,247
Cost of sales, excluding depreciation expense	—			(695		)	(115		)	53			(757		)
Gross margin	—			444			46			—			490
Operating and maintenance expense	—			(201		)	(31		)	—			(232		)
Depreciation expense	—			(176		)	(24		)	—			(200		)
Impairments	—			(20		)	—			—			(20		)
General and administrative expense	(6		)	(33		)	(1		)	—			(40		)
Acquisition and integration costs	(44		)	(1		)	—			—			(45		)
Other	—			—			(2		)	—			(2		)
Operating income (loss)	(50		)	13			(12		)	—			(49		)
Bankruptcy reorganization items	(15		)	498			—			—			483
Losses from unconsolidated investments	—			(1		)	—			—			(1		)
Equity in earnings from investments in affiliates	806			—			—			(806		)	—
Interest expense	(161		)	(6		)	(3		)	3			(167		)
Other income and expense, net	17			3			—			(3		)	17
Income (loss) before income taxes	597			507			(15		)	(806		)	283
Income tax benefit	—			313			—			—			313
Net income (loss)	597			820			(15		)	(806		)	596
Less: Net loss attributable to noncontrolling interest	—			(1		)	—			—			(1		)
Net income (loss) attributable to Dynegy Inc.	$	597		$	821		$	(15	)	$	(806	)	$	597

Condensed Consolidating Statements of Operations for the Three Months Ended March 31, 2016

(amounts in millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	984		$	139		$	—		$	1,123
Cost of sales, excluding depreciation expense	—			(472		)	(73		)	—			(545		)
Gross margin	—			512			66			—			578
Operating and maintenance expense	—			(190		)	(31		)	—			(221		)
Depreciation expense	—			(150		)	(21		)	—			(171		)
General and administrative expense	(2		)	(33		)	(2		)	—			(37		)
Acquisition and integration costs	(3		)	(1		)	—			—			(4		)
Operating income (loss)	(5		)	138			12			—			145
Earnings from unconsolidated investments	—			2			—			—			2
Equity in earnings from investments in affiliates	118			—			—			(118		)	—
Interest expense	(124		)	(18		)	—			—			(142		)
Other income and expense, net	1			2			(2		)	—			1
Income (loss) before income taxes	(10		)	124			10			(118		)	6
Income tax expense	—			(16		)	—			—			(16		)
Net income (loss) attributable to Dynegy Inc.	$	(10	)	$	108		$	10		$	(118	)	$	(10	)

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2017

(amounts in millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	597		$	820		$	(15	)	$	(806	)	$	596
Other comprehensive income before reclassifications:
Actuarial gain and plan amendments, net of tax of zero	15			—			—			—			15
Amounts reclassified from accumulated other comprehensive income:
Amortization of unrecognized prior service credit, net of tax of zero	(2		)	—			—			—			(2		)
Other comprehensive income, net of tax	13			—			—			—			13
Comprehensive income (loss)	610			820			(15		)	(806		)	609
Less: Comprehensive loss attributable to noncontrolling interest	—			(1		)	—			—			(1		)
Total comprehensive income (loss) attributable to Dynegy Inc.	$	610		$	821		$	(15	)	$	(806	)	$	610

Condensed Consolidating Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2016

(amounts in millions)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	(10	)	$	108	$	10	$	(118	)	$	(10	)
Amounts reclassified from accumulated other comprehensive income:
Amortization of unrecognized prior service credit, net of tax of zero	(1		)	—		—		—			(1		)
Other comprehensive loss, net of tax	(1		)	—		—		—			(1		)
Comprehensive income (loss)	(11		)	108		10		(118		)	(11		)
Less: Comprehensive loss attributable to noncontrolling interest	—			—		—		—			—
Total comprehensive income (loss) attributable to Dynegy Inc.	$	(11	)	$	108	$	10	$	(118	)	$	(11	)

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Condensed Consolidating Statements of Cash Flows for the Three Months Ended March 31, 2017

(amounts in millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	(93	)	$	184		$	58		$	—		$	149
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—			(28		)	(3		)	—			(31		)
Acquisitions, net of cash acquired	(3,259		)	(4		)	—			—			(3,263		)
Distributions from unconsolidated investments	—			2			—			—			2
Net intercompany transfers	254			—			—			(254		)	—
Net cash used in investing activities	(3,005		)	(30		)	(3		)	(254		)	(3,292		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings, net of debt issuance costs	425			—			—			—			425
Repayments of borrowings	(231		)	(30		)	(38		)	—			(299		)
Proceeds from issuance of equity, net of issuance costs	150			—			—			—			150
Preferred stock dividends paid	(5		)	—			—			—			(5		)
Interest rate swap settlement payments	(4		)	—			—			—			(4		)
Acquisition of noncontrolling interest	(375		)	—			—			—			(375		)
Payments related to bankruptcy financing	(119		)	—			—			—			(119		)
Net intercompany transfers	—			(248		)	(6		)	254			—
Intercompany borrowings, net of repayments	29			(28		)	(1		)	—			—
Other financing	(1		)	—			—			—			(1		)
Net cash provided by (used in) financing activities	(131		)	(306		)	(45		)	254			(228		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(3,229		)	(152		)	10			—			(3,371		)
Cash, cash equivalents, and restricted cash beginning of period	3,550			262			26			—			3,838
Cash, cash equivalents, and restricted cash end of period	$	321		$	110		$	36		$	—		$	467

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Condensed Consolidating Statements of Cash Flows for the Three Months Ended March 31, 2016

(amounts in millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	(14	)	$	307		$	(44	)	$	—		$	249
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—			(105		)	(20		)	—			(125		)
Distributions from unconsolidated investments	—			8			—			—			8
Net intercompany transfers	339			—			—			(339		)	—
Net cash provided by (used in) investing activities	339			(97		)	(20		)	(339		)	(117		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings, net of debt issuance costs	—			198			—			—			198
Repayments of borrowings	(2		)	(3		)	—			—			(5		)
Preferred stock dividends paid	(5		)	—			—			—			(5		)
Interest rate swap settlement payments	(4		)	—			—			—			(4		)
Net intercompany transfers	—			(345		)	6			339			—
Other financing	(2		)	—			—			—			(2		)
Net cash provided by (used in) financing activities	(13		)	(150		)	6			339			182
Net increase (decrease) in cash, cash equivalents and restricted cash	312			60			(58		)	—			314
Cash, cash equivalents and restricted cash, beginning of period	327			133			84			—			544
Cash, cash equivalents and restricted cash, end of period	$	639		$	193		$	26		$	—		$	858

Note 18—Genco Chapter 11 Bankruptcy and Emergence

On December 9, 2016, Genco filed a petition (the “Bankruptcy Petition”) under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On January 25, 2017, the Bankruptcy Court confirmed the Genco Plan and Genco emerged from bankruptcy on February 2, 2017. As a result, we eliminated $825 million of Genco senior notes and $7 million of accrued interest in exchange for:


•	On the Emergence Date, $113 million of cash, $182 million of new Dynegy seven year unsecured notes, and warrants (the “2017 Warrants”) to purchase up to 8.7 million shares of common stock with a fair value of $17 million .


•	On April 18, 2017, $3 million of cash, $3 million of new Dynegy seven -year unsecured notes, and 0.1 million 2017 Warrants with a fair value of less than $1 million .

The 2017 Warrants, which have an exercise price of $35 per share of common stock, have a seven -year term expiring on February 2, 2024 and are recorded as Other long-term liabilities in our consolidated balance sheet as of March 31, 2017 .

Remaining holders of Genco senior notes have until July 17, 2017 (the 165th day after the Emergence Date) in order to exercise their rights to receive a distribution. As of March 31, 2017, we have accrued a liability of $28 million , comprised of $6 million for the April 18, 2017 distribution and $22 million for potential future distributions.

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

The following table summarizes the Company’s gain from the termination of the Genco senior notes, which is recognized in Bankruptcy reorganization items in our consolidated statement of operations for the three months ended March 31, 2017 (includes consideration for claims exchanged on April 18, 2017):



(amounts in millions)
Liabilities subject to compromise, which were terminated	$	832
Less:
Seven-year unsecured notes	185
Cash consideration	116
Accrual for future potential distributions	22
2017 Warrants, at fair value	17
Legal and consulting fees	9
Bankruptcy reorganization items	$	483

For income tax purposes, the income from cancellation of debt is excluded from taxable income in the current year and will instead reduce Genco’s tax attributes.

Note 19—Segment Information

We report the results of our operations in six segments: (i) PJM, (ii) NY/NE, (iii) ERCOT, (iv) MISO, (v) IPH, and (vi) CAISO. PJM also includes our Dynegy Energy Services retail business in Ohio and Pennsylvania. IPH also includes our Homefield Energy retail business in Illinois. Our consolidated financial results also reflect corporate-level expenses such as general and administrative expense, interest expense, and income tax benefit (expense).

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Reportable segment information, including intercompany transactions accounted for at prevailing market rates, for the three months ended March 31, 2017 and 2016 is presented below:

Segment Data as of and for the Three Months Ended March 31, 2017



(amounts in millions)	PJM			NY/NE			ERCOT			MISO			IPH			CAISO			Other and Eliminations			Total
Domestic:
Unaffiliated revenues	$	630		$	309		$	17		$	92		$	175		$	24		$	—		$	1,247
Intercompany and affiliate revenues	(8		)	1			(1		)	8			—			—			—			—
Total revenues	$	622		$	310		$	16		$	100		$	175		$	24		$	—		$	1,247

Depreciation expense	$	(92	)	$	(62	)	$	(13	)	$	(7	)	$	(12	)	$	(12	)	$	(2	)	$	(200	)
Impairments	(20		)	—			—			—			—			—			—			(20		)
General and administrative expense	—			—			—			—			—			—			(40		)	(40		)
Acquisition and integration costs	—			—			—			—			—			—			(45		)	(45		)

Operating income (loss)	$	86		$	(41	)	$	(28	)	$	17		$	18		$	(14	)	$	(87	)	$	(49	)

Bankruptcy reorganization items	—			—			—			—			498			—			(15		)	483
Losses from unconsolidated investments	(1		)	—			—			—			—			—			—			(1		)
Interest expense	—			—			—			—			—			—			(167		)	(167		)
Other income and expense, net	—			—			—			—			1			—			16			17
Income before income taxes																						283
Income tax benefit	—			—			—			—			—			—			313			313
Net income																						596
Less: Net loss attributable to noncontrolling interest																						(1		)
Net income attributable to Dynegy Inc.																						$	597

Total assets—domestic	$	5,765		$	3,720		$	1,615		$	340		$	597		$	473		$	570		$	13,080
Investment in unconsolidated affiliate	$	72		$	77		$	—		$	—		$	—		$	—		$	—		$	149
Capital expenditures	$	(12	)	$	(6	)	$	(1	)	$	(1	)	$	(3	)	$	(3	)	$	(2	)	$	(28	)

DYNEGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Interim Periods Ended March 31, 2017 and 2016

Segment Data as of and for the Three Months Ended March 31, 2016



(amounts in millions)	PJM			NY/NE			MISO			IPH			CAISO			Other and Eliminations			Total
Domestic:
Unaffiliated revenues	$	557		$	250		$	125		$	168		$	23		$	—		$	1,123
Intercompany revenues	5			(1		)	(3		)	(1		)	—			—			—
Total revenues	$	562		$	249		$	122		$	167		$	23		$	—		$	1,123

Depreciation expense	$	(85	)	$	(57	)	$	(8	)	$	(9	)	$	(11	)	$	(1	)	$	(171	)
General and administrative expense	—			—			—			—			—			(37		)	(37		)
Acquisition and integration costs	—			—			—			—			—			(4		)	(4		)

Operating income (loss)	$	177		$	(2	)	$	13		$	14		$	(14	)	$	(43	)	$	145

Earnings from unconsolidated investments	2			—			—			—			—			—			2
Interest expense	—			—			—			—			—			(142		)	(142		)
Other income and expense, net	—			—			—			—			—			1			1
Income before income taxes																			6
Income tax expense	—			—			—			—			—			(16		)	(16		)
Net loss attributable to Dynegy Inc.																			$	(10	)

Total assets—domestic	$	5,515		$	2,909		$	1,060		$	897		$	520		$	807		$	11,708
Investment in unconsolidated affiliate	$	185		$	—		$	—		$	—		$	—		$	—		$	185
Capital expenditures	$	(21	)	$	(22	)	$	(6	)	$	(11	)	$	(1	)	$	(4	)	$	(65	)

DYNEGY INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

For the Interim Periods Ended March 31, 2017 and 2016

Item 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with the unaudited consolidated financial statements and the notes thereto included in this report and with the audited consolidated financial statements and the notes thereto included in our Form 10-K.

We are a holding company and conduct substantially all of our business operations through our subsidiaries. We sell electric energy, capacity and ancillary services primarily on a wholesale basis from our power generation facilities. We also serve residential, municipal, commercial and industrial customers primarily in MISO and PJM through our Homefield Energy and Dynegy Energy Services retail businesses. We currently own approximately 31,000 MW of generating capacity in twelve states and also provide retail electricity to residential, commercial, industrial, and municipal customers in Illinois, Ohio, and Pennsylvania. We report the results of our power generation business as six separate segments in our unaudited consolidated financial statements: (i) PJM, (ii) NY/NE, (iii) ERCOT, (iv) MISO (v) IPH and (vi) CAISO.

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The charts below show our wholesale generation, retail load and Adjusted EBITDA contribution by fuel type during the first quarter.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We maintain a strong focus on liquidity. We believe that we have adequate resources from a combination of our current liquidity position and cash expected to be generated from future operations to fund our liquidity and capital requirements as they become due. Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements, contractual obligations, capital expenditures (including required environmental expenditures), and working capital needs. Examples of working capital needs include purchases and sales of commodities and associated collateral requirements, facility maintenance costs, and other costs such as payroll.

Since 2013, we have increased scale and shifted our portfolio mix, which was predominately coal-based, to a predominately gas-based portfolio, through four major acquisitions. We used a significant portion of our balance sheet capacity to finance these acquisitions. We are now focused on strengthening our balance sheet, managing debt maturities and improving our leverage profile through debt reduction primarily from operating cash flows, PRIDE initiatives and select asset sales.

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Liquidity. The following table summarizes our liquidity position at March 31, 2017 (amounts in millions):



Revolving facilities and LC capacity (1)	$	1,675
Less:
Outstanding revolvers	(300		)
Outstanding LCs (2)	(476		)
Revolving facilities and LC availability	899
Cash and cash equivalents	467
Total available liquidity	$	1,366

__________________________________________


(1)	Includes $1.545 billion in senior secured revolving credit facilities and $130 million related to LCs. Please read Note 12—Debt —Letter of Credit Facilities for further discussion.


(2)	Upon the closing of our pending transaction, AEP will return a previously issued LC totaling $58 million to Dynegy. Please read Note 10—Joint Ownership of Generating Facilities for further discussion.

Quarterly Liquidity Highlights:


•	January 2017 - Amended credit agreement (Fourth Amendment) to increase revolver capacity by $45 million and to extend the maturity date on $450 million in revolver capacity to 2021, which was effective upon the ENGIE Acquisition Closing Date.


•	February 2017 - Amended credit agreement (Fifth Amendment) to increase the Tranche C Term Loan amount by $224 million and to reduce interest rate by 75 basis points, which was effective upon the ENGIE Acquisition Closing Date. This is expected to save Dynegy approximately $100 million in interest costs over the next seven years.


•	February 2017 - Entered into new $50 million LC facility, which was effective upon the ENGIE Acquisition Closing Date.


•	February 2017 - Genco emerged from bankruptcy and, as a result, we eliminated $825 million of Genco senior notes. We exchanged $757 million of the Genco senior notes for $113 million cash, $182 million in Dynegy senior notes and 8.7 million 2017 Warrants.


•	February 2017 - Closed the ENGIE Acquisition for a base purchase price of $3.3 billion in cash.


•	February 2017 - Paid the ECP Buyout Price of $375 million.


•	February 2017 - Issued 13,711,152 common shares to Terawatt Holdings, LP for $150 million.


•	March 2017 - Refinanced previously monetized capacity under our Forward Capacity Sales Agreement by 24 months by replacing our sale of cleared capacity for Planning Year 2017-2018 with a sale for Planning Year 2019-2020.


•	April 2017 - We exchanged $15 million of the Genco senior notes for $3 million cash, $3 million in Dynegy senior notes and 0.1 million 2017 Warrants.

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Cash Flows

The following table presents net cash from operating, investing, and financing activities for the three months ended March 31, 2017 and 2016 :



	Three Months Ended March 31,
(amounts in millions)	2017			2016
Net cash provided by operating activities	$	149		$	249
Net cash used in investing activities	$	(3,292	)	$	(117	)
Net cash provided by (used in) financing activities	$	(228	)	$	182

Operating Activities

Changes in net cash provided by operating activities for the three months ended March 31, 2017 compared to March 31, 2016 were primarily due to:



	(in millions)
Increase in cash provided by operation of our power generation facilities and retail operations	$	2
Increase in interest payments on our various debt agreements	(2		)
Increase in payments for acquisition-related costs	(35		)
Decrease in cash provided by changes in working capital and other	(65		)
	$	(100	)

Future Operating Cash Flows . Our future operating cash flows will vary based on a number of factors, many of which are beyond our control, including the price of power, the prices of natural gas, coal, and fuel oil and their correlation to power prices, collateral requirements, the value of capacity and ancillary services, the run-time of our generating facilities, the effectiveness of our commercial strategy, legal, environmental, and regulatory requirements, and our ability to achieve the cost savings contemplated in our “PRIDE Energized” initiative.

Collateral Postings. We use a portion of our capital resources in the form of cash and LCs to satisfy counterparty collateral demands. The following table summarizes our collateral postings to third parties at March 31, 2017 and December 31, 2016 :



(amounts in millions)	March 31, 2017		December 31, 2016
Cash (1)	$	103	$	124
LCs	476		382
Total	$	579	$	506

__________________________________________


(1)	Includes broker margin as well as other collateral postings included in Prepayments and other current assets in our unaudited consolidated balance sheets. At March 31, 2017 and December 31, 2016 , $66 million and $54 million , respectively, of cash posted as collateral were netted against Liabilities from risk management activities in our unaudited consolidated balance sheets.

Collateral postings increased from December 31, 2016 to March 31, 2017 primarily due to entry in the ERCOT market as a result of the ENGIE Acquisition. The fair value of our derivatives collateralized by first priority liens included liabilities of $131 million and $136 million at March 31, 2017 and December 31, 2016 , respectively.

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Investing Activities

Historical Investing Cash Flows. Changes in net cash used in investing activities for the three months ended March 31, 2017 compared to March 31, 2016 were primarily due to:



	(in millions)
Cash paid, net of cash acquired for the ENGIE Acquisition	$	(3,263	)
Decrease in capital expenditures	94
Decrease in other investing activity	(6		)
	$	(3,175	)

Capital Expenditures. Our capital spending by reportable segment was as follows:



	Three Months Ended March 31,				Estimated Remaining
(amounts in millions)	2017		2016		2017
PJM	$	12	$	21	$	92
NY/NE	6		22		64
ERCOT	1		—		13
MISO	1		6		7
IPH	3		11		30
CAISO	3		1		31
Other	2		4		9
Total (1)(2)	$	28	$	65	$	246

____________________________________


(1)	Includes capitalized interest of zero and $4 million for the three months ended March 31, 2017 and 2016 , respectively.


