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Letter of Correspondence

Terry A. Hart

 Dynegy Holdings Inc.

 1000 Louisiana, Suite 5800

 Houston, Texas 77002

 terry.hart@dynegy.com

 (713) 507-6961 (phone)

 (713) 356-2198 (fax)

 September 12, 2005

 Via Edgar and Facsimile

 202-772-9204

 United States Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street NE, Mail Stop 3561

 Washington D.C. 20549-0405

 Attention: James A. Allegretto, Senior Assistant Chief Accountant

  Re:
Dynegy Holdings Inc. (“DHI” or the “Company”)

Form 10-K for the Year Ended December 31, 2004

Filed March 23, 2005

File No. 0-29311

 Ladies and Gentlemen:

 This
letter sets forth the responses of the Company to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in its comment letter dated August 16, 2005 (the “Comment Letter”)
with respect to the Company’s Form 10-K for the year ended December 31, 2004. For your convenience, we have repeated each comment of the Staff exactly as expressed in the Comment Letter, and set forth below such comment is the Company’s
response.

 The Company has discussed the responses included in
this letter to the Commission with the Chairman of the Audit and Compliance Committee of our parent company’s Board of Directors. We respectfully request an opportunity to discuss this response letter further with the Staff if, following a
review of the information, the Staff does not concur with our analysis.

 United States Securities and Exchange Commission

 Attention: Mr. James A. Allegretto

 September 12, 2005

  Page
 2

 Form 10-K for the Year Ended December 31, 2004

 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities, page 27

1.
Please tell us why you have a reporting obligation under the 1934 Exchange Act. If due to outstanding debt securities, please tell us the approximate number of record and beneficial
owners.

 Response:

 Pursuant to the 1934 Exchange Act, we understand that companies generally assume Exchange Act reporting obligations either (i) pursuant to Section
13(a) of the Exchange Act, upon registration of a class of equity securities under Section 12(b) or 12(g) of the Exchange Act, or (ii) pursuant to Section 15(d) of the Exchange Act, upon registration of an offering of securities pursuant to the
Securities Act. The Company’s equity securities are not registered under the Exchange Act, resulting in the absence of a reporting obligation for the Company under Section 13(a) of the Exchange Act. However, the Company’s offerings of the
following securities outstanding as of December 31, 2004 were registered under the Securities Act, with the registration statement number, prospectus date, and current number of record holders reflected opposite each class of such securities.

 DHI Securities

 Registration

 Number

 Prospectus

 Date

 No. of

 Record
Holders

 Guaranties of Dynegy Inc.’s 4.75% Convertible Subordinated Debentures due 2023

333-115148

08-02-2004

32

 8.75% Senior Notes due 2012

333-66090

02-15-2002

52

 Guaranties of Dynegy Danskammer LLC’s Series A pass-through trust certificates

333-64842

08-07-2001

14

 Guaranties of Dynegy Roseton LLC’s Series B pass-through trust certificates

333-64842

08-07-2001

15

 6.875% Senior Notes due 2011

333-46636

03-15-2001

54

 8.125% Senior Notes due 2005

333-89021

03-15-2000

—
(paid off

)

 7.45% Senior Notes due 2006 (Dynegy Inc., issuer, subsequently changed its name to DHI)

333-60253

07-22-1999

18

 7.125% Senior Debentures due 2018 (NGC Corporation, issuer, subsequently changed its name to DHI)

333-12987

05-15-1998

36

 Guaranties of the 8.316% Subordinated Capital Income Securities of

 NGC Corporation Capital Trust I due 2027 (NGC Corporation, guarantor,

 subsequently changed its name to DHI)

33-34513

09-12-1997

22

7.625% Senior Debentures due 2026 (NGC Corporation, issuer, subsequently changed its name to DHI)

333-12987

10-10-1996

38

 United States Securities and Exchange Commission

 Attention: Mr. James A. Allegretto

 September 12, 2005

  Page
 3

 In light of the fact
that no class of registered securities issued by the Company is held of record by more than 300 holders, the Company became eligible to suspend its reporting obligation under Section 15(d) of the Exchange Act as of January 1, 2005, the first day of
the fiscal year following the effective date of its most recent Securities Act registration statement. However, covenants in the Indenture dated as of August 11, 2003 covering the Company’s second priority senior secured notes require the
Company to file with the Commission, whether or not required by the rules and regulations of the Commission, so long as any of the second priority senior secured notes are outstanding, all such current, quarterly and annual reports that would be
required to be filed with the Commission if the Company were subject to the Exchange Act reporting obligations. Therefore, the Company continues to voluntarily file Exchange Act reports with the Commission to satisfy contractual requirements
associated with outstanding debt obligations.

 Moreover, the
registered offering by the Company of its guaranty of $225,000,000 of 4.75% Convertible Subordinated Debentures due 2023 issued by our parent, Dynegy Inc., triggers an obligation under Rule 3-10(a)(1) of Regulation S-X to file financial statements
of the Company that may, pursuant to Rule 3-10(e) be satisfied by an appropriate footnote in Dynegy Inc.’s financial statements. In lieu of including this information in a footnote to Dynegy Inc.’s financial statements, the Company files
Exchange Act reports.

 Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations, page 29

 Off-Balance
Sheet Arrangements, page 37

2.
Please explain to us in detail how you account for the subsidiaries that issued the pass-through certificates and purchased the notes from the owner lessors. In doing so, please
tell us the authoritative literature you applied and specifically address the applicability of FAS 140 and/or FIN 46R with respect to the subsidiaries as well as the owner lessors.

 Response:

 Dynegy Danskammer LLC and Dynegy Roseton LLC (“the Subsidiaries”). The pass-through trust, acting on behalf of the Subsidiaries,
issued the pass-through certificates and purchased the notes from the Owner Lessors. As previously discussed with the Staff, the Subsidiaries are deemed the issuers of the pass-through trust certificates.

 The accounting of the DNE Leveraged Lease (operating versus capital