(2)	Excludes prepayments of long-term service agreements until such time that the work is performed.

Capital spending in our PJM, MISO, and IPH segments primarily consisted of environmental and maintenance capital projects. Capital spending in our NY/NE, ERCOT, and CAISO segments primarily consisted of only maintenance capital projects.

Future Investing Cash Flows. The expected capital expenditures for the remainder of 2017 are noted above. The capital budget is subject to revision as opportunities arise or circumstances change.

Financing Activities

Historical Financing Cash Flows. Changes in net cash provided by financing activities for the three months ended March 31, 2017 compared to the same period March 31, 2016 were primarily due to:



	(in millions)
Increase in proceeds from long-term borrowings, net of issuance costs, primarily related to the draws on the Revolver, and the Tranche C-1 Term Loan	$	425
Proceeds from issuance of equity related to the PIPE Transaction in 2017	150
Proceeds related to the Forward Capacity Agreement in 2016	(198		)
Cash paid related to the ECP Buyout in 2017	(375		)
Cash paid related to the Genco Bankruptcy in 2017	(119		)
Increase in repayment of borrowings, primarily related to the Tranche B-2 Term Loan and Inventory Financing Agreements	(294		)
Other financing activity	1
	$	(410	)

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Future Financing Cash Flows. Our future cash flows from financing activities include:


•	Principal payments on our debt instruments and other financial obligations;


•	Periodic payments to settle our interest rate swap agreements; and


•	Dividend payments on our mandatory convertible preferred stock.

Financing Trigger Events. Our debt instruments and certain of our other financial obligations include provisions, which, if not met, could require early payment, additional collateral support or similar actions. The trigger events include the violation of covenants (including, in the case of the Credit Agreement under certain circumstances, the senior secured leverage ratio covenant discussed below), defaults on scheduled principal or interest payments, including any indebtedness to the extent linked to it by reason of cross-default or cross-acceleration provisions, insolvency events, acceleration of other financial obligations, and, in the case of the Credit Agreement, change of control provisions. We do not have any trigger events tied to specified credit ratings or stock price in our debt instruments and are not party to any contracts that require us to issue equity based on credit ratings or other trigger events. Please read Note 12—Debt for further discussion.

Financial Covenants

Credit Agreement. Our Credit Agreement contains customary events of default and affirmative and negative covenants, subject to certain specified exceptions, including a financial covenant specifying required thresholds for our senior secured leverage ratio calculated on a rolling four quarters basis. To the extent Dynegy uses 25 percent or more of its Revolving Facility, the Fourth Amendment of the Credit Agreement requires that Dynegy must be in compliance with the Consolidated Senior Secured Net Debt to Consolidated Adjusted EBITDA ratio (as defined in the Credit Agreement). The Consolidated Senior Secured Net Debt to Consolidated Adjusted EBITDA ratio is 4.00:1.00. We were in compliance with these covenants as of March 31, 2017.

Existing balances under our Forward Capacity Agreement, Inventory Financing Agreements, and Equipment Financing Agreements are excluded from Net Debt, as defined in the Credit Agreement.

Dividends. We have paid no cash dividends on our common stock and have no current intention of doing so. Any future determinations to pay cash dividends will be at the discretion of our Board of Directors, subject to applicable limitations under Delaware law, and will be dependent upon our results of operations, financial condition, contractual restrictions, and other factors deemed relevant by our Board of Directors.

On April 3, 2017, our Board of Directors declared a dividend on our mandatory convertible preferred stock of $1.34 per share, or approximately $5 million in the aggregate. The dividend is for the period beginning on February 1, 2017 and ending on April 30, 2017. Such dividends were paid on May 1, 2017, to stockholders of record as of April 15, 2017.

Credit Ratings

Our credit rating status is currently “non-investment grade” and our current ratings are as follows:



	Moody’s	S&P
Dynegy Inc.:
Corporate Family Rating	B2	B+
Senior Secured	Ba3	BB
Senior Unsecured	B3	B+

RESULTS OF OPERATIONS

Overview and Discussion of Comparability of Results

In this section, we discuss our results of operations, both on a consolidated basis and, where appropriate, by segment, for the three months ended March 31, 2017 and 2016 . At the end of this section, we have included our business outlook for each segment.

We report the results of our power generation business primarily as six separate segments in our unaudited consolidated financial statements: (i) PJM, (ii) NY/NE, (iii) ERCOT, (iv) MISO, (v) IPH, and (vi) CAISO. Our consolidated financial results

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also reflect corporate-level expenses such as general and administrative expense, interest expense and income tax benefit (expense). All references to hedging within this Form 10-Q relate to economic hedging activities as we do not elect hedge accounting.

We completed the ENGIE Acquisition on February 7, 2017; therefore, the results of our newly acquired plants within our PJM, NY/NE and ERCOT segments are included in our consolidated results since the acquisition date. Please read Note 3—Acquisitions and Divestitures —ENGIE Acquisition for further discussion.

Consolidated Summary Financial Information — Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

The following table provides summary financial data regarding our unaudited consolidated results of operations for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(amounts in millions)	2017			2016			Favorable (Unfavorable) $ Change
Revenues
Energy	$	1,021		$	820		$	201
Capacity	203			184			19
Mark-to-market income, net	14			112			(98		)
Contract amortization	(15		)	(17		)	2
Other	24			24			—
Total revenues	1,247			1,123			124
Cost of sales, excluding depreciation expense	(757		)	(545		)	(212		)
Gross margin	490			578			(88		)
Operating and maintenance expense	(232		)	(221		)	(11		)
Depreciation expense	(200		)	(171		)	(29		)
Impairments	(20		)	—			(20		)
General and administrative expense	(40		)	(37		)	(3		)
Acquisition and integration costs	(45		)	(4		)	(41		)
Other	(2		)	—			(2		)
Operating income (loss)	(49		)	145			(194		)
Bankruptcy reorganization items	483			—			483
Earnings (loss) from unconsolidated investments	(1		)	2			(3		)
Interest expense	(167		)	(142		)	(25		)
Other income and expense, net	17			1			16
Income before income taxes	283			6			277
Income tax benefit (expense)	313			(16		)	329
Net income (loss)	596			(10		)	606
Less: Net loss attributable to noncontrolling interest	(1		)	—			(1		)
Net income (loss) attributable to Dynegy Inc.	$	597		$	(10	)	$	607

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The following tables provide summary financial data regarding our operating income (loss) by segment for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31, 2017
(amounts in millions)	PJM			NY/NE			ERCOT			MISO			IPH			CAISO			Other			Total
Revenues	$	622		$	310		$	16		$	100		$	175		$	24		$	—		$	1,247
Cost of sales, excluding depreciation expense	(337		)	(239		)	(17		)	(50		)	(103		)	(11		)	—			(757		)
Gross margin	285			71			(1		)	50			72			13			—			490
Operating and maintenance expense	(87		)	(48		)	(14		)	(26		)	(42		)	(15		)	—			(232		)
Depreciation expense	(92		)	(62		)	(13		)	(7		)	(12		)	(12		)	(2		)	(200		)
Impairments	(20		)	—			—			—			—			—			—			(20		)
General and administrative expense	—			—			—			—			—			—			(40		)	(40		)
Acquisition and integration costs	—			—			—			—			—			—			(45		)	(45		)
Other	—			(2		)	—			—			—			—			—			(2		)
Operating income (loss)	$	86		$	(41	)	$	(28	)	$	17		$	18		$	(14	)	$	(87	)	$	(49	)



	Three Months Ended March 31, 2016
(amounts in millions)	PJM			NY/NE			MISO			IPH			CAISO			Other			Total
Revenues	$	562		$	249		$	122		$	167		$	23		$	—		$	1,123
Cost of sales, excluding depreciation expense	(213		)	(154		)	(63		)	(99		)	(16		)	—			(545		)
Gross margin	349			95			59			68			7			—			578
Operating and maintenance expense	(87		)	(40		)	(38		)	(45		)	(10		)	(1		)	(221		)
Depreciation expense	(85		)	(57		)	(8		)	(9		)	(11		)	(1		)	(171		)
General and administrative expense	—			—			—			—			—			(37		)	(37		)
Acquisition and integration costs	—			—			—			—			—			(4		)	(4		)
Operating income (loss)	$	177		$	(2	)	$	13		$	14		$	(14	)	$	(43	)	$	145

Discussion of Consolidated Results of Operations

Revenues. The following table summarizes the change in revenues by segment:



(amounts in millions)	PJM			NY/NE			ERCOT		MISO			IPH			CAISO			Total
Revenues, net of hedges, attributable to newly acquired ENGIE plants for the first quarter of 2017	$	38		$	23		$	16	$	—		$	—		$	—		$	77
Higher (lower) power prices	54			62			—		2			(9		)	4			113
Higher (lower) generation volumes (1)	19			19			—		(13		)	1			(11		)	15
Higher (lower) capacity revenues	(18		)	(4		)	—		1			17			2			(2		)
Change in MTM value of derivative transactions	(43		)	(39		)	—		(13		)	(2		)	6			(91		)
Lower (higher) contract amortization	—			(2		)	—		—			2			1			1
Other (2)	10			2			—		1			(1		)	(1		)	11
Total change in revenues	$	60		$	61		$	16	$	(22	)	$	8		$	1		$	124

_______________________________________


(1)	Increase primarily due to lower outages, offsetting decrease primarily due to plant shutdowns at our MISO and CAISO segments.


(2)	Other primarily consists of ancillary, tolling, transmission and gas revenues.

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Cost of Sales. The following table summarizes the change in cost of sales by segment:



(amounts in millions)	PJM		NY/NE			ERCOT		MISO			IPH			CAISO			Total
Cost of sales attributable to newly acquired ENGIE plants for the first quarter of 2017	$	16	$	10		$	17	$	—		$	—		$	—		$	43
Higher (lower) prices	78		70			—		(1		)	(2		)	7			152
Higher (lower) generation volumes (1)	12		23			—		(12		)	10			(10		)	23
Higher (lower) transportation costs	1		—			—		—			—			(1		)	—
Lower (higher) contract amortization	10		(15		)	—		—			3			—			(2		)
Other (2)	7		(3		)	—		—			(7		)	(1		)	(4		)
Total change in cost of sales	$	124	$	85		$	17	$	(13	)	$	4		$	(5	)	$	212

_______________________________________


(1)	Higher generation volumes primarily due to lower outages and increased run times at our PJM, NY/NE and IPH segments; offsetting decrease primarily due to plant shutdowns at our MISO and CAISO segments.


(2)	Other primarily consists of transmission expenses.

Operating and Maintenance Expense. O&M expense increase d by $11 million primarily due to the newly acquired ENGIE plants for the first quarter of 2017, partially offset by a decrease primarily due to plant shutdowns at our MISO segment.

Depreciation Expense. Depreciation expense increase d by $29 million primarily due to increases from the newly acquired ENGIE plants, additions, and changes in useful lives, offset by decreases due to impairments.

Impairments. Impairments increase d by $20 million due to charges in 2017 at our PJM segment on our Killen facility. Please read Note 9—Property, Plant and Equipment for further discussion.

General and Administrative Expense. General and administrative expense increase d by $3 million primarily due to higher overhead associated with the ENGIE Acquisition and higher legal fees.

Acquisition and Integration Costs. Acquisition and integration costs increase d by $41 million due to $31 million in advisory and consulting fees, and $10 million in severance, retention, and payroll costs related to the ENGIE Acquisition in 2017.

Bankruptcy Reorganization Items. Bankruptcy reorganization items increase d by $483 million primarily due to the gain on extinguishment of debt and legal costs associated with the Genco bankruptcy reorganization. Please read Note 18—Genco Chapter 11 Bankruptcy and Emergence —Reorganization items for further discussion.

Interest Expense. Interest expense increase d by $25 million primarily due to interest on our Tranche C-1 Term Loan and 2025 Senior Notes. Please read Note 12—Debt for further discussion.

Other Income and Expense. Other income and expense increased by $16 million primarily due to the change in fair value of our common stock warrants and interest income on the Tranche C Term Loan that was held in escrow.

Income Tax Benefit (Expense). The net favorable change of $329 million was primarily due to a $317 million benefit associated with a partial release of our deferred tax asset valuation allowance during the three months ended March 31, 2017 as a result of the ENGIE Acquisition.

Net income (loss) attributable to Dynegy Inc. The $607 million increase was primarily due to (i) a $22 million loss attributable to newly acquired ENGIE plants in the first quarter of 2017, (ii) income from a $317 million deferred tax valuation allowance release in 2017, and (iii) a $483 million gain primarily due to extinguishment of debt associated with the Genco bankruptcy reorganization, partially offset by (i) $91 million in losses associated with our hedging transactions, (ii) $45 million in acquisition and integration costs related to the ENGIE Acquisition, and (iii) $20 million in impairment charges recorded in 2017.

Discussion of Adjusted EBITDA

Non-GAAP Measures. In analyzing and planning for our business, we supplement our use of GAAP financial measures with non-GAAP financial measures, including EBITDA and Adjusted EBITDA as performance measures. These non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures included in the tables below, may provide a more complete understanding of factors and trends affecting our business. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures and are by definition an incomplete understanding of Dynegy and must be considered in conjunction with GAAP measures.

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We believe that the non-GAAP measures disclosed in our filings are only useful as an additional tool to help management and investors make informed decisions about our financial and operating performance. By definition, non-GAAP measures do not give a full understanding of Dynegy; therefore, to be truly valuable, they must be used in conjunction with the comparable GAAP measures. In addition, non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

EBITDA and Adjusted EBITDA. We define EBITDA as earnings (loss) before interest expense, income tax expense (benefit) and depreciation and amortization expense. We define Adjusted EBITDA as EBITDA adjusted to exclude (i) gains or losses on the sale of certain assets, (ii) the impacts of mark-to-market changes on derivatives related to our generation portfolio, as well as warrants, (iii) the impact of impairment charges, (iv) certain other costs such as those associated with acquisitions, (v) non-cash compensation expense, and (vi) other material or unusual items.

We believe EBITDA and Adjusted EBITDA provide meaningful representations of our operating performance. We consider EBITDA as another way to measure financial performance on an ongoing basis. Adjusted EBITDA is meant to reflect the operating performance of our entire power generation fleet for the period presented; consequently, it excludes the impact of mark-to-market accounting, impairment charges and other items that could be considered “non-operating” or “non-core” in nature. Because EBITDA and Adjusted EBITDA are financial measures that management uses to allocate resources, determine our ability to fund capital expenditures, assess performance against our peers, and evaluate overall financial performance, we believe they provide useful information for our investors. In addition, many analysts, fund managers and other stakeholders who communicate with us typically request our financial results in an EBITDA and Adjusted EBITDA format.

As prescribed by the SEC, when EBITDA or Adjusted EBITDA is discussed in reference to performance on a consolidated basis, the most directly comparable GAAP financial measure to EBITDA and Adjusted EBITDA is Net income (loss). Management does not analyze interest expense and income taxes on a segment level; therefore, the most directly comparable GAAP financial measure to EBITDA or Adjusted EBITDA when performance is discussed on a segment level is Operating income (loss).

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Adjusted EBITDA — Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

The following table provides summary financial data regarding our Adjusted EBITDA by segment for the three months ended March 31, 2017 :



	Three Months Ended March 31, 2017
(amounts in millions)	PJM			NY/NE			ERCOT			MISO			IPH			CAISO			Other			Total
Net income attributable to Dynegy Inc.																						$	597
Loss attributable to noncontrolling interest																						(1		)
Income tax benefit																						(313		)
Other income and expense, net																						(17		)
Interest expense																						167
Loss from unconsolidated investments																						1
Bankruptcy reorganization items																						(483		)
Operating income (loss)	$	86		$	(41	)	$	(28	)	$	17		$	18		$	(14	)	$	(87	)	$	(49	)
Depreciation and amortization expense	100			68			13			8			14			15			2			220
Bankruptcy reorganization items	—			—			—			—			498			—			(15		)	483
Loss from unconsolidated investments	(1		)	—			—			—			—			—			—			(1		)
Other income and expense, net	—			—			—			—			1			—			16			17
EBITDA	185			27			(15		)	25			531			1			(84		)	670
Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude noncontrolling interest	1			—			—			—			—			—			—			1
Acquisition, integration and restructuring costs	—			—			—			—			—			—			46			46
Bankruptcy reorganization items	—			—			—			—			(498		)	—			15			(483		)
Mark-to-market adjustments, including warrants	(15		)	15			6			(15		)	(1		)	(4		)	(12		)	(26		)
Impairments	20			—			—			—			—			—			—			20
Non-cash compensation expense	—			—			—			—			—			—			5			5
Other	—			—			—			—			(1		)	—			(2		)	(3		)
Adjusted EBITDA	$	191		$	42		$	(9	)	$	10		$	31		$	(3	)	$	(32	)	$	230

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The following table provides summary financial data regarding our Adjusted EBITDA by segment for the three months ended March 31, 2016 :



	Three Months Ended March 31, 2016
(amounts in millions)	PJM			NY/NE			ERCOT		MISO			IPH			CAISO			Other			Total
Net loss attributable to Dynegy Inc.																					$	(10	)
Income tax expense																					16
Other income and expense, net																					(1		)
Interest expense																					142
Earnings from unconsolidated investments																					(2		)
Operating income (loss)	$	177		$	(2	)	$	—	$	13		$	14		$	(14	)	$	(43	)	$	145
Depreciation and amortization expense	83			75			—		9			10			12			1			190
Earnings from unconsolidated investments	2			—			—		—			—			—			—			2
Other income and expense, net	—			—			—		—			—			—			1			1
EBITDA	262			73			—		22			24			(2		)	(41		)	338
Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude noncontrolling interest	3			—			—		—			—			—			—			3
Acquisition and integration costs	—			—			—		—			—			—			4			4
Mark-to-market adjustments, including warrants	(56		)	(20		)	—		(28		)	(3		)	2			(1		)	(106		)
Non-cash compensation expense	—			—			—		—			—			—			7			7
Other (1)	—			—			—		5			—			—			—			5
Adjusted EBITDA	$	209		$	53		$	—	$	(1	)	$	21		$	—		$	(31	)	$	251

__________________________________________


(1)	Other includes an adjustment to exclude Wood River’s energy margin and O&M costs of $5 million for the three months ended March 31, 2016. Adjusted EBITDA did not include this adjustment for the three months ended March 31, 2017.

Adjusted EBITDA decreased by $21 million . The newly acquired ENGIE plants contributed $15 million in the first quarter of 2017. The offsetting $36 million decrease was primarily driven by lower energy margin, net of hedges as a result of decreased spark spreads and higher gas costs at the PJM segment and decreased dark spreads at the NY/NE segment, both driven by mild weather. Please read Discussion of Segment Adjusted EBITDA for further information.

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Discussion of Segment Adjusted EBITDA — Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

PJM Segment

The following table provides summary financial data regarding our PJM segment results of operations for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(dollars in millions, except for price information)	2017			2016			Favorable (Unfavorable) $ Change
Operating revenues
Energy	$	498		$	395		$	103
Capacity	107			111			(4		)
Mark-to-market income, net	15			56			(41		)
Contract amortization	(9		)	(10		)	1
Other	11			10			1
Total operating revenues	622			562			60
Operating costs
Cost of sales	(340		)	(226		)	(114		)
Contract amortization	3			13			(10		)
Total operating costs	(337		)	(213		)	(124		)
Gross margin	285			349			(64		)
Operating and maintenance expense	(87		)	(87		)	—
Depreciation expense	(92		)	(85		)	(7		)
Impairments	(20		)	—			(20		)
Operating income	86			177			(91		)
Depreciation and amortization expense	100			83			17
Earnings (loss) from unconsolidated investments	(1		)	2			(3		)
EBITDA	185			262			(77		)
Adjustments to reflect Adjusted EBITDA from unconsolidated investments	1			3			(2		)
Mark-to-market adjustments	(15		)	(56		)	41
Impairments	20			—			20
Adjusted EBITDA (1)	$	191		$	209		$	(18	)

Million Megawatt Hours Generated (1)	13.4			13.0			0.4
IMA (1)(2):
Combined-Cycle Facilities	89		%	98		%
Coal-Fired Facilities	65		%	77		%
Average Capacity Factor (1)(3):
Combined-Cycle Facilities	68		%	83		%
Coal-Fired Facilities	60		%	43		%
CDDs (4)	2			2			—
HDDs (4)	2,226			2,449			(223		)
Average Market On-Peak Spark Spreads ($/MWh) (5):
PJM West	$	11.38		$	18.73		$	(7.35	)
AD Hub	$	12.63		$	19.81		$	(7.18	)
Average Market On-Peak Power Prices ($/MWh) (6):
PJM West	$	32.52		$	31.49		$	1.03
AD Hub	$	31.39		$	28.80		$	2.59
Average natural gas price—TetcoM3 ($/MMBtu) (7)	$	3.02		$	1.82		$	1.20

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__________________________________________


(1)	Adjusted EBITDA includes the activity of the assets acquired in the ENGIE Acquisition for our period of ownership. Million Megawatt Hours Generated and Average Capacity Factor include such activity for the full month of February. IMA includes such activity for March.


(2)	IMA is an internal measurement calculation that reflects the percentage of generation available during periods when market prices are such that these units could be profitably dispatched. The calculation excludes certain events outside of management control such as weather related issues. The calculation excludes CTs.


(3)	Reflects actual production as a percentage of available capacity. The calculation excludes CTs.


(4)	Reflects CDDs or HDDs for the PJM Region based on National Oceanic and Atmospheric Association (“NOAA”) data.


(5)	Reflects the average of the on-peak spark spreads available to a 7.0 MMBtu/MWh heat rate generator selling power at day-ahead prices and buying delivered natural gas at a daily cash market price and does not reflect spark spreads available to us.


(6)	Reflects the average of day-ahead settled prices for the periods presented and does not necessarily reflect prices we realized.


(7)	Reflects the average of daily quoted prices for the periods presented and does not reflect costs incurred by us.

Operating income decreased by $91 million primarily due to the following:



	(in millions)
Income attributable to newly acquired plants in the first quarter of 2017	$	13
Lower energy margin, net of hedges, primarily due to lower spark spreads as a result of mild winter weather and higher gas costs, partially offset by higher generation volumes due to lower outages	$	(15	)
Lower capacity revenues as a result of lower pricing	$	(18	)
Change in MTM value of derivative transactions	$	(43	)
Asset impairments	$	(20	)
Lower contract amortization	$	(10	)

Adjusted EBITDA decreased by $18 million primarily due to the following:



	(in millions)
Contribution from newly acquired plants in the first quarter of 2017	$	16
Lower energy margin, net of hedges, due to the following:
Lower spark spreads as a result of mild winter weather and higher gas costs	$	(40	)
Higher generation volumes primarily due to lower outages	$	24
Lower capacity revenues as a result of lower pricing	$	(18	)

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NY/NE Segment

The following table provides summary financial data regarding our NY/NE segment results of operations for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(dollars in millions, except for price information)	2017			2016			Favorable (Unfavorable) $ Change
Operating revenues
Energy	$	273		$	171		$	102
Capacity	46			43			3
Mark-to-market income (loss), net	(15		)	27			(42		)
Contract amortization	(4		)	(2		)	(2		)
Other	10			10			—
Total operating revenues	310			249			61
Operating costs
Cost of sales	(238		)	(138		)	(100		)
Contract amortization	(1		)	(16		)	15
Total operating costs	(239		)	(154		)	(85		)
Gross margin	71			95			(24		)
Operating and maintenance expense	(48		)	(40		)	(8		)
Depreciation expense	(62		)	(57		)	(5		)
Other	(2		)	—			(2		)
Operating loss	(41		)	(2		)	(39		)
Depreciation and amortization expense	68			75			(7		)
EBITDA	27			73			(46		)
Mark-to-market adjustments	15			(20		)	35
Adjusted EBITDA (1)	$	42		$	53		$	(11	)

Million Megawatt Hours Generated (1)	4.7			3.9			0.8
IMA for Combined-Cycle Facilities (1)(2)	98		%	89		%
Average Capacity Factor for Combined-Cycle Facilities (1)(3)	37		%	40		%
CDDs (4)	—			—			—
HDDs (4)	2,772			2,719			53
Average Market On-Peak Spark Spreads ($/MWh) (5):
New York—Zone A	$	10.99		$	16.69		$	(5.70	)
Mass Hub	$	6.63		$	10.82		$	(4.19	)
Average Market On-Peak Power Prices ($/MWh) (6):
Mass Hub	$	37.76		$	33.85		$	3.91
Average natural gas price—Algonquin Citygates ($/MMBtu) (7)	$	4.45		$	3.29		$	1.16

__________________________________________


(1)	Adjusted EBITDA includes the activity of the assets acquired in the ENGIE Acquisition for our period of ownership. Million Megawatt Hours Generated and Average Capacity Factor include such activity for the full month of February. IMA includes such activity for March.


(2)	IMA is an internal measurement calculation that reflects the percentage of generation available during periods when market prices are such that these units could be profitably dispatched. The calculation excludes certain events outside of management control such as weather related issues. The calculation excludes our Brayton Point facility.


(3)	Reflects actual production as a percentage of available capacity. The calculation excludes our Brayton Point facility.


(4)	Reflects CDDs or HDDs for the ISO-NE Region based on NOAA data.


(5)	Reflects the average of the on-peak spark spreads available to a 7.0 MMBtu/MWh heat rate generator selling power at day-ahead prices and buying delivered natural gas at a daily cash market price and does not reflect spark spreads available to us.

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(6)	Reflects the average of day-ahead settled prices for the periods presented and does not necessarily reflect prices we realized.


(7)	Reflects the average of daily quoted prices for the periods presented and does not reflect costs incurred by us.

Operating loss increased by $39 million primarily due to the following:



	(in millions)
Loss attributable to newly acquired plants in the first quarter of 2017	$	(5	)
Lower energy margin, net of hedges, primarily due to lower dark spreads at Brayton Point as a result of mild winter weather, partially offset by higher generation volumes as a result of lower planned outages	$	(5	)
Lower capacity revenues as a result of lower pricing	$	(4	)
Change in MTM value of derivative transactions	$	(39	)
Lower contract amortization	$	13

Adjusted EBITDA decreased by $11 million primarily due to the following:



	(in millions)
Contribution from newly acquired plants in the first quarter of 2017	$	8
Lower energy margin, net of hedges, due to the following:
Lower dark spreads at Brayton Point as a result of mild winter weather	$	(15	)
Higher generation volumes as a result of lower planned outages	$	3
Lower capacity revenues as a result of lower pricing	$	(4	)

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ERCOT Segment

The ERCOT segment includes the results of operations since the ENGIE Acquisition Closing Date. The following table provides summary financial data regarding our ERCOT segment for the three months ended March 31, 2017 :



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(dollars in millions, except for price information)	2017			2016			Favorable (Unfavorable) $ Change
Operating revenues
Energy	$	22		$	—		NA
Mark-to-market loss, net	(6		)	—			NA
Other	—			—			NA
Total operating revenues	16			—			NA
Operating costs
Cost of sales	(17		)	—			NA
Total operating costs	(17		)	—			NA
Gross margin	(1		)	—			NA
Operating and maintenance expense	(14		)	—			NA
Depreciation expense	(13		)	—			NA
Operating loss	(28		)	—			NA
Depreciation and amortization expense	13			—			NA
EBITDA	(15		)	—			NA
Mark-to-market adjustments	6			—			NA
Adjusted EBITDA (1)	$	(9	)	$	—		NA

Million Megawatt Hours Generated (1)	0.6			—			NA
IMA (1)(2):
Combined-Cycle Facilities	97		%	—		%
Coal-Fired Facility	93		%	—		%
Average Capacity Factor (1)(3):
Combined-Cycle Facilities	9		%	—		%
Coal-Fired Facility	18		%	—		%
CDDs (4)	267			120			147
HDDs (4)	494			758			(264		)
Average Market On-Peak Spark Spreads ($/MWh) (5):
ERCOT North	$	4.11		$	6.65		$	(2.54	)
Average Market On-Peak Power Prices ($/MWh) (6):
ERCOT North	$	23.54		$	19.62		$	3.92
Average natural gas price—Waha Hub ($/MMBtu) (7)	$	2.78		$	1.85		$	0.93

__________________________________________


(1)	Adjusted EBITDA includes the activity of the assets acquired in the ENGIE Acquisition for our period of ownership. Million Megawatt Hours Generated and Average Capacity Factor include such activity for the full month of February. IMA includes such activity for March only.


(2)	IMA is an internal measurement calculation that reflects the percentage of generation available when market prices are such that these units could be profitably dispatched. The calculation excludes certain events outside of management control such as weather related issues. The calculation excludes CTs.


(3)	Reflects actual production as a percentage of available capacity. The calculation excludes CTs.


(4)	Reflects CDDs or HDDs for the ERCOT Region based on NOAA data.


(5)	Reflects the average of the on-peak spark spreads available to a 7.0 MMBtu/MWh heat rate generator selling power at day-ahead prices and buying delivered natural gas at a daily cash market price and does not reflect spark spreads available to us.


(6)	Reflects the average of day-ahead settled prices for the periods presented and does not necessarily reflect prices we realized.

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(7)	Reflects the average of daily quoted prices for the periods presented and does not reflect costs incurred by us.

Operating loss of $28 million primarily consisted of the following:



	(in millions)
Energy margin	$	5
MTM loss	$	(6	)
O&M costs	$	(14	)
Depreciation expense	$	(13	)

Adjusted EBITDA was a loss of $9 million primarily related to the following:



	(in millions)
Energy margin	$	5
O&M costs primarily due to planned outages	$	(14	)

The Adjusted EBITDA results above are reflective of ERCOT being a primarily summer-based cooling market. Due to this, outages are generally performed between March and April in preparation for summer months. During the first quarter, we had multiple planned outages.

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MISO Segment

The following table provides summary financial data regarding our MISO segment results of operations for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(dollars in millions, except for price information)	2017			2016			Favorable (Unfavorable) $ Change
Operating revenues
Energy	$	77		$	88		$	(11	)
Capacity	7			6			1
Mark-to-market income, net	15			28			(13		)
Other	1			—			1
Total operating revenues	100			122			(22		)
Operating costs
Cost of sales	(50		)	(63		)	13
Total operating costs	(50		)	(63		)	13
Gross margin	50			59			(9		)
Operating and maintenance expense	(26		)	(38		)	12
Depreciation expense	(7		)	(8		)	1
Operating income	17			13			4
Depreciation and amortization expense	8			9			(1		)
EBITDA	25			22			3
Mark-to-market adjustments	(15		)	(28		)	13
Other (1)	—			5			(5		)
Adjusted EBITDA	$	10		$	(1	)	$	11

Million Megawatt Hours Generated	2.7			3.3			(0.6		)
IMA for Coal-Fired Facilities (2)	89		%	89		%
Average Capacity Factor for Coal-Fired Facilities (3)	65		%	50		%
CDDs (4)	57			28			29
HDDs (4)	2,203			2,424			(221		)
Average Market On-Peak Power Prices ($/MWh) (5):
Indiana (Indy Hub)	$	32.65		$	25.61		$	7.04
Commonwealth Edison (NI Hub)	$	30.27		$	27.34		$	2.93

__________________________________________


(1)	Other includes an adjustment to exclude Wood River’s energy margin and O&M costs of $5 million for the three months ended March 31, 2016. Adjusted EBITDA did not include this adjustment for the three months ended March 31, 2017.


(2)	IMA is an internal measurement calculation that reflects the percentage of generation available during periods when market prices are such that these units could be profitably dispatched. The calculation excludes certain events outside of management control such as weather related issues.


(3)	Reflects actual production as a percentage of available capacity.


(4)	Reflects CDDs or HDDs for the MISO Region based on NOAA data.


(5)	Reflects the average of day-ahead settled prices for the periods presented and does not necessarily reflect prices we realized.

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Operating income increased by $4 million primarily due to the following:



	(in millions)
Higher energy margin, net of hedges, primarily due to higher realized power prices driven by an increase in natural gas prices	$	3
Higher capacity revenue primarily due to higher volumes partially offset by lower pricing	$	1
Change in MTM value of derivative transactions	$	(13	)
Lower O&M costs due to shutdowns in 2016	$	12

Adjusted EBITDA increased by $11 million primarily due to the following:



	(in millions)
Higher energy margin, net of hedges, primarily due to higher realized power prices driven by an increase in natural gas prices	$	3
Higher capacity revenue primarily due to higher volumes partially offset by lower pricing	$	1
Lower O&M costs due to shutdowns in 2016	$	7

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IPH Segment

The following table provides summary financial data regarding our IPH segment results of operations for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(dollars in millions, except for price information)	2017			2016			Favorable (Unfavorable) $ Change
Operating revenues
Energy	$	137		$	145		$	(8	)
Capacity	39			22			17
Mark-to-market income, net	1			3			(2		)
Contract amortization	(2		)	(4		)	2
Other	—			1			(1		)
Total operating revenues	175			167			8
Operating costs
Cost of sales	(105		)	(104		)	(1		)
Contract amortization	2			5			(3		)
Total operating costs	(103		)	(99		)	(4		)
Gross margin	72			68			4
Operating and maintenance expense	(42		)	(45		)	3
Depreciation expense	(12		)	(9		)	(3		)
Operating income	18			14			4
Depreciation and amortization expense	14			10			4
Bankruptcy reorganization items	498			—			498
Other income and expense, net	1			—			1
EBITDA	531			24			507
Bankruptcy reorganization items	(498		)	—			(498		)
Mark-to-market adjustments	(1		)	(3		)	2
Other	(1		)	—			(1		)
Adjusted EBITDA	$	31		$	21		$	10

Million Megawatt Hours Generated	3.8			3.3			0.5
IMA for IPH Facilities (1)	86		%	86		%
Average Capacity Factor for IPH Facilities (2)	52		%	39		%
CDDs (3)	57			28			29
HDDs (3)	2,203			2,424			(221		)
Average Market On-Peak Power Prices ($/MWh) (4):
Indiana (Indy Hub)	$	32.65		$	25.61		$	7.04
Commonwealth Edison (NI Hub)	$	30.27		$	27.34		$	2.93

________________________________________


(1)	IMA is an internal measurement calculation that reflects the percentage of generation available during periods when market prices are such that these units could be profitably dispatched. The calculation excludes certain events outside of management control such as weather related issues. The calculation excludes CTs.


(2)	Reflects actual production as a percentage of available capacity. The calculation excludes CTs.


(3)	Reflects CDDs or HDDs for the MISO Region based on NOAA data.


(4)	Reflects the average of day-ahead settled prices for the periods presented and does not necessarily reflect prices we realized.

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Operating income increased by $4 million primarily due to the following:



	(in millions)
Lower energy margin, net of hedges, primarily due to lower power prices due to transmission congestion, offset by higher generation due to fewer planned outages	$	(8	)
Higher capacity revenues due to higher price and volume	$	17
Change in MTM value of derivative transactions	$	(2	)
Depreciation	$	(3	)

Adjusted EBITDA increased by $10 million primarily due to the following:



	(in millions)
Lower energy margin, net of hedges due to the following:
Lower power prices primarily due to transmission congestion	$	(13	)
Higher generation due to fewer planned outages	$	5
Higher capacity revenues due to higher price and volume	$	17

CAISO Segment

The following table provides summary financial data regarding our CAISO segment results of operations for the three months ended March 31, 2017 and 2016 , respectively:



	Three Months Ended March 31,						Favorable (Unfavorable) $ Change
(dollars in millions, except for price information)	2017			2016			Favorable (Unfavorable) $ Change
Operating revenues
Energy	$	14		$	21		$	(7	)
Capacity	4			2			2
Mark-to-market income (loss), net	4			(2		)	6
Contract amortization	—			(1		)	1
Other	2			3			(1		)
Total operating revenues	24			23			1
Operating costs
Cost of sales	(11		)	(16		)	5
Total operating costs	(11		)	(16		)	5
Gross margin	13			7			6
Operating and maintenance expense	(15		)	(10		)	(5		)
Depreciation expense	(12		)	(11		)	(1		)
Operating loss	(14		)	(14		)	—
Depreciation and amortization expense	15			12			3
EBITDA	1			(2		)	3
Mark-to-market adjustments	(4		)	2			(6		)
Adjusted EBITDA	$	(3	)	$	—		$	(3	)

Million Megawatt Hours Generated	0.3			0.7			(0.4		)
IMA for Combined-Cycle Facilities (1)	95		%	99		%
Average Capacity Factor for Combined-Cycle Facilities (2)	14		%	29		%
CDDs (3)	25			44			(19		)
HDDs (3)	717			594			123
Average Market On-Peak Spark Spreads ($/MWh) (4):
North of Path 15 (NP 15)	$	8.34		$	10.71		$	(2.37	)
Average natural gas price—PG&E Citygate ($/MMBtu) (5)	$	3.34		$	2.20		$	1.14

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__________________________________________


(1)	IMA is an internal measurement calculation that reflects the percentage of generation available when market prices are such that these units could be profitably dispatched. The calculation excludes certain events outside of management control such as weather related issues. The calculation excludes CTs.


(2)	Reflects actual production as a percentage of available capacity. The calculation excludes CTs.


(3)	Reflects CDDs or HDDs for the CAISO Region based on NOAA data.


(4)	Reflects the average of the on-peak spark spreads available to a 7.0 MMBtu/MWh heat rate generator selling power at day-ahead prices and buying delivered natural gas at a daily cash market price and does not reflect spark spreads available to us.


(5)	Reflects the average of daily quoted prices for the periods presented and does not reflect costs incurred by us.

Operating loss was unchanged from 2016 but was impacted by the following:



	(in millions)
Lower energy margin, net of hedges, primarily due to lower generation volumes as a result of higher competing hydroelectric generation	$	(3	)
Higher capacity revenues due to higher contracted volumes	$	2
Change in MTM value of derivative transactions	$	6
Higher O&M costs primarily due to planned outages and additions to AROs	$	(5	)

Adjusted EBITDA decreased by $3 million primarily due to the following:



	(in millions)
Lower energy margin, net of hedges, primarily due to lower generation volumes as a result of higher competing hydroelectric generation	$	(3	)
Higher capacity revenues due to higher contracted volumes	$	2
Higher O&M costs associated with planned outages	$	(1	)

Outlook

We expect that our future financial results will continue to be impacted by market structure and prices for electric energy, capacity, and ancillary services, including pricing at our plant locations relative to pricing at their respective trading hubs, the volatility of fuel and electricity prices, transportation and transmission logistics, weather conditions, and the availability of our plants. Further, there is a trend toward greater environmental regulation of all aspects of our business. As this trend continues, it is possible that we will experience additional costs related to water, air, and coal ash regulations.

Certain states (Illinois and New York) in our markets have passed legislation or orders whereby those states will subsidize certain nuclear energy producers. We believe that these subsidies will adversely affect the energy and capacity markets by artificially suppressing prices. As a result, we are currently a party to lawsuits in Illinois and New York challenging these subsidy programs. Other states including Connecticut, New Jersey and Pennsylvania are also considering similar nuclear subsidy programs. Please read Environmental and Regulatory Matters below for further discussion.

The portions of our generation volumes sold, coal requirements contracted, coal requirements priced, and coal transportation requirements contracted, by segment, are discussed below. We look to procure and price additional coal and coal transportation opportunistically. For our gas-fired fleet, we hedge price risk by selling forward spark spreads which involves purchasing the required amount of natural gas at the same time as we sell power. We expect to continue our hedging program for energy over a one- to three-year period using various instruments, including retail sales in our PJM and IPH segments, and in accordance with our risk management policy.

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Our Operating Segments

PJM Segment. The PJM segment is comprised of 23 power generation facilities located within the PJM region, with a total generating capacity of 13,510 MW. We have recently announced the planned retirements of our jointly owned Stuart and Killen facilities by mid-2018.

In PJM, we are installing a total of 308 MW of uprates, which will be accomplished primarily through upgrades to the hot gas path components of our combined-cycle gas turbines and one peaking facility. The uprates started in the fall of 2015 and are expected to be completed in the spring of 2018.

PJM introduced its new Capacity Performance (“CP”) product beginning with the Planning Year 2016-2017 capacity auction. CP resources must be capable of sustainable, predictable operation that allows them to be available to provide energy and reserves during performance assessment hours throughout the Delivery Year . Beginning in Planning Year 2018-2019, PJM introduced the Base product, which, alongside CP, replaced the legacy capacity product. Base capacity resources are those capacity resources that are not capable of sustained, predictable operation throughout the entire delivery year, but are capable of providing energy and reserves during hot weather operations. They are subject to non-performance charges assessed during emergency conditions, from June through September.

We use our retail business to hedge a portion of the energy output from our facilities. Our portfolio beyond 2018 is primarily open to benefit from possible future power market pricing improvements.

The following table reflects our hedging activities as of April 12, 2017 :



	2017	2018	2019 to 2021
Generation volumes hedged	92%	51%	7%
Coal requirements contracted (1)	80%	73%	15%
Coal requirements priced (1)	80%	73%	4%
Coal transportation requirements contracted (1)	100%	100%	100%

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(1)	Excludes non-operated jointly-owned generating units.

PJM Capacity Market . The most recent Reliability Pricing Model auction results for the zones in which our assets are located, are as follows for each Planning Year:



	2016-2017				2017-2018				2018-2019				2019-2020
(price per MW-day)	Legacy Capacity		CP		Legacy Capacity		CP		Base		CP		Base		CP
RTO zone	$	59.37	$	134.00	$	120.00	$	151.50	$	149.98	$	164.77	$	80.00	$	100.00
MAAC zone	$	119.13	$	134.00	$	120.00	$	151.50	$	149.98	$	164.77	$	80.00	$	100.00
EMAAC zone	$	119.13	$	134.00	$	120.00	$	151.50	$	210.63	$	225.42	$	99.77	$	119.77
COMED zone	$	59.37	$	134.00	$	120.00	$	151.50	$	200.21	$	215.00	$	182.77	$	202.77
ATSI zone	$	114.23	$	134.00	$	120.00	$	151.50	$	149.98	$	164.77	$	80.00	$	100.00
PPL zone	$	119.13	$	134.00	$	120.00	$	151.50	$	75.00	$	164.77	$	80.00	$	100.00

Our capacity sales, net of purchases, aggregated by Planning Year and capacity type through Planning Year 2019-2020, are as follows:



	2016-2017	2017-2018	2018-2019	2019-2020
Legacy/Base auction capacity sold, net (MW)	4,123	3,569	2,172	1,722
CP auction capacity sold, net (MW)	6,703	7,859	8,526	9,046
Bilateral capacity sold, net (MW)	85	2	295	200
Total segment capacity sold, net (MW)	10,911	11,430	10,993	10,968
Average price per MW-day	$120.35	$143.33	$179.06	$128.85

Our Kendall facility has one tolling agreement for 85 MW that expires in 2017. Effective as of the closing of the ENGIE Acquisition, we acquired a 50% non-operating ownership interest in the Sayreville facility.

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NY/NE Segment. The NY/NE segment is comprised of 11 power generation facilities located within the ISO-NE (5,331 MW) and NYISO (1,212 MW) regions, totaling 6,543 MW of electric generating capacity.

In New York, we completed uprate installations which are expected to result in 35 MW of additional summer capacity and 79 MW of additional winter capacity. In addition to the benefit of incremental output, both blocks have experienced improved efficiency as a result of the uprates.

In New England, at our Lake Road and Milford-Connecticut facilities, we cleared 70 MW of new uprates in FCA-10, at a capacity rate of $7.03 per kW-month for seven years beginning with Planning Year 2019-2020 and extending through Planning Year 2025-2026. For FCA-11, we cleared a total of 34 MW of uprates at Lake Road and Casco Bay that did not qualify for a seven-year rate lock. Milford-Massachusetts cleared an incremental 53 MW of new capacity in FCA-11 that qualified the entire plant for a seven-year rate lock. Milford-Massachusetts will receive the FCA-11 clearing price of $5.30 per kW-month for 202 MW through Planning Year 2026-2027.

On February 2, 2017, FERC issued an order accepting the December 27, 2016 Compliance Filing of Atlas Power Finance, LLC, Dynegy, and ECP (collectively, “Applicants”), which proposed mitigation measures in response to market power concerns identified by FERC in its December 22, 2016 order conditionally authorizing the ENGIE Acquisition. In this order, FERC accepted, among other commitments, Applicants’ proposal to divest at least 224 MW in the Southeast New England capacity zone in ISO-NE, and Applicants’ commitment to execute agreements to sell the divested capacity by August 7, 2017. Our Brayton Point facility is expected to be retired in ISO-NE in June 2017.

The following table reflects our hedging activities as of April 12, 2017 :

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(1)	Excludes our Brayton Point facility and volumes subject to tolling agreements.

NYISO Capacity Market. We have approximately 1,212 MW of power generation in NYISO. The most recent seasonal auction results for NYISO's Rest-of-State zones, in which the capacity for our Independence plant clears, are as follows for each planning period:



	Winter 2016-2017	Summer 2017
Price per kW-month	$0.75	$3.00

Due to the short-term, seasonal nature of the NYISO capacity auctions, we monetize the majority of Independence’s capacity through bilateral trades. Our capacity sales, aggregated by season through Summer 2020, are as follows:



	Winter 2016-2017	Summer 2017	Winter 2017-2018	Summer 2018	Winter 2018-2019	Summer 2019	Winter 2019-2020	Summer 2020
Auction capacity sold (MW)	396	47	—	—	—	—	—	—
Bilateral capacity sold (MW)	775	868	780	620	330	255	118	50
Total capacity sold (MW)	1,171	915	780	620	330	255	118	50
Average price per kW-month	$1.95	$3.41	$2.48	$3.66	$3.32	$3.39	$3.43	$3.45

ISO-NE Capacity Market . We have approximately 5,331 MW of power generation in ISO-NE. The most recent FCA results for ISO-NE Rest-of-Pool, in which most of our assets are located, are as follows for each Planning Year:



	2016-2017	2017-2018	2018-2019	2019-2020	2020-2021
Price per kW-month	$3.15	$7.03	$9.55	$7.03	$5.30

On February 6, 2017, ISO-NE conducted the capacity auction for Planning Year 2020-2021 (FCA-11). In this auction, Rest-of-Pool cleared at $5.30 per kW-month. Performance incentive rules will go into effect for Planning Year 2018-2019, having the potential to increase capacity payments for those resources that are providing excess energy or reserves during a shortage event, while penalizing those that produce less than the required level. Dynegy continues to market and pursue longer term multi-year capacity transactions that extend past FCA-11.

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Our capacity sales, aggregated by Planning Year through Planning Year 2020-2021, are as follows:



	2016-2017	2017-2018	2018-2019	2019-2020	2020-2021
Auction capacity sold (MW)	3,968	3,433	3,471	3,500	3,595
Bilateral capacity sold (MW)	199	148	91	44	—
Total capacity sold (MW)	4,167	3,581	3,562	3,544	3,595
Average price per kW-month	$3.19	$6.98	$10.08	$7.02	$5.38

ERCOT Segment. The ERCOT segment is comprised of six power generation facilities located within the ERCOT region, with a total generating capacity of 4,696 MW.

The following table reflects our hedging activities as of April 12, 2017 :



	2017	2018	2019 to 2021
Generation volumes hedged	56%	50%	3%
Coal requirements contracted	100%	—%	—%
Coal requirements priced	100%	—%	—%
Coal transportation requirements contracted	100%	100%	—%

ERCOT Market. In addition to the energy and fuel hedges summarized in the table above we also hedge using the forward sale of ancillary services.

MISO and IPH Segments.

MISO Segment. The MISO segment is comprised of three power generation facilities located within the MISO region, with a total generating capacity of 1,913 MW. On June 9, 2016, Dynegy announced that Hennepin will receive firm transmission service for a majority of the facility into the PJM control area beginning with Planning Year 2017-2018. Beginning June 1, 2017, Hennepin will pseudo-tie and offer energy and capacity for 260 MW, or 14 percent of our current MISO capacity and energy, into PJM. Hennepin’s remaining volume of approximately 34 MW will continue to be offered into MISO.

Dynegy’s portfolio beyond 2018 is primarily open to benefit from possible future power market pricing improvements. The following table reflects our hedging activities as of April 12, 2017 :



	2017	2018	2019 to 2021
Generation volumes hedged (1)	81%	49%	7%
Coal requirements contracted	100%	86%	56%
Coal requirements priced	100%	86%	—%
Coal transportation requirements contracted	100%	98%	96%

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(1)	Excludes Baldwin Unit 1 starting October 2018.

IPH Segment. The IPH segment is comprised of five power generation facilities, totaling 3,563 MW and primarily operates in MISO. Joppa, which is within the Electric Energy, Inc. control area, is interconnected to Tennessee Valley Authority and Louisville Gas and Electric Company, but primarily sells its capacity and energy to MISO. We currently offer a portion of our IPH segment generating capacity and energy into PJM. As of June 1, 2016, our Coffeen, Duck Creek, E.D. Edwards, and Newton facilities have 937 MW, or 26 percent of IPH’s current capacity and energy, electrically tied into PJM through pseudo-tie arrangements. Additionally, IPH has secured firm transmission beginning June 1, 2017 to export 240 MW into PJM from our Joppa facility.

IPH will continue to use our retail business to hedge a portion of the output from our IPH facilities. The retail hedges are well correlated to our facilities due to the close proximity of the hedge and through participation in FTR markets.

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The following table reflects our hedging activities as of April 12, 2017 :



	2017	2018	2019 to 2021
Generation volumes hedged	83%	47%	23%
Coal requirements contracted	98%	49%	27%
Coal requirements priced	75%	45%	—%
Coal transportation requirements contracted	100%	100%	100%

MISO Capacity Market. We have approximately 5,476 MW of power generation in MISO. This includes the 937 MW related to PJM pseudo-tie arrangements from the IPH fleet which began June 1, 2016. With Joppa’s export capability and Hennepin’s pseudo-tie arrangement that will begin on June 1, 2017, we will have approximately 1,437 MW expected to be sold in PJM for Planning Year 2020-2021. The capacity auction results for MISO Local Resource Zone 4, in which our assets are located, are as follows for each Planning Year:



	2016-2017	2017-2018
Price per MW-day	$72.00	$1.50

Our MISO and IPH segments cleared no incremental volumes, in excess of our retail load obligations, in the MISO Planning Year 2016-2017 or Planning Year 2017-2018 capacity auctions. MISO capacity sales through Planning Year 2020-2021 are as follows:



	2016-2017	2017-2018	2018-2019	2019-2020	2020-2021
MISO Segment:
Bilateral capacity sold in MISO (MW)	1,011	1,075	242	185	185
Legacy/Base auction capacity sold in PJM (MW)	—	208	—	—	—
Total MISO segment capacity sold (MW)	1,011	1,283	242	185	185
Average price per kW-month	$2.75	$2.97	$2.68	$2.60	$2.71

IPH Segment:
Bilateral capacity sold in MISO (MW)	2,246	2,350	1,877	881	669
Legacy/Base auction capacity sold in PJM (MW)	50	365	—	260	—
CP auction capacity sold in PJM (MW)	730	472	835	356	—
Total IPH segment capacity sold (MW)	3,026	3,187	2,712	1,497	669
Average price per kW-month	$4.26	$4.43	$4.93	$4.00	$5.21

The results of the most recent MISO capacity auction further validate our strategy of right-sizing our MISO wholesale generation business to more closely match our retail business, export capacity, and wholesale origination effort. Despite a meaningful decline in the auction clearing price over the past two years, Dynegy has still been able to effectively monetize much of its available capacity at attractive prices.

CAISO Segment. The CAISO segment is comprised of two power generation facilities located within the CAISO region, with a total generating capacity of 1,185 MW.

In its 2015 Gas Transmission and Storage rate case, which sets gas transportation rates for 2015-2017, PG&E proposed revenue requirements and allocation proposals which would result in a significant increase in the rates for electric generators served by the local transmission system, including Moss Landing. Historically, after PG&E’s gas transportation rate structure was changed to unbundle the Backbone Transmission System (“BB”) rates, PG&E gas transmission and storage rate case settlements have included a bill credit for Moss Landing that effectively reduced the differential between rates for BB and local transmission system service, allowing the plant to compete against other power generators. Dynegy actively participated in the hearing process before the CPUC. However, on June 23, 2016, the CPUC approved a rate increase for local transmission customers, including Dynegy, of approximately 200 percent. Dynegy filed a request for rehearing of the CPUC’s unfavorable June 23, 2016 decision on August 1, 2016. The request for rehearing does not act as a stay on the rate increase, which went into effect on August 1, 2016. If Dynegy’s request for rehearing is denied, Dynegy will explore options for an appeal.

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The following table reflects our hedging activities as of April 12, 2017 :

CAISO Capacity Market. The CAISO capacity market is a bilateral market in which Load Serving Entities are required to procure sufficient resources to meet their peak load plus a 15 percent reserve margin. We transact with investor owned utilities, municipalities, community choice aggregators, retail providers, and other marketers through Request for Offers solicitations, broker markets, and directly with bilateral transactions for both the Standard and Flexible RA capacity.

Our capacity sales, aggregated by calendar year for 2017 through 2019 for Moss Landing, are as follows:

We have also sold seasonal capacity for Moss Landing opportunistically. Our Oakland facility operated under a reliability must run (“RMR”) contract with the CAISO for 2016 and was given notice of extension for 2017.

Environmental and Regulatory Matters

Please read Item 1. Business—Environmental Matters in our Form 10-K for a detailed discussion of our environmental and regulatory matters.

State-based Subsidies

On August 1, 2016, the New York Public Service Commission (“NY PSC”) promulgated an Order adopting a Clean Energy Standard. The Order includes a program whereby the State will subsidize certain nuclear energy producers in New York through “zero emissions credits” (“ZECs”), which load serving entities will be required to buy, with the cost passed on to retail ratepayers. In October 2016, a group of generators including Dynegy, and our trade association, the Electric Power Supply Association, filed a lawsuit in the Southern District of New York challenging the NY PSC’s ruling on constitutional grounds. We cannot predict the outcome of that litigation, but if left unchecked, we believe these subsidies have already and will continue to adversely affect the energy and capacity markets in NYISO by artificially suppressing prices.

In December 2016, Illinois passed legislation, the Future Energy Jobs Act (“FEJA”) amending the Illinois Power Agency Act (“IPAA”) to create a ZEC program for Illinois nuclear generators. The FEJA amendments to the IPAA become effective on June 1, 2017, and unless enjoined or eliminated, the ZECs will result in an estimated $2.35 billion of payments over ten years to Exelon. In February 2017, a group of generators including Dynegy and our trade association, the Electric Power Supply Association, filed a lawsuit challenging the FEJA on constitutional grounds in the Northern District of Illinois, Eastern Division, followed by a Motion for Preliminary Injunction in March 2017. We cannot predict the outcome of that litigation, but if left unchecked, we believe these subsidies have already and will continue to adversely affect the energy and capacity markets in PJM and MISO.

The Clean Water Act

Effluent Limitation Guidelines. In April 2017, the EPA granted petitions requesting reconsideration of the Effluent Limitations Guideline (“ELG”) final rule. The EPA also administratively stayed and delayed the ELG rule’s compliance date deadlines pending judicial review. The EPA intends to decide, by fall 2017, which portions of the ELG rule, if any, that it will seek to have remanded for further rulemaking and to conduct notice and comment rulemaking during the reconsideration period to stay or amend the compliance deadlines for the ELG rule. A lawsuit has been filed challenging the administrative stay of the ELG rule.

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Our projected ELG compliance expenditures decreased by $56 million during the three months ended March 31, 2017 due to the announced shut down of Killen by its operator. In addition, we have continued to evaluate the timing of our ELG investments, and we have determined that, based on existing rules, most of the projects originally scheduled for 2017 and 2018 can be delayed by at least two years. Given the recent stay of the rule granted by the EPA, deferring this spend is also prudent to ensure that any investment made conforms to the ultimate rules which, at this point, are uncertain. As a result of these delays, $40 million of ELG investment originally expected in 2017 and $140 million in spend planned in 2018 have now been deferred to future years.

The majority of ELG compliance expenditures are expected to occur in the 2019-2023 timeframe. As planning and work progress, we continue to review our estimates as well as timing of our capital expenditures. The following table presents the projected capital expenditures by period for ELG compliance as of March 31, 2017 :



(amounts in millions)	Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years		Total
ELG expenditures (1)	$	1	$	58	$	164	$	29	$	252

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(1)	Projections have not been adjusted to reflect the pending transactions with LS Power, AEP and AES. Please read Note 3—Acquisitions and Divestitures and Note 10—Joint Ownership of Generating Facilities for further discussion.

The Clean Air Act

Coleto Creek Regional Haze. The EPA issued a federal implementation plan (“FIP”) in December 2015 for the State of Texas that imposed regional haze program reasonable progress requirements on numerous coal-fired EGUs. The FIP would require Coleto Creek to meet an SO ₂ emission limit of 0.04 lbs/MMBtu by February 2021, based on installation of a scrubber. Coleto Creek, other electricity generating companies and the State of Texas filed petitions for judicial review. In July 2016, the United States Court of Appeals for the Fifth Circuit stayed the FIP pending completion of judicial review. In March 2017, the court remanded the FIP to the EPA for reconsideration.

In January 2017, the EPA proposed a FIP for Texas that would impose Best Available Retrofit Technology (‘‘BART’’) emission limits for SO ₂ on numerous EGUs, including Coleto Creek. BART requirements for EGUs were not addressed in the EPA’s December 2015 regional haze FIP for Texas. The proposed FIP BART SO ₂ emissions limit for Coleto Creek is 0.04 lbs/MMBtu based on installation of a scrubber. Compliance would be required within five years from the effective date of a final rule.

A future requirement to install a scrubber at Coleto Creek as a result of either the reasonable progress FIP or proposed BART FIP, when final, could have a material adverse effect on Coleto Creek.

Coal Combustion Residuals

EPA CCR Rule. At this time, we estimate the cost of our compliance with the CCR rule will be approximately $301 million with the majority of the expenditures in the 2017-2023 timeframe. This estimate is reflected in our AROs.

Coal Segment Groundwater. Please read Note 13—Commitments and Contingencies , Other Contingencies, Coal Segment Groundwater, for further discussion.

Climate Change

Clean Power Plan. In March 2017, the President of the United States issued Executive Order 13783 directing the EPA to review the Clean Power Plan, as well as the GHG new source performance standards, and, if appropriate, initiate proceedings to suspend, revise or rescind those rules.

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RISK MANAGEMENT DISCLOSURES

The following table provides a reconciliation of the risk management data contained within our unaudited consolidated balance sheets on a net basis:



(amounts in millions)	As of and for the Three Months Ended March 31, 2017
Fair value of portfolio at December 31, 2016	$	6
Risk management gains recognized through the statement of operations in the period, net	38
Contracts realized or otherwise settled during the period	(18		)
Acquired derivatives	9
Change in collateral/margin netting	12
Fair value of portfolio at March 31, 2017	$	47

The net risk management asset of $47 million is the aggregate of the following line items in our unaudited consolidated balance sheets: Current Assets—Assets from risk management activities, Other Assets—Assets from risk management activities, Current Liabilities—Liabilities from risk management activities, and Other Liabilities—Liabilities from risk management activities.

Risk Management Asset and Liability Disclosures. The following table provides an assessment of net contract values by year as of March 31, 2017 , based on our valuation methodology:

Net Fair Value of Risk Management Portfolio



(amounts in millions)	Total			2017			2018			2019			2020			2021		Thereafter
Market quotations (1)(2)	$	—		$	17		$	(12	)	$	(4	)	$	(1	)	$	—	$	—
Prices based on models (2)	(19		)	(18		)	(1		)	—			—			—		—
Total (3)	$	(19	)	$	(1	)	$	(13	)	$	(4	)	$	(1	)	$	—	$	—

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(1) Prices obtained from actively traded, liquid markets for commodities.

(2) The market quotations category represents our transactions classified as Level 1 and Level 2. The prices based on models category represents transactions classified as Level 3. Please read Note 5—Risk Management Activities, Derivatives and Financial Instruments for further discussion.


(3)	Excludes $66 million of broker margin that has been netted against Risk management liabilities in our unaudited consolidated balance sheet. Please read Note 5—Risk Management Activities, Derivatives and Financial Instruments for further discussion.

UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION

This Form 10-Q includes statements reflecting assumptions, expectations, projections, intentions, or beliefs about future events that are intended as “forward-looking statements.” All statements included or incorporated by reference in this quarterly report, other than statements of historical fact, that address activities, events, or developments that we expect, believe, or anticipate will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment of the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties, and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “plan,” “may,” “will,” “should,” “expect,” and other words of similar meaning. In particular, these include, but are not limited to, statements relating to the following:


•	beliefs and assumptions about weather and general economic conditions;


•	beliefs, assumptions, and projections regarding the demand for power, generation volumes, and commodity pricing, including natural gas prices and the timing of a recovery in power market prices, if any;


•	beliefs and assumptions about market competition, generation capacity, and regional supply and demand characteristics of the wholesale and retail power markets, including the anticipation of plant retirements and higher market pricing over the longer term;


•	sufficiency of, access to, and costs associated with coal, fuel oil, and natural gas inventories and transportation thereof;

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•	the effects of, or changes to the power and capacity procurement processes in the markets in which we operate;

•

expectations regarding, or impacts of, environmental matters, including costs of compliance, availability and adequacy of emission credits, and the impact of ongoing proceedings and potential regulations or changes to current regulations, including those relating to climate change, air emissions, cooling water intake structures, coal combustion byproducts, and other laws and regulations that we are, or could become, subject to, which could increase our costs, result in an impairment of our assets, cause us to limit or terminate the operation of certain of our facilities, or otherwise have a negative financial effect;


•	beliefs about the outcome of legal, administrative, legislative, and regulatory matters, including any impacts from the change in administration to these matters;


•	projected operating or financial results, including anticipated cash flows from operations, revenues, and profitability;


•	our focus on safety and our ability to operate our assets efficiently so as to capture revenue generating opportunities and operating margins;


•	our ability to mitigate forced outage risk, including managing risk associated with CP in PJM and performance incentives in ISO-NE;


•	our ability to optimize our assets through targeted investment in cost effective technology enhancements;


•	the effectiveness of our strategies to capture opportunities presented by changes in commodity prices and to manage our exposure to energy price volatility;


•	efforts to secure retail sales and the ability to grow the retail business;


•	efforts to identify opportunities to reduce congestion and improve busbar power prices;


•	ability to mitigate impacts associated with expiring RMR and/or capacity contracts;


•	expectations regarding our compliance with the Credit Agreement, including collateral demands, interest expense, any applicable financial ratios, and other payments;


•	expectations regarding performance standards and capital and maintenance expenditures;


•	the timing and anticipated benefits to be achieved through our company-wide improvement programs, including our PRIDE initiative;


•	expectations regarding strengthening the balance sheet, managing debt maturities and improving Dynegy’s leverage profile;


•	expectations, timing and benefits of the AES and AEP transactions;


•	efforts to divest assets and the associated timing of such divestitures, and anticipated use of proceeds from such divestitures;


•	anticipated timing, outcome, and impact of expected retirements;


•	beliefs about the costs and scope of the ongoing demolition and site remediation efforts; and


•	expectations regarding the synergies and anticipated benefits of the ENGIE Acquisition.

Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties, and other factors, many of which are beyond our control, including those set forth under Item 1A—Risk Factors of our Form 10-K.

CRITICAL ACCOUNTING POLICIES

Please read “Critical Accounting Policies” in our Form 10-K for a complete description of our critical accounting policies, with respect to which there have been no material changes since the filing of such Form 10-K.

Item 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Please read Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Form 10-K for a discussion of our exposure to commodity price variability and other market risks related to our net non-trading derivative assets and liabilities. The following is a discussion of the more material of these risks and our relative exposures as of March 31, 2017 .

Value at Risk (“VaR”). The following table sets forth the aggregate daily VaR of the mark-to-market portion of our risk-management portfolio primarily associated with the PJM, NY/NE, ERCOT, MISO, and CAISO segments. The VaR calculation does not include market risks associated with the accrual portion of the risk-management portfolio that is designated as “normal purchase, normal sale,” nor does it include expected future production from our generating assets. Please read “VaR” in our Form

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10-K for a complete description of our valuation methodology. The daily VaR at March 31, 2017 compared to December 31, 2016 was lower due to a decrease in volatility and price.

Daily and Average VaR for Risk Management Portfolios



(amounts in millions)	March 31, 2017		December 31, 2016
One day VaR—95 percent confidence level	$	15	$	38
One day VaR—99 percent confidence level	$	21	$	53
Average VaR—95 percent confidence level for the rolling twelve months ended	$	18	$	14

Credit Risk. The following table represents our credit exposure at March 31, 2017 associated with the mark-to-market portion of our risk management portfolio, on a net basis. We had no exposure related to non-investment grade quality counterparties.

Credit Exposure Summary



(amounts in millions)	Investment Grade Quality
Type of Business:
Financial institutions	$	79
Utility and power generators	20
Commercial/industrial/end users	3
Total	$	102

Interest Rate Risk

We are exposed to fluctuating interest rates related to our variable rate financial obligations, which consist of amounts outstanding under our Credit Agreement. We currently use interest rate swaps to mitigate this interest rate exposure. Our interest rate hedging instruments are recorded at their fair value. An increase in LIBOR by 25 basis points would result in a $3.7 million increase in our annual interest expense on the unhedged portion of our indebtedness.

The absolute notional amounts associated with our interest rate contracts were as follows at March 31, 2017 and December 31, 2016 , respectively:



	March 31, 2017			December 31, 2016
Interest rate swaps (in millions of U.S. dollars)	$	767		$	769
Fixed interest rate paid (percent)	3.03		%	3.19		%

Item 4—CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). This evaluation included consideration of the various processes carried out under the direction of our disclosure committee. This evaluation also considered the work completed relating to our compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2017 .

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting during the quarter ended March 31, 2017 .

PART II. OTHER INFORMATION

Item 1—LEGAL PROCEEDINGS

Please read Note 13—Commitments and Contingencies —Legal Proceedings to the accompanying unaudited consolidated financial statements for a discussion of the legal proceedings that we believe could be material to us.

Item 1A—RISK FACTORS

Please read Item 1A—Risk Factors of our Form 10-K for factors, risks, and uncertainties that may affect future results.

Item 4—MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this quarterly report on Form 10-Q.

Item 6—EXHIBITS

The following documents are included as exhibits to this Form 10-Q:



Exhibit Number			Description

*2.1			Membership Interest Purchase Agreement, dated as of February 23, 2017, by and between Dynegy Inc. and Spruce Generation, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-k of Dynegy Inc. filed on February 28, 2017 File No. 001-33443).
*2.2			Asset Purchase Agreement, dated as of February 23, 2017, by and between AEP Generation Resources Inc. and Dynegy Zimmer, LLC (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-k of Dynegy Inc. filed on February 28, 2017 File No. 001-33443).
*2.3			Asset Purchase Agreement, dated February 23, 2017, by and between Dynegy Conesville, LLC and AEP Generation Resources Inc. (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-k of Dynegy Inc. filed on February 28, 2017 File No. 001-33443).
*2.4			Asset Purchase Agreement dated April 21, 2017, by and among Dynegy Zimmer, LLC, Dynegy Miami Fort, LLC, AES Ohio Generation, LLC and The Dayton Power and Light Company (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-k of Dynegy Inc. filed on April 24, 2017 File No. 001-33443).
3.1			Dynegy Inc. Seventh Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-k of Dynegy Inc. filed on March 3, 2017 File No. 001-33443).
**10.1			Form of Performance Award Agreement (CEO) (2017 Awards).
**10.2			Form of Performance Award Agreement (EVP) (2017 Awards).
**10.3			Form of Stock Unit Award Agreement (CEO) (2017 Awards).
**10.4			Form of Stock Unit Award Agreement (Executive Management) (2017 Awards).
**10.5			Form of Non-Qualified Stock Option Award Agreement (CEO) (2017 Awards).
**10.6			Form of Non-Qualified Stock Option Award Agreement (2017 Awards).
**10.7			Amendment and Waiver Agreement, dated February 2, 2017, to the Letter of Credit and Reimbursement Agreement by and between Illinois Power Marketing Company and MUFG Union Bank, N.A.
**10.8			Amendment Agreement, dated March 8, 2017, to the Letter of Credit and Reimbursement Agreement by and between Illinois Power Marketing Company and MUFG Union Bank, N.A.
**10.9			Second Amendment Agreement, dated April 21, 2017, to the Letter of Credit and Reimbursement Agreement by and between Illinois Power Marketing Company and MUFG Union Bank, N.A.
**31.1			Chief Executive Officer Certification Pursuant to Rule 13a-14(a) and 15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**31.2			Chief Financial Officer Certification Pursuant to Rule 13a-14(a) and 15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†32.1			Chief Executive Officer Certification Pursuant to 18 United States Code Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
†32.2			Chief Financial Officer Certification Pursuant to 18 United States Code Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**95.1			Mine Safety Violations and Other Legal Matter Disclosures pursuant to section 1503 of the Dodd-Frank Act.
**101.INS			XBRL Instance Document
**101.SCH			XBRL Taxonomy Extension Schema Document
**101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
**101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
**101.LAB			XBRL Taxonomy Extension Label Linkbase Document
**101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

__________________________________________


**	Filed herewith.


*	Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Dynegy will furnish the omitted schedules and exhibits to the Securities and Exchange Commission upon request by the Commission.


†	Pursuant to Securities and Exchange Commission Release No. 33-8238, this certification will be treated as “accompanying” this report and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act,

and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

DYNEGY INC.

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			DYNEGY INC.

Date:	May 5, 2017	By:	/s/ CLINT C. FREELAND
			Clint C. Freeland Executive Vice President and Chief Financial Officer

EXHIBIT 10.1

FORM OF PERFORMANCE AWARD AGREEMENT (CEO)

THIS PERFORMANCE AWARD AGREEMENT (this “ Agreement ”) is made as of the 1 day of March, 2017, between DYNEGY INC., a Delaware corporation (“ Dynegy ”), and all of its Affiliates (collectively, the “ Company ”), and Robert Flexon (“ Employee ”). A copy of the Amended and Restated Dynegy Inc. 2012 Long Term Incentive Plan (the “ Plan ”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.


1)	The Plan . Employee acknowledges receipt of a copy of the Plan, and agrees that this Performance Award shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.

The Grant . The Compensation and Human Resources Committee of the Board of Directors (the “ Committee ”) granted to Employee on March 1, 2017 (“ Effective Date ”), a Performance Award of a designated number of performance units, each of which has a designated value equivalent to Dynegy’s Stock Price as of the Effective Date. No portion of the Performance Units will be earned if the Company’s performance is below the Minimum level of performance. The performance criteria are designated in Section 3 and on Exhibit 1 to this Agreement.

Performance Period and Performance Goals . Subject to the provisions of Sections 5 and 6 of this Agreement, the performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 2017 through December 31, 2019 (the “ Performance Period ”). The Performance Criteria for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

Payment . Subject to the provisions of Sections 5 and 6 of this Agreement, following the end of the Performance Period, Employee shall be entitled to receive the payment of an amount not exceeding the maximum value of the Performance Award, based on the achievement of the Performance Criteria set forth in Exhibit 1 for such Performance Period, as determined and certified in writing by the Committee. Payment of the Performance Award may be made in a lump sum in Dynegy Common Stock and shall be made no earlier than January 22, 2020 and not later than March 15, 2020 or such other time as complies with Code Section 409A.


5)	Termination . The Performance Award shall terminate if Employee does not remain continuously in the employ of the Company or does not continue to perform services as a Consultant or Director for the Company at all times during the Performance Period, except that:

if the Employee is determined to be disabled (as defined in the Company’s long term disability program or plan in which the Employee is a participant or, if the Employee does not participate in any such plan, as defined in the Dynegy Inc. Long Term Disability Plan, as amended, or the successor plan thereto) or in the event of the death of the Employee, all Performance Units shall become vested at Target level of performance. In such case, Employee or Employee’s legal representative, or the person, if any, who acquired the Performance Award by bequest or inheritance or by reason of the death of Employee, shall be entitled to receive any payment with respect to the Performance Award in accordance with this Agreement, or


b)	if the Employee’s employment with the Company terminates by reason of Involuntary Termination, then the Performance Units shall not be forfeited upon termination of employment and instead shall become vested upon completion of the performance period based solely upon the actual level of performance of the Company, or


c)	if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, then the Performance Units shall become vested upon completion of the performance period based upon actual level of performance; or


d)	if the Employee’s employment with the Company terminates on April 30, 2018, then the Performance Units shall not be forfeited upon termination of employment and instead shall become vested upon completion of the performance period based solely upon the actual level of performance of the Company.

PERFORMANCE AWARD AGREEMENT PAGE 1

EXHIBIT 10.1

Corporate Change . If a Corporate Change occurs during the Performance Period, provided the ending share would entitle Employee to receive a Performance Award based upon the performance goals set forth in Exhibit 1 to this Agreement Employee shall receive a payment with respect to the Performance Award, which shall be determined by using either, as applicable (a) the agreed price per share received by the shareholders of Dynegy as a result of the Corporate Change, or if there is no agreed price per Share, then (b) the average closing Dynegy Inc. share price for the twenty (20) consecutive trading days immediately preceding the effective date of the Corporate Change, as the ending Share price for the Performance Period. Such payment, if any, shall be made regardless of whether Employee’s employment with the Company is terminated (other than for Cause) on or after the effective date of such Corporate Change, and shall be made in stock or cash to Employee as soon as administratively feasible but no later than the later of December 31 of the calendar year in which the Corporate Change occurs or the 15 ^th day of the third month following the effective date of the Corporate Change. The Performance Period shall end as of the effective date of a Corporate Change, and any Performance Award payments hereunder shall only be made in accordance with this Section. Notwithstanding anything contained herein to the contrary, any Corporate Change within the first twelve (12) months of the Performance Period would entitle Employee to receive a Performance Award at Target level of performance.

Status of Stock . Employee agrees that any Shares distributed pursuant to this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. Employee also agrees that (a) the certificates representing the Shares may bear such legend or legends as the Committee in its sole discretion deems appropriate in order to assure compliance with applicable securities laws and (b) the Company may refuse to register the transfer of the Shares on the stock transfer records of the Company, and may give related instructions to its transfer agent, if any, to stop registration of such transfer, if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law.

Employment Relationship . For purposes of this Agreement, Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of the Company or an Affiliate (as such term is defined in the Plan). Nothing in the adoption of the Plan or the grant of the Performance Award thereunder pursuant to this Agreement shall confer upon Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Unless otherwise provided in a written employment agreement or by applicable law, Employee’s employment by the Company shall be on an at-will basis, and the employment relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee in its sole discretion, and its determination shall be final and binding on all parties.


9)	Withholding of Tax . To the extent that payment of the Performance Award results in compensation income to Employee for federal or state income tax purposes, the Company is authorized to withhold from any cash or Stock distributable to the Employee under this Agreement) then or thereafter payable to Employee any tax required to be withheld by reason of such resulting compensation income.


10)	Code Section 409A . If it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended accordingly.


11)	Miscellaneous .

This grant is subject to all the terms, conditions, limitations and restrictions contained in the Plan. In the event of any conflict or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling. In the event of any conflict or inconsistency between the terms hereof and the terms of the Dynegy Inc. Severance Plan, including any amendments or supplements thereto, the terms hereof shall be controlling.

Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered when hand delivered to Employee at his or her principal place of employment or when sent by registered or certified mail to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

[Remainder of page intentionally left blank]

PERFORMANCE AWARD AGREEMENT PAGE 2

EXHIBIT 10.1

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has agreed to and accepted the terms of this Agreement*, all as of the date first above written.

DYNEGY INC.

By: /s/ Julius Cox

Name: Julius Cox

Title: Executive Vice President and CAO

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

PERFORMANCE AWARD AGREEMENT PAGE 3

EXHIBIT 10.1

Exhibit 1

Performance Criteria

The following Performance Criteria shall apply to the Performance Award described in the attached PERFORMANCE AWARD AGREEMENT, dated as of the 1 day of March, 2017 between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its Affiliates (collectively, the “ Company ”), and the Employee.

1) Performance Period : January 1, 2017 through December 31, 2019.

2) Performance Criteria :

a) Total Shareholder Return – For one-half (50%) of the Award, the performance criteria shall be calculated utilizing a volume-weighted average price (VWAP) by comparing the cumulative total stockholder return (“ TSR ”) for Dynegy’s common stock relative to the TSR for the Designated Peer Group and assuming that any dividends paid by Dynegy or the Designated Peer Group are reinvested on a daily basis. For this purpose, TSR is calculated based on (a) the average stock price for a share of common stock during the 10 trading days both before and after January 1, 2017 and (b) the average stock price for a share of common stock during the 10 trading days both before and after December 31, 2019.

b) Free Cash Flow – For one-half (50%) of the Award, the performance criteria shall be based on Dynegy’s Free Cash Flow (“FCF”) over the Performance Period. FCF is defined as cash flow from operations less non-discretionary maintenance and environmental capital expenditures, the cash impact of acquisition-related fees and financing costs plus the return of restricted cash. FCF also includes receipts or payments related to interest rate swaps and excludes the impact of changes in collateral and working capital. FCF will exclude capital costs related to compliance with environmental requirements.

3) Designated Peer Group : Any member of the Designated Peer Group (see Exhibit 2 ) that undergoes a “change of control event”, or significant change in business direction, prior to the end of the Performance Period may be removed from the Designated Peer Group at the discretion of the Human Resources and Compensation Committee. A “change of control event” shall mean: (i) when a company completes the sale of assets having a gross sales price which exceeds 50% of the consolidated total capitalization of the company (consolidated total stockholders’ equity plus consolidated total long-term debt as determined in accordance with generally accepted accounting principles) as at the end of the last full fiscal quarter prior to the date such determination is made; or (ii) any corporation, person or group within the meaning of Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “ Act ”), becomes the beneficial owner (within the meaning of Rule 13d-3 under the Act) of voting securities of the company representing more than 30% of the total votes eligible to be cast at any election of directors of the company.

4) Award Level for TSR : The Award Level for TSR shall be determined based on the percentile rank of Relative TSR. For this purpose, the following shall apply:

Percentile Rank ¹ Award Level ²

90th% or better: (Maximum) 200%

75th% 175%

50th% (Target): 100%

25th% (Minimum) 50%

Below 25th% 0%

5) Award Level for FCF: The Award Level for FCF shall be determined based on the achievement of the following cumulative FCF amounts over the Performance Period:

PERFORMANCE AWARD AGREEMENT EXHIBIT 1

EXHIBIT 10.1



Performance Level	FCF Amount	% of Target PSUs Earned ³
Maximum		200%
Target		100%
Threshold		50%
<Threshold		0%

__________________________________________

¹ If absolute TSR is negative across the Designated Peer Group, award payouts will be capped at 100%, regardless of relative TSR positioning.

² Linear interpolation will be applicable to the percentages between 25% and 50%, 50% and 75%, and 75% and 90%.

³ Linear interpolation will be applicable to the percentages between the Performance Levels.

PERFORMANCE AWARD AGREEMENT EXHIBIT 1

EXHIBIT 10.1

Exhibit 2

Designated Peer Group

☐ Public Service Enterprise Group (PSEG)

☐ Exelon Corporation (EXC)

☐ FirstEnergy (FE)

☐ Entergy Corporation (ETR)

☐ NRG Energy Inc. (NRG)

☐ AES Corporation (AES)

☐ Calpine Corporation (CPN)

☐ Capital Power Corporation (CPX)

☐ TransAlta Corporation (TAC)

PERFORMANCE AWARD AGREEMENT EXHIBIT 2

EXHIBIT 10.2

FORM OF PERFORMANCE AWARD AGREEMENT (EVP)

THIS PERFORMANCE AWARD AGREEMENT (this “ Agreement ”) is made as of the 1 day of March, 2017, between DYNEGY INC., a Delaware corporation (“ Dynegy ”), and all of its Affiliates (collectively, the “ Company ”), and Named Employee (“ Employee ”). A copy of the Amended and Restated Dynegy Inc. 2012 Long Term Incentive Plan (the “ Plan ”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.


1)	The Plan . Employee acknowledges receipt of a copy of the Plan, and agrees that this Performance Award shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.


5)	Termination . The Performance Award shall terminate if Employee does not remain continuously in the employ of the Company or does not continue to perform services as a Consultant or Director for the Company at all times during the Performance Period, except that:


b)	if the Employee’s employment with the Company terminates by reason of Involuntary Termination, then the Performance Units shall not be forfeited upon termination of employment and instead shall become vested upon completion of the performance period based solely upon the actual level of performance of the Company, or


c)	if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, then the Performance Unites shall become vested upon completion of the performance period based upon actual level of performance.


6)	Corporate Change . If a Corporate Change occurs during the Performance Period, provided the ending share would entitle Employee to receive a Performance Award based upon the performance goals set forth in Exhibit 1 to this Agreement Employee shall receive a payment with respect to the Performance Award, which shall be determined by using either, as applicable (a)

PERFORMANCE AWARD AGREEMENT PAGE 1

EXHIBIT 10.2

the agreed price per share received by the shareholders of Dynegy as a result of the Corporate Change, or if there is no agreed price per Share, then (b) the average closing Dynegy Inc. share price for the twenty (20) consecutive trading days immediately preceding the effective date of the Corporate Change, as the ending Share price for the Performance Period. Such payment, if any, shall be made regardless of whether Employee’s employment with the Company is terminated (other than for Cause) on or after the effective date of such Corporate Change, and shall be made in stock or cash to Employee as soon as administratively feasible but no later than the later of December 31 of the calendar year in which the Corporate Change occurs or the 15 ^th day of the third month following the effective date of the Corporate Change. The Performance Period shall end as of the effective date of a Corporate Change, and any Performance Award payments hereunder shall only be made in accordance with this Section. Notwithstanding anything contained herein to the contrary, any Corporate Change within the first twelve (12) months of the Performance Period would entitle Employee to receive a Performance Award at Target level of performance.


9)	Withholding of Tax . To the extent that payment of the Performance Award results in compensation income to Employee for federal or state income tax purposes, the Company is authorized to withhold from any cash or Stock distributable to the Employee under this Agreement) then or thereafter payable to Employee any tax required to be withheld by reason of such resulting compensation income.


10)	Code Section 409A . If it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended accordingly.


11)	Miscellaneous .

[Remainder of page intentionally left blank]

PERFORMANCE AWARD AGREEMENT PAGE 2

EXHIBIT 10.2

DYNEGY INC.

By: /s/ Julius Cox

Name: Julius Cox

Title: Executive Vice President and CAO

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

PERFORMANCE AWARD AGREEMENT PAGE 3

EXHIBIT 10.2

Exhibit 1

Performance Criteria


1.	Performance Period : January 1, 2017 through December 31, 2019.


2.	Performance Criteria :

(a)

Total Shareholder Return – For one-half (50%) of the Award, the performance criteria shall be calculated utilizing a volume-weighted average price (VWAP) by comparing the cumulative total stockholder return (“ TSR ”) for Dynegy’s common stock relative to the TSR for the Designated Peer Group and assuming that any dividends paid by Dynegy or the Designated Peer Group are reinvested on a daily basis. For this purpose, TSR is calculated based on (a) the average stock price for a share of common stock during the 10 trading days both before and after January 1, 2017 and (b) the average stock price for a share of common stock during the 10 trading days both before and after December 31, 2019.

(b)

Free Cash Flow – For one-half (50%) of the Award, the performance criteria shall be based on Dynegy’s Free Cash Flow (“FCF”) over the Performance Period. FCF is defined as cash flow from operations less non-discretionary maintenance and environmental capital expenditures, the cash impact of acquisition-related fees and financing costs plus the return of restricted cash. FCF also includes receipts or payments related to interest rate swaps and excludes the impact of changes in collateral and working capital. FCF will exclude capital costs related to compliance with environmental requirements.

Designated Peer Group : Any member of the Designated Peer Group (see Exhibit 2 ) that undergoes a “change of control event”, or significant change in business direction, prior to the end of the Performance Period may be removed from the Designated Peer Group at the discretion of the Human Resources and Compensation Committee. A “change of control event” shall mean: (i) when a company completes the sale of assets having a gross sales price which exceeds 50% of the consolidated total capitalization of the company (consolidated total stockholders’ equity plus consolidated total long-term debt as determined in accordance with generally accepted accounting principles) as at the end of the last full fiscal quarter prior to the date such determination is made; or (ii) any corporation, person or group within the meaning of Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “ Act ”), becomes the beneficial owner (within the meaning of Rule 13d-3 under the Act) of voting securities of the company representing more than 30% of the total votes eligible to be cast at any election of directors of the company.


2.	Award Level for TSR : The Award Level for TSR shall be determined based on the percentile rank of Relative TSR. For this purpose, the following shall apply:

Percentile Rank ¹ Award Level ²

90th% or better: (Maximum) 200%

75th% 175%

50th% (Target): 100%

25th% (Minimum) 50%

Below 25th% 0%

1. Award Level for FCF: The Award Level for FCF shall be determined based on the achievement of the following cumulative FCF amounts over the Performance Period:

PERFORMANCE AWARD AGREEMENT EXHIBIT 1

EXHIBIT 10.2



Performance Level	FCF Amount	% of Target PSUs Earned ³
Maximum		200%
Target		100%
Threshold		50%
<Threshold		0%

__________________________________________

¹ If absolute TSR is negative across the Designated Peer Group, award payouts will be capped at 100%, regardless of relative TSR positioning.

² Linear interpolation will be applicable to the percentages between 25% and 50%, 50% and 75%, and 75% and 90%.

³ Linear interpolation will be applicable to the percentages between the Performance Levels.

PERFORMANCE AWARD AGREEMENT EXHIBIT 1

EXHIBIT 10.2

Exhibit 2

Designated Peer Group

☐ Public Service Enterprise Group (PSEG)

☐ Exelon Corporation (EXC)

☐ FirstEnergy (FE)

☐ Entergy Corporation (ETR)

☐ NRG Energy Inc. (NRG)

☐ AES Corporation (AES)

☐ Calpine Corporation (CPN)

☐ Capital Power Corporation (CPX)

☐ TransAlta Corporation (TAC)

PERFORMANCE AWARD AGREEMENT EXHIBIT 2

EXHIBIT 10.3

FORM OF STOCK UNIT AWARD AGREEMENT (CEO)

THIS STOCK UNIT AWARD AGREEMENT (this “ Agreement ”) is made as of the 1 day of March, 2017, between DYNEGY INC., a Delaware corporation (“ Dynegy ”), and all of its Affiliates (collectively, the “ Company ”), and Robert Flexon (the “Employee”). A copy of the Amended and Restated Dynegy Inc. 2012 Long Term Incentive Plan (the “ Plan ”) is annexed to this Agreement and shall be deemed a part hereof as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined in this Agreement but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

1. Award . Pursuant to the Plan, as of the date of this Agreement (the “ Grant Date ”), a designated number of stock units (the “ Stock Units ”) shall be granted to Employee as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services, subject to the acceptance by the Employee of the terms and conditions of this Agreement. The Employee acknowledges receipt of a copy of the Plan, and agrees that this award of Stock Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.

2. Stock Units . The Employee hereby accepts the Stock Units when issued and agrees with respect thereto as follows:

(a) Payment and Determination of Value . Except as otherwise provided in Sections 2(c) or 10 below, Dynegy shall provide to the Employee one share of Dynegy’s common stock, $0.01 par value per share for each Stock Unit on its vesting date.

(b) Vesting . An Employee’s Stock Units shall become vested in three cumulative equal annual installments as follows:

(i) on the first anniversary of the Grant Date, one-third of the aggregate number of Stock Units shall be vested without further action by the Committee; and

(ii) on the second anniversary of the Grant Date, one-third of the aggregate number of Stock Units shall be vested without further action by the Committee; and

(iii) on the third anniversary of the Grant Date, one-third of the aggregate number of Stock Units shall be vested without further action by the Committee.

Except as otherwise provided in Section 2(c) below, any portion of the Stock Units that does not become vested in accordance with the preceding provisions of this Section 2(b) shall be forfeited to the Company for no consideration as of the date of the termination of the Employee’s employment with the Company.

Upon Corporate Change, if the Committee seeks to terminate the Agreement under Section XIII(b)(2) of the Plan, the Committee will comply with Section XIII(b)(3) of the Plan to assess value of the Agreement.

(c) Accelerated Vesting and Payment . Notwithstanding the provisions of Sections 2(a) and 2(b) above, the vesting for some or all of the Employee’s Stock Units shall be accelerated as follows:

(i) if the Employee is determined to be disabled (as defined in the Company’s long term disability program or plan in which the Employee is a participant or, if the Employee does not participate in any such plan, as defined in the Dynegy Inc. Long Term Disability Plan, as amended, or the successor plan thereto) or in the event of the death of the Employee, all of the Employee’s then outstanding Stock Units shall become vested as of the date of such determination or death, as applicable; and

(ii) if the Employee’s employment with the Company terminates by reason of Involuntary Termination (as such term is defined in the Dynegy Inc. Severance Plan), then 100% of the Stock Units awarded to the Employee hereunder shall become vested as of the date of such termination of employment, provided, however, that Employee shall not receive such shares until their original designated vesting date; and

STOCK UNIT AWARD AGREEMENT PAGE 1

EXHIBIT 10.3

(iii) if the Employee’s employment with the Company terminates as a result of an Involuntary Termination without cause within six months following a Corporate Change, then 100% of the Stock Units awarded to the Employee hereunder shall become vested as of the date of such Corporate Change; and

(iv) if the Employee’s employment with the Company terminates on April 30, 2018, as provided in Section 3 of his Employment Agreement, then 100% of the Stock Units awarded to the Employee hereunder shall become vested as of such date, provided, however, that Employee shall not receive such shares until their original designated vesting date; and

(v) if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, then 100% of the Stock Units awarded to the Employee hereunder shall become vested as of such date, provided, however, that Employee shall not receive such shares until their original designed vesting date.

If the Employee’s employment with the Company terminates by reason of resignation by the Employee (except as otherwise provided above) or dismissal by the Company for Cause, then the Employee’s Stock Units shall be forfeited to the Company for no consideration as of the date of the termination of the Employee’s employment with the Company.

3. Transfer Restrictions . The Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or otherwise disposed of by the Employee.

4. Shareholder Rights . The Employee shall not have any of the rights of a shareholder of the Company with respect to the Stock Units.

5. Corporate Acts . The existence of the Stock Units shall not affect in any way the right or power of the Board of Directors of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

6. Withholding of Tax . To the extent that the receipt of the Stock Units results in compensation income to the Employee for federal or state income tax purposes, the Employee shall deliver to the Company at the time of such receipt, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and if the Employee fails to do so, the Company is authorized to withhold from any cash or stock remuneration (including withholding any Stock Units distributable to the Employee under this Agreement) then or thereafter payable to the Employee any tax required to be withheld by reason of such resulting compensation income.

7. Employment Relationship . For purposes of this Agreement, the Employee shall be considered to be in the employment of the Company as long as the Employee remains an employee of either the Company or an Affiliate (as such term is defined in the Plan). Nothing in the adoption of the Plan or the award of the Stock Units thereunder pursuant to this Agreement shall confer upon the Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Unless otherwise provided in a written employment agreement or by applicable law, the Employee’s employment by the Company shall be on an at-will basis, and the employment relationship may be terminated at any time by either the Employee or the Company for any reason whatsoever, with or without cause. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, and its determination shall be final.

8. Notices . Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Employee, such notices or communications shall be effectively delivered when hand delivered to the Employee at his or her principal place of employment or when sent by registered or certified mail to the Employee at the last address the Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

STOCK UNIT AWARD AGREEMENT PAGE 2

EXHIBIT 10.3

respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. In addition, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

10. Code Section 409A . If and to the extent any portion of any payment provided to the Employee under this Agreement in connection with the Employee’s separation from service (as defined in Section 409A of Internal Revenue Code of 1986, as amended (“ Code Section 409A ”) is determined to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the Employee is a “specified employee” as defined in Code Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the procedures separately adopted by the Company for this purpose, by which determination the Employee, as a condition to accepting benefits under this Agreement and the Plan, agrees that he or she is bound, such portion of the shares of Dynegy’s common stock to be delivered on a vesting date shall not be delivered before the earlier of (i) the day that is six months plus one day after the date of separation from service (as determined under Code Section 409A) or (ii) the tenth 10th day after the date of the Employee’s death (as applicable, the “ New Payment Date ”). The shares that otherwise would have been delivered to the Employee during the period between the date of separation from service and the New Payment Date shall be delivered to the Employee on such New Payment Date, and any remaining shares will be delivered on their original schedule. Neither the Company nor the Employee shall have the right to accelerate or defer the delivery of any such shares except to the extent specifically permitted or required by Code Section 409A. This Agreement is intended to comply with the provisions of Code Section 409A and this Agreement and the Plan shall, to the extent practicable, be construed in accordance therewith. Terms defined in this Agreement and the Plan shall have the meanings given such terms under Code Section 409A if and to the extent required to comply with Code Section 409A. In any event, the Company makes no representations or warranty and shall have no liability to the Employee or any other person if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Code Section 409A but not to satisfy the conditions of that section.

11. Binding Effect . This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Employee.

12. Miscellaneous . In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Dynegy Inc. Severance Plan, including any amendments or supplements thereto, the terms of this Agreement shall be controlling.

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STOCK UNIT AWARD AGREEMENT PAGE 3

EXHIBIT 10.3

DYNEGY INC.

By: /s/ Julius Cox

Name: Julius Cox

Title: Executive Vice President and CAO

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

STOCK UNIT AWARD AGREEMENT PAGE 4

EXHIBIT 10.4

FORM OF STOCK UNIT AWARD AGREEMENT (EVP)

THIS STOCK UNIT AWARD AGREEMENT (this “ Agreement ”) is made as of the 1 day of March, 2017, between DYNEGY INC., a Delaware corporation (“ Dynegy ”), and all of its Affiliates (collectively, the “ Company ”), and Named Employee (the “Employee”). A copy of the Amended and Restated Dynegy Inc. 2012 Long Term Incentive Plan (the “ Plan ”) is annexed to this Agreement and shall be deemed a part hereof as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined in this Agreement but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

2. Stock Units . The Employee hereby accepts the Stock Units when issued and agrees with respect thereto as follows:

(b) Vesting . An Employee’s Stock Units shall become vested in three cumulative equal annual installments as follows:

(i) on the first anniversary of the Grant Date, one-third of the aggregate number of Stock Units shall be vested without further action by the Committee; and

(ii) on the second anniversary of the Grant Date, one-third of the aggregate number of Stock Units shall be vested without further action by the Committee; and

(iii) on the third anniversary of the Grant Date, one-third of the aggregate number of Stock Units shall be vested without further action by the Committee.

(c) Accelerated Vesting and Payment . Notwithstanding the provisions of Sections 2(a) and 2(b) above, the vesting for some or all of the Employee’s Stock Units shall be accelerated as follows:

STOCK UNIT AWARD AGREEMENT PAGE 1

EXHIBIT 10.4

(iv) if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, then 100% of the Stock Units awarded to the Employee hereunder shall become vested as of such date, provided, however, that Employee shall not receive such shares until their original designated vesting date.

3. Transfer Restrictions . The Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or otherwise disposed of by the Employee.

4. Shareholder Rights . The Employee shall not have any of the rights of a shareholder of the Company with respect to the Stock Units.

9. Entire Agreement; Amendment . This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. In addition, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

STOCK UNIT AWARD AGREEMENT PAGE 2

EXHIBIT 10.4

11. Binding Effect . This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Employee.

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STOCK UNIT AWARD AGREEMENT PAGE 3

EXHIBIT 10.4

DYNEGY INC.

By: /s/ Julius Cox

Name: Julius Cox

Title: Executive Vice President and CAO

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

STOCK UNIT AWARD AGREEMENT PAGE 4

EXHIBIT 10.5

FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (CEO)

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “ Agreement ”) is made as of the 1 day of March, 2017, between DYNEGY INC., a Delaware corporation (“ Dynegy ”), and all of its Affiliates (collectively, the “ Company ”), and Robert Flexon (“ Employee ”). A copy of the Dynegy Inc. 2012 Long Term Incentive Plan (the “ Plan ”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

1. The Grant . The Compensation and Human Resources Committee of the Board of Directors (the “Committee”) granted to Employee on March 1, 2017 (“ Effective Date ”), as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services, the right and option to purchase (the “ Option ”), in accordance with the terms and conditions set forth in the Plan and in this Agreement, an aggregate number of shares (the “ Shares ”) of common stock of Dynegy, $0.01 par value per share (the “Common Stock”), at a price of $8.02 per share (the “ Exercise Price ”). Employee acknowledges receipt of a copy of the Plan, and agrees that the Option shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement. The Option shall not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”). The Exercise Price is, in the judgment of the Committee, not less than one hundred percent (100%) of the Fair Market Value of a share of the Common Stock on the Effective Date.

2. Exercise . Subject to the provisions, limitations and other relevant provisions of the Plan and of this Agreement, and the earlier expiration of the Option as herein provided, Employee may exercise the Option to purchase some or all of the Shares as follows:

(a) The Option shall become exercisable in three cumulative equal annual installments as follows:

(i) on the first anniversary of the Effective Date, the right to purchase one-third of the aggregate number of Shares shall become exercisable without further action by the Committee;

(ii) on the second anniversary of the Effective Date, the right to purchase an additional one-third of the aggregate number of Shares shall become exercisable without further action by the Committee; and

(iii) on the third anniversary of the Effective Date, the right to purchase the remaining one-third of the aggregate number of Shares shall become exercisable without further action by the Committee.

(b) Notwithstanding any other provision of this Agreement, the unexercised portion of the Option, if any, will automatically and without notice terminate and become null and void upon the expiration of ten (10) years from the Effective Date of the Option.

(c) Any exercise by Employee of the Option, or portion thereof, shall be conducted by delivery of an irrevocable notice of exercise to the Company or its designee as provided in the Plan. In no event shall Employee be entitled to exercise the Option for less than a whole Share.

(d) Upon Corporate Change, if the Committee seeks to terminate the Agreement under Section XIII(b)(2) of the Plan, the Committee will comply with Section XIII(b)(3) of the Plan to assess value of the Agreement.

3. Termination of Employment . The Option may be exercised only while Employee remains an employee of the Company and will terminate and cease to be exercisable upon Employee’s termination of employment with the Company, except that:

(a) if Employee shall die while in the employ of the Company, the Option awarded hereunder shall immediately vest with respect to all of the remaining Shares and become fully exercisable without further action by the Committee, and Employee’s legal representative, or the person, if any, who acquired the Option by bequest or inheritance or by reason of the death of Employee, may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and including the date twelve (12) months after the date of death, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 1

EXHIBIT 10.5

(b) if Employee is determined to be disabled (as defined in the Company’s long term disability program or plan in which Employee is a participant or, if Employee does not participate in any such plan, as defined in the Dynegy Inc. Long Term Disability Plan, as amended, or the successor plan thereto), the Option awarded hereunder shall immediately vest with respect to all of the remaining Shares and become fully exercisable without further action by the Committee, and Employee may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and including the date twelve (12) months after the date of such determination, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

(c) if Employee’s employment with the Company terminates by reason of dismissal by the Company for Cause and at a time when Employee was entitled to exercise the Option, Employee may exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date thirty (30) days after the date of termination by reason of dismissal by the Company for Cause, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

(d) if Employee’s employment with the Company terminates by reason of resignation by the Employee (except as otherwise provided in Section 3 (f) and (h) below) and at a time when Employee was entitled to exercise the Option, Employee may exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date thirty (30) days after the date of termination by reason of such resignation, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

(e) if Employee’s employment with the Company terminates by reason of Involuntary Termination, as such term is defined below, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become fully exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, at any time up to and including the date twelve (12) months after the date of such termination of employment, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

(f) if Employee’s employment with the Company terminates on April 30, 2018, as provided in Section 3 of his Employment Agreement, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become fully exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, at any time up to and including the last day of the option term as designated in Section 2(b) above; and

(g) if the Employee’s employment with the Company terminates as a result of an Involuntary Termination within six months following a Corporate Change, the Option shall become fully vested and immediately exercisable in full on the effective date of the Corporate Change, and such Option shall remain exercisable from such date for the lesser of: (A) twelve (12) months from the date of such Corporate Change; (B) the remaining period of time for exercise of the Option hereunder (irrespective of any mandatory exercise period specified herein that would otherwise be triggered by the termination of employment of such Employee); or (C) such period of time (which period of time may end as early as the consummation of a Corporate Change) as the Committee may determine in connection with or in contemplation of a Corporate Change in the exercise of its discretion under the Plan, with respect to which the Committee has the discretion to, among other things, require the surrender of stock options (which surrender may be in exchange for a cash payment, if applicable) and to cancel such stock options upon the consummation of a Corporate Change; and

(h) if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, beginning on the later of the termination date or original vesting date up to and including the date twelve (12) months after the later of the termination date or the date of the original vesting date, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void.

(i) For purposes of this Agreement:

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 2

EXHIBIT 10.5

“ Involuntary Termination ” shall have the same meaning as specified in the Dynegy Inc. Severance Plan.

4. Registration . The Company intends to register the Shares for issuance under the Securities Act of 1933, as amended (the “ Act ”), and to keep such registration effective throughout the period the Option is exercisable. In the absence of such effective registration or an available exemption from registration under the Act, issuance of the Shares will be delayed until registration of such shares is effective or an exemption from registration under the Act is available. The Company intends to use its best efforts to ensure that no such delay will occur. In the event exemption from registration under the Act is available upon an exercise of the Option, Employee (or the person permitted to exercise the Option in the event of Employee’s death or incapacity), if requested by the Company to do so, will execute and deliver to the Company, in writing, such agreements and other documents containing such provisions as the Company may require to assure compliance with applicable securities laws.

Employee agrees that the Shares will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. Employee also agrees that (a) the certificates representing the Shares, if any, may bear such legend or legends as the Committee in its sole discretion deems appropriate in order to assure compliance with applicable securities laws, and (b) the Company may refuse to register transfer of the Shares on the stock transfer records of the Company, and may give related instructions to its transfer agent, if any, to stop registration of such transfer, if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law.

5. Employment Relationship . For purposes of this Agreement, Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of (a) the Company, (b) an Affiliate (as such term is defined in the Plan), or (c) a corporation (or a parent or subsidiary of such corporation) assuming or substituting a new option for the Option. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee in its sole discretion, and its determination shall be final and binding on all parties.

6. Withholding Taxes . As a condition to the issuance of Shares upon exercise of this Option, the Employee hereby agrees that, if the Company determines that it is or could be obligated to withhold any tax in connection with the exercise of this Option, or in connection with the transfer of, or the lapse of restrictions on, any Shares or other property acquired pursuant to the Option, by Employee’s acceptance hereof, Employee hereby (a) agrees to reimburse the Company or any Affiliate by which Employee is employed for any federal, state or local taxes required by any government to be withheld or otherwise deducted by such corporation in respect of Employee’s exercise of the Option, or (b) authorize the Company or any Affiliate by which Employee is employed to withhold from any cash compensation paid to Employee or in Employee’s behalf, an amount sufficient to discharge any federal, state and local taxes imposed on the Company, or the Affiliate by which Employee is employed, and which otherwise has not been reimbursed by Employee, in respect of Employee’s exercise of the Option. If Employee fails to satisfy the Company’s tax withholding and deposit obligation pursuant to the preceding sentence, the Company shall effect such withholding by retaining Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise which is equal to the amount to be withheld.

7. Miscellaneous .

(a) This grant is subject to all the terms, conditions, limitations and restrictions contained in the Plan. In the event of any conflict or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling. In the event of any conflict or inconsistency between the terms hereof and the terms of the Dynegy Inc. Severance Plan, including any amendments or supplements thereto, the terms hereof shall be controlling.

(b) This grant is not a contract of employment and the terms of Employee’s employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein. Nothing herein shall be construed to impose any obligation on the Company or on any Affiliate to continue Employee’s employment, and it shall not impose any obligation on Employee’s part to remain in the employ of the Company or of any Affiliate.

(c) All references in this Agreement to any “corporation” shall include a corporation, a general partnership, a joint venture, a limited partnership, a business trust or any other lawful business entity.

(d) Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered when hand delivered to Employee at his or her principal place of employment or when sent by registered or certified mail to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 3

EXHIBIT 10.5

8. Amendment . This Agreement may not be amended except by an agreement in writing signed by each of the Company and Employee consenting to such amendment. Notwithstanding the preceding, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

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NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 4

EXHIBIT 10.5

DYNEGY INC.

By: /s/ Julius Cox

Name: Julius Cox

Title: Executive Vice President and CAO

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 5

EXHIBIT 10.6

FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (EXECUTIVE)

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “ Agreement ”) is made as of the 1 day of March, 2017, between DYNEGY INC., a Delaware corporation (“ Dynegy ”), and all of its Affiliates (collectively, the “ Company ”), and Named Employee (“ Employee ”). A copy of the Amended and Restated Dynegy Inc. 2012 Long Term Incentive Plan (the “ Plan ”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

(a) The Option shall become exercisable in three cumulative equal annual installments as follows:

(i) on the first anniversary of the Effective Date, the right to purchase one-third of the aggregate number of Shares shall become exercisable without further action by the Committee;

(iii) on the third anniversary of the Effective Date, the right to purchase the remaining one-third of the aggregate number of Shares shall become exercisable without further action by the Committee.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 1

EXHIBIT 10.6

option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

(d) if Employee’s employment with the Company terminates by reason of resignation by the Employee (except as otherwise provided in Section 3 (g) below) and at a time when Employee was entitled to exercise the Option, Employee may exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date thirty (30) days after the date of termination by reason of such resignation, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

(f) if the Employee’s employment with the Company terminates as a result of an Involuntary Termination within six months following a Corporate Change, the Option shall become fully vested and immediately exercisable in full on the effective date of the Corporate Change, and such Option shall remain exercisable from such date for the lesser of: (A) twelve (12) months from the date of such Corporate Change; (B) the remaining period of time for exercise of the Option hereunder (irrespective of any mandatory exercise period specified herein that would otherwise be triggered by the termination of employment of such Employee); or (C) such period of time (which period of time may end as early as the consummation of a Corporate Change) as the Committee may determine in connection with or in contemplation of a Corporate Change in the exercise of its discretion under the Plan, with respect to which the Committee has the discretion to, among other things, require the surrender of stock options (which surrender may be in exchange for a cash payment, if applicable) and to cancel such stock options upon the consummation of a Corporate Change; and

(g) if the Employee’s employment with the Company terminates by reason of retirement following the date on which such Employee has (I) reached sixty (60) years of age and (II) completed at least ten (10) years of service as an employee of the Company, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become exercisable without further action of the Committee, and Employee may exercise the Option, to the extent not previously exercised, beginning on the later of the termination date or original vesting date up to and including the date twelve (12) months after the later of the termination date or the date of the original vesting date, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void.

(h) For purposes of this Agreement:

“ Involuntary Termination ” shall have the same meaning as specified in the Dynegy Inc. Severance Plan.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 2

EXHIBIT 10.6

7. Miscellaneous .

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 3

EXHIBIT 10.6

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NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 4

EXHIBIT 10.6

DYNEGY INC.

By: /s/ Julius Cox

Name: Julius Cox

Title: Executive Vice President and CAO

*Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance capabilities with E*Trade Financial, the Company’s restricted stock administrator.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT PAGE 5

[EXECUTION VERSION]

EXHIBIT 10.7

AMENDMENT AND WAIVER AGREEMENT

This AMENDMENT AND WAIVER AGREEMENT, dated as of February 2, 2017 (this “ Agreement ”), is made by and among Illinois Power Marketing Company, an Illinois corporation (the “ Applicant ”), and MUFG Union Bank, N.A. (formerly known as Union Bank, N.A.) (together with its successors and assigns, the “ Bank ” ).

PRELIMINARY STATEMENTS

1. The Applicant and the Bank are parties to that certain Letter of Credit and Reimbursement Agreement, dated as of January 29, 2014 (as amended prior to the date hereof, the “ Existing Agreement ”, as further amended by this Agreement, the “ Amended Agreement ”, and as the Amended Agreement may hereafter be amended, amended and restated, supplemented or otherwise modified from time to time, the “ Letter of Credit Agreement ”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Amended Agreement.

2. As of the date hereof, the aggregate stated amount of all outstanding Letters of Credit issued by the Bank pursuant to the Existing Agreement is $17,850,881.00. Pursuant to the Cash Collateral Agreement, all obligations of the Applicant to the Bank under the Letter of Credit Agreement and such Letters of Credit are secured by funds on deposit in the Account in an amount equal to 101% of the aggregate stated amount of such Letters of Credit (the “ Required Cash Collateral Balance ”).

3. The Applicant has requested the Bank to withdraw and transfer to the Applicant all funds on deposit in the Account and to accept in substitution therefor an irrevocable standby letter of credit issued by Royal Bank of Canada in a stated amount equal to the Required Cash Collateral Balance. In addition, the Applicant desires to amend the Existing Agreement in certain particulars, including, without limitation, to (i) modify the Termination Date, (ii) terminate the ability for the Applicant to request additional Letters of Credit and (iii) modify certain provisions in the Existing Agreement to reflect the substitution of an irrevocable standby letter of credit for the funds on deposit in the Account. The Bank has agreed to such withdrawal and transfer and such amendments, to waive the requirements set forth in the Cash Collateral Agreement regarding the maintenance of funds on deposit in the Account, and to authorize BTMU pursuant to the Special Deposit Account Control Agreement to transfer all funds on deposit in the Account to the Applicant, in each case, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Amendments to the Existing Agreement . The Existing Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, hereby amended as follows:

(a) The definition of “ Facility Amount ” contained in Section 1 of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“ Facility Amount ” has the meaning assigned to such term in the recitals hereto; provided , however , that, on and after the Amendment Effective Date, the Facility Amount shall equal, on any date of determination, the lesser of (i) $17,850,881.00 and (ii) the aggregate stated amount of all Letters of Credit outstanding at such time.

(b) The definition of “ Termination Date ” contained in Section 1 of the Existing Agreement is hereby amended by deleting the date “May 31, 2018” in its entirety and substituting therefor the new date “March 9, 2017”.

(c) The following definitions are hereby added to Section 1 of the Existing Agreement in the appropriate alphabetical order:

“ Amendment Effective Date ” means February 2, 2017.

“ Obligations ” means all obligations of the Applicant to the Bank now or hereafter existing under this Agreement and the Applications, whether for principal, interest, fees, expenses, increased costs, indemnity obligations or otherwise, including, without limitation, the Letter of Credit Fees and all other fees relating to the Letters of Credit, obligations of the Applicant to reimburse the Bank for any drawings under the Letters of Credit, accrued interest on such reimbursement obligations, and all other obligations of the Applicant to the Bank arising under or in relation to this Agreement, the Applications, the Cash Collateral Agreement, the Special Deposit Account Control Agreement and the Letters of Credit.

74765507_4

“ RBC Letter of Credit ” means that certain irrevocable standby letter of credit, dated February 1, 2017, issued by Royal Bank of Canada in favor of the Bank, in an initial stated amount equal to $18,029,390.00, to secure the Liabilities of the Applicant to the Bank under this Agreement and the Letters of Credit and all other Obligations; provided , that, upon the irrevocable termination of any Letter of Credit and the payment in full of all drawings thereunder and other Liabilities of the Applicant in respect of such Letter of Credit, so long as no Event of Default or Unmatured Event of Default shall have occurred and be continuing, the stated amount of the RBC Letter of Credit may be reduced to an amount not less than 101% of the aggregate stated amount of all outstanding Letters of Credit.

(d) Section 2.1 of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“2.1 Issuance of Letters of Credit . The aggregate stated amount of all outstanding Letters of Credit as of the Amendment Effective Date is $17,850,881.00. The Bank shall not issue any Letters of Credit at any time on or after the Amendment Effective Date.”

(e) Section 2.2 of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“2.2 [Reserved] .”

(f) Section 2.6 of the Existing Agreement is hereby deleted in its entirety.

(g) Schedule 2 to the Existing Agreement is hereby deleted in its entirety.

(h) Section 3.1 of the Existing Agreement is hereby amended by adding the following text immediately prior to the “.” at the end of the first sentence thereof:

“, except to the extent that such payment or disbursement and interest thereon was reimbursed with the proceeds of a drawing under the RBC Letter of Credit after a drawing request is made by the Bank thereunder”

(i) Schedule 4(h) to the Existing Agreement is hereby amended by deleting all contracts and orders listed thereon and substituting therefor the word “None”.

(j) Section 4(i) of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“(i) Ownership . The Applicant is a wholly-owned subsidiary of Dynegy Inc., a Delaware corporation.”

(k) Section 5(a) of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“(a) [Reserved] .”

(l) Section 5(c) of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“(c) [Reserved] .”

(m) Section 5(d) of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“(d) [Reserved] .”

(n) Section 10.1.4 of the Existing Agreement is hereby amended and restated in its entirety to read as follows:

“10.1.4 Termination Date . (a) Any Letter of Credit shall remain outstanding on the Termination Date; or (b) on or before the Termination Date, the Bank shall not have been reimbursed in full in cash for any drawings under any Letter of Credit; or (c) any other Liabilities or Obligations (other than any inchoate indemnity and expense reimbursement obligations that expressly survive the termination of this Agreement) shall not have been paid in full in cash on or before the Termination Date.”

74765507_4

(o) Subsection 10.2 of the Existing Agreement is hereby amended by adding the following new sentence at the end thereof:

“Upon the occurrence and during the continuance of any Event of Default, the Bank may draw all or any portion of the amount available for drawing under the RBC Letter of Credit, the proceeds of which shall be held by or for the benefit of the Bank (in the Account or otherwise) as cash collateral securing the Obligations and/or shall be applied to satisfy the Applicant’s reimbursement obligations under this Agreement and its other Liabilities and Obligations.”

(p) Section 11.1 of the Existing Agreement is hereby amended by deleting the phrase “any amounts then on deposit in the Account” in its entirety and substituting therefor the new phrase “any amounts then on deposit in the Account and/or any amounts drawn by the Bank under the RBC Letter of Credit”.

Section 2. Waiver of Cash Collateral Requirement . For so long as the RBC Letter of Credit remains outstanding and in full force and effect, the Bank hereby waives the requirements set forth in Section 3 of the Cash Collateral Agreement to maintain funds on deposit in the Account.

Section 3. Authorization to Withdraw and Transfer Funds from the Account . The Bank agrees that, immediately upon the satisfaction of the conditions precedent set forth in Section 4 hereof and notwithstanding any provision to the contrary contained in the Cash Collateral Agreement (including, without limitation, Section 4(b) thereof), it will provide written instructions to BTMU pursuant to Section 5(a) of the Special Deposit Account Control Agreement to withdraw all funds then on deposit in the Account and transfer such funds to the Applicant to such account as the Applicant shall designate in writing to the Bank on or before the date hereof.

Section 4. Conditions to Effectiveness .

This Agreement shall become effective as of the date first above written (the “ Amendment Effective Date ”) when, and only when:

(a) This Agreement shall have been duly executed by the Bank, and the Bank (or its counsel) shall have received from the Applicant either (i) a counterpart of this Agreement signed on behalf of the Applicant or (ii) written evidence satisfactory to the Bank (which may include facsimile or other electronic transmission of a signed signature page of this Agreement) that the Applicant has signed a counterpart of this Agreement.

(b) The Bank shall have received the RBC Letter of Credit, duly executed by Royal Bank of Canada, in form and substance satisfactory to the Bank.

(c) The Applicant shall have paid all reasonable and documented costs and expenses of the Bank (including, without limitation, the reasonable and documented fees and expenses of counsel to the Bank) incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and all documents delivered pursuant hereto and the transactions contemplated hereby and thereby.

(d) The Bank shall have received copies of the resolutions of the board of directors of the Applicant authorizing the execution, delivery and performance by the Applicant of this Agreement and the performance by the Applicant of the Amended Agreement, certified by a duly authorized officer of the Applicant (which certificate shall state that such resolutions have not been amended, modified or rescinded and remain in full force and effect on and as of the Amendment Effective Date).

(e) The Bank shall have received certified copies of all approvals, authorizations or consents of, or notices to or registrations with, any governmental body or agency required for the Applicant, if necessary, to enter into this Agreement and to perform the Amended Agreement.

(f) The Bank shall have received a certificate of a duly authorized officer of the Applicant certifying the names and true signatures of the officers of the Applicant authorized to sign this Agreement and the other documents to be delivered by the Applicant hereunder.

(g) The Bank shall have received a certificate signed by a duly authorized officer of the Applicant, dated the Amendment Effective Date, to the effect that: (i) the representations and warranties of the Applicant contained in this Agreement and the other Financing Documents are true and correct on and as of the Amendment Effective Date as though made on and as of

74765507_4

such date; and (ii) no Event of Default or Unmatured Event of Default has occurred and is continuing or would result from the execution, delivery and performance by the Applicant of this Agreement and the other Financing Documents.

(h) The Bank shall have received all documents it may reasonably request relating to the existence and good standing of the Applicant (including, without limitation, certified copies of the articles of incorporation and by-laws of the Applicant), the corporate authority for and the validity of this Agreement and the other Financing Documents, and any other matters relevant hereto, all in form and substance satisfactory to the Bank.

Section 5. Representations and Warranties of the Applicant .

To induce the Bank to enter into this Agreement, the Applicant hereby represents and warrants to the Bank as follows:

(a) Authorization and Enforceability . The execution, delivery and performance by the Applicant of this Agreement and the performance by the Applicant of the Amended Agreement (the foregoing being referred to herein, collectively, as the “ Amendment Transactions ”) are within the Applicant’s organizational powers and have been duly authorized by all necessary organizational action. This Agreement has been duly executed and delivered by the Applicant. This Agreement and the Amended Agreement constitute the legal, valid and binding obligations of the Applicant, enforceable against the Applicant in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws of general application affecting the rights of creditors generally, and to general principles of equity.

(b) Governmental Approvals; No Conflicts . The Amendment Transactions (i) do not require any authorization, approval or consent of, or notice to or filing with, any governmental or regulatory authority or any other Person, (ii) do not and will not violate or conflict with any provision of law, (iii) do not and will not contravene or conflict with any provision of the articles of incorporation or by-laws of the Applicant or of any indenture, loan agreement or other contract, or any judgement, order or decree that is binding upon the Applicant, and (iv) do not and will not result in or require the imposition of any lien or security interest on any of the revenues or assets of the Applicant other than liens and security interests in favor of the Bank granted pursuant to the Cash Collateral Agreement.

(c) Litigation . There are no actions, suits or proceedings by or before any arbitrator or governmental authority pending against or, to the knowledge of the Applicant, threatened against the Applicant that involve this Agreement, the Amended Agreement or the Amendment Transactions.

(d) No Default . No Unmatured Event of Default or Event of Default has occurred and is continuing or would occur as a result of the execution, delivery or performance by the Applicant of this Amendment.

Section 6. Reference to and Effect on the Letter of Credit Agreement and the Other Financing Documents .

(a) Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Existing Agreement and the other Financing Documents shall remain in full force and effect in accordance with their respective terms and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Cash Collateral Agreement and all of the Collateral (as defined in the Cash Collateral Agreement), if any, do and shall continue to secure the payment of all Obligations (as defined in the Cash Collateral Agreement). The amendments and waiver set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, amendment of, consent to departure from or modification of any term or provision of the Existing Agreement, any other Financing Document or any other document or instrument referred to therein or of any transaction or further or future action on the part of the Applicant requiring the consent of the Bank, except to the extent specifically provided for herein. Except as expressly set forth herein, the Bank has not and shall not be deemed to have waived any of its rights or remedies against the Applicant for any existing or future Events of Default or Unmatured Events of Default. The Bank reserves the right to insist on strict compliance with the terms of the Letter of Credit Agreement and the other Financing Documents, and the Applicant expressly acknowledges such reservation of rights. Any future or additional amendment or waiver of any provision of the Letter of Credit Agreement or any other Financing Document shall be effective only if set forth in a writing separate and distinct from this Agreement and executed by the appropriate parties in accordance with the terms thereof.

(b) Upon the effectiveness of this Agreement: (i) each reference in the Existing Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Existing Agreement shall mean and be a reference to the Amended Agreement; and (ii) each reference in any other Financing Document to “the Letter of Credit Agreement”, “the Reimbursement Agreement”, “thereunder”, “thereof” or words of like import referring to the Existing Agreement shall mean and be a reference

74765507_4

to the Amended Agreement. This Agreement shall constitute a “Financing Document” for all purposes under the Letter of Credit Agreement and the other Financing Documents.

(c) The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Bank under the Existing Agreement or any other Financing Document, nor constitute a waiver of any provision of the Existing Agreement or any other Financing Document.

Section 7. Liens Unimpaired . After giving effect to this Agreement, none of (a) the modification of the Existing Agreement effected pursuant to Section 1 of this Agreement, (b) the waiver of the requirements set forth in Section 3 of the Cash Collateral Agreement effected pursuant to Section 2 of this Agreement, (c) the authorization to withdraw and transfer funds from the Account pursuant to Section 3 of this Agreement, or (d) the execution, delivery, performance or effectiveness of this Agreement:

(i) impairs the validity, effectiveness or priority of the liens granted pursuant to the Cash Collateral Agreement, and such liens continue unimpaired with the same priority to secure repayment of all Obligations (as defined in the Cash Collateral Agreement), whether heretofore or hereafter incurred; or

(ii) requires that any new filings be made or other action taken to perfect or to maintain the perfection of such liens.

Section 8. Confirmation . The Applicant hereby acknowledges and agrees that, as of the Amendment Effective Date, the Applicant has no defense, offset, counterclaim, cross claim, or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of the Applicant’s liability to pay the Liabilities and other Obligations or to seek affirmative relief or damages of any kind from the Bank.

Section 9. Costs and Expenses .

The Applicant agrees to pay (a) all reasonable and documented out-of-pocket costs and expenses incurred by the Bank in connection with the preparation, negotiation, execution and delivery of this Agreement and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable and documented fees, charges and disbursements of counsel to the Bank with respect thereto and with respect to advising the Bank as to its rights and responsibilities hereunder and thereunder, and (b) all reasonable and documented out-of-pocket expenses incurred by the Bank (including, without limitation, the reasonable and documented fees, charges and disbursements of any counsel and any consultant for the Bank) in connection with the enforcement of this Agreement.

Section 10. Counterparts .

This Agreement may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission (including, without limitation, by Adobe portable document format file (also known as a “PDF” file)) shall be as effective as delivery of a manually signed counterpart of this Agreement.

Section 11. Governing Law .

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 12. Miscellaneous .

This Agreement shall be subject to the provisions of Sections 12.3, 12.4, 12.5 (other than the first sentence thereof), 12.13 and 12.14 of the Existing Agreement, each of which is incorporated by reference herein, mutatis mutandis .

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

74765507_4

[EXECUTION VERSION]

EXHIBIT 10.7

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

ILLINOIS POWER MARKETING COMPANY, as the Applicant


By : /s/ Siddharth Manjeshwar	Name: Siddharth Manjeshwar Title: Vice President and Treasurer

S-1

[Signature Page to Amendment and Waiver Agreement (Illinois Power Marketing Company)]

74765507_4

[EXECUTION VERSION]

EXHIBIT 10.7

MUFG UNION BANK, N.A. (formerly known as Union Bank, N.A.), as the Bank


By : /s/ Robert MacFarlane	Name: Robert MacFarlane Title: Director

S-2

[Signature Page to Amendment and Waiver Agreement (Illinois Power Marketing Company)]

74765507_4

[EXECUTION VERSION]

EXHIBIT 10.8

AMENDMENT AGREEMENT

This AMENDMENT AGREEMENT, dated as of March 8, 2017 (this “ Agreement ”), is made by and among Illinois Power Marketing Company, an Illinois corporation (the “ Applicant ”), and MUFG Union Bank, N.A. (formerly known as Union Bank, N.A.) (together with its successors and assigns, the “ Bank ” ).

PRELIMINARY STATEMENTS

2. The Applicant desires to amend the Existing Agreement to extend the Termination Date, and the Bank has agreed to such amendment on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Amendment to the Existing Agreement . The definition of “ Termination Date ” contained in Section 1 of the Existing Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, hereby amended by deleting the date “March 9, 2017” in its entirety and substituting therefor the new date “April 21, 2017”.

Section 2. Conditions to Effectiveness .

This Agreement shall become effective as of the date first above written (the “ Amendment Effective Date ”) when, and only when:

(b) The Bank shall have received all documents it may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Bank.

Section 3. Representations and Warranties of the Applicant .

To induce the Bank to enter into this Agreement, the Applicant hereby represents and warrants to the Bank as follows:

76809654_3

Section 4. Reference to and Effect on the Letter of Credit Agreement and the Other Financing Documents .

(a) Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Existing Agreement and the other Financing Documents shall remain in full force and effect in accordance with their respective terms and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Cash Collateral Agreement and all of the Collateral (as defined in the Cash Collateral Agreement), if any, do and shall continue to secure the payment of all Obligations (as defined in the Cash Collateral Agreement). The amendment set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, amendment of, consent to departure from or modification of any term or provision of the Existing Agreement, any other Financing Document or any other document or instrument referred to therein or of any transaction or further or future action on the part of the Applicant requiring the consent of the Bank, except to the extent specifically provided for herein. Except as expressly set forth herein, the Bank has not and shall not be deemed to have waived any of its rights or remedies against the Applicant for any existing or future Events of Default or Unmatured Events of Default. The Bank reserves the right to insist on strict compliance with the terms of the Letter of Credit Agreement and the other Financing Documents, and the Applicant expressly acknowledges such reservation of rights. Any future or additional amendment or waiver of any provision of the Letter of Credit Agreement or any other Financing Document shall be effective only if set forth in a writing separate and distinct from this Agreement and executed by the appropriate parties in accordance with the terms thereof.

Section 5. Liens Unimpaired . After giving effect to this Agreement, none of (a) the modification of the Existing Agreement effected pursuant to Section 1 of this Agreement or (b) the execution, delivery, performance or effectiveness of this Agreement:

(ii) requires that any new filings be made or other action taken to perfect or to maintain the perfection of such liens.

Section 6. Confirmation . The Applicant hereby acknowledges and agrees that, as of the Amendment Effective Date, the Applicant has no defense, offset, counterclaim, cross claim, or demand of any kind or nature whatsoever that can be asserted to reduce or eliminate all or any part of the Applicant’s liability to pay the Liabilities and other Obligations or to seek affirmative relief or damages of any kind from the Bank.

Section 7. Costs and Expenses .

76809654_3

and documented fees, charges and disbursements of any counsel and any consultant for the Bank) in connection with the enforcement of this Agreement.

Section 8. Counterparts .

Section 9. Governing Law .

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 10. Miscellaneous .

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

76809654_3

[EXECUTION VERSION]

EXHIBIT 10.8

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

ILLINOIS POWER MARKETING COMPANY, as the Applicant


By :_/s/ Siddharth Manjeshwar	Name: Siddharth Manjeshwar Title: Vice President and Treasurer

S-1

[Signature Page to Amendment Agreement (Illinois Power Marketing Company)]

76809654_3

[EXECUTION VERSION]

EXHIBIT 10.8

MUFG UNION BANK, N.A. (formerly known as Union Bank, N.A.), as the Bank


By :_/s/ Chi-Cheng Chen	Name: Chi-Cheng Chen Title: Director

S-2

[Signature Page to Amendment Agreement (Illinois Power Marketing Company)]

76809654_3

[EXECUTION DRAFT]

EXHIBIT 10.9

SECOND AMENDMENT AGREEMENT

This SECOND AMENDMENT AGREEMENT, dated as of April 21, 2017 (this “ Agreement ”), is made by and among Illinois Power Marketing Company, an Illinois corporation (the “ Applicant ”), and MUFG Union Bank, N.A. (formerly known as Union Bank, N.A.) (together with its successors and assigns, the “ Bank ” ).

PRELIMINARY STATEMENTS

2. The Applicant desires to amend the Existing Agreement to extend the Termination Date, and the Bank has agreed to such amendment on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Amendment to the Existing Agreement . The definition of “ Termination Date ” contained in Section 1 of the Existing Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, hereby amended by deleting the date “April 21, 2017” in its entirety and substituting therefor the new date “July 11, 2017”.

Section 2. Conditions to Effectiveness .

This Agreement shall become effective as of the date first above written (the “ Amendment Effective Date ”) when, and only when:

(b) The Bank shall have received all documents it may reasonably request relating to any matters relevant hereto, all in form and substance satisfactory to the Bank.

Section 3. Representations and Warranties of the Applicant .

To induce the Bank to enter into this Agreement, the Applicant hereby represents and warrants to the Bank as follows:

77197632_2

Section 4. Reference to and Effect on the Letter of Credit Agreement and the Other Financing Documents .

(a) Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Existing Agreement and the other Financing Documents shall remain in full force and effect in accordance with their respective terms and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Cash Collateral Agreement and all of the Collateral (as defined in the Cash Collateral Agreement), if any, do and shall continue to secure the payment of all Obligations (as defined in the Cash Collateral Agreement). The amendment set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, amendment of, consent to departure from or modification of any term or provision of the Existing Agreement, any other Financing Document or any other document or instrument referred to therein or of any transaction or further or future action on the part of the Applicant requiring the consent of the Bank, except to the extent specifically provided for herein. Except as expressly set forth herein, the Bank has not and shall not be deemed to have waived any of its rights or remedies against the Applicant for any existing or future Events of Default or Unmatured Events of Default. The Bank reserves the right to insist on strict compliance with the terms of the Letter of Credit Agreement and the other Financing Documents, and the Applicant expressly acknowledges such reservation of rights. Any future or additional amendment or waiver of any provision of the Letter of Credit Agreement or any other Financing Document shall be effective only if set forth in a writing separate and distinct from this Agreement and executed by the appropriate parties in accordance with the terms thereof.

(ii) requires that any new filings be made or other action taken to perfect or to maintain the perfection of such liens.

Section 7. Costs and Expenses .

77197632_2

and documented fees, charges and disbursements of any counsel and any consultant for the Bank) in connection with the enforcement of this Agreement.

Section 8. Counterparts .

Section 9. Governing Law .

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 10. Miscellaneous .

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

77197632_2

[EXECUTION DRAFT]

EXHIBIT 10.9

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

ILLINOIS POWER MARKETING COMPANY, as the Applicant


By : /s/ Siddharth Manjeshwar	Name: Siddharth Manjeshwar Title: VP & Treasurer

S-1

[Signature Page to Second Amendment Agreement (Illinois Power Marketing Company)]

77197632_2

[EXECUTION DRAFT]

EXHIBIT 10.9

MUFG UNION BANK, N.A. (formerly known as Union Bank, N.A.), as the Bank


By: /s/ Chi-Cheng Chen	Name: Chi-Cheng Chen Title: Director

S-2

[Signature Page to Second Amendment Agreement (Illinois Power Marketing Company)]

77197632_2

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Robert C. Flexon, certify that:


1.	I have reviewed this report on Form 10-Q of Dynegy Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 5, 2017	By:	/s/ R OBERT C . F LEXON
			Robert C. Flexon President and Chief Executive Officer

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Clint C. Freeland, certify that:


1.	I have reviewed this report on Form 10-Q of Dynegy Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 5, 2017	By:	/s/ C LINT C. F REELAND
			Clint C. Freeland Executive Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

(ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the periodic report of Dynegy Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert C. Flexon, President and Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for the purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:


(1)	the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and


(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.



Date:	May 5, 2017	By:	/s/ ROBERT C. FLEXON
			Robert C. Flexon President and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

(ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the periodic report of Dynegy Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clint C. Freeland, Executive Vice President and Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for the purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:


(1)	the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and


(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.



Date:	May 5, 2017	By:	/s/ C LINT C. F REELAND
			Clint C. Freeland Executive Vice President and Chief Financial Officer

Exhibit 95.1

MINE SAFETY VIOLATIONS AND OTHER LEGAL MATTER DISCLOSURES

PURSUANT TO SECTION 1503(a) OF THE DODD-FRANK WALL STREET

REFORM AND CONSUMER PROTECTION ACT

Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires issuers that are operators, or that have subsidiaries that is an operator, of a coal or other mine to include in periodic reports filed with the Securities and Exchange Commission certain information relating to citations and orders for violations of standards under the Federal Mine Safety and Health Act of 1977. The following tables disclose information required under the Dodd-Frank Act during the three months ended March 31, 2017 .



Mine or Operating Name/MSHA Identification Number	Section 104 S&S Citations (#)	Section 104(b) Orders (#)	Section 104(d) Citations and Orders (#)	Section 110(b)(2) Violations (#)	Section 107(a) Orders (#)	Total Dollar Value of MHSA Assessments Proposed ($)
Honeybrook Refuse Operation/36-08595	1	—	—	—	—	$	—
NEPCO CO - Generation Facility/36-08064	1	—	—	—	—	$	—

Mine or Operating Name/MSHA Identification Number

Total Number of Mining Related Fatalities (#)

Received Notice of Pattern of Violations Under Section 104(e) (yes/no)

Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no)

Legal Actions Pending as of Last day of Period (#)

Legal Actions Initiated During Period (#)

Legal Actions Resolved During Period (#)

Honeybrook Refuse Operation/36-08595

—

NEPCO CO - Generation Facility/36-08064

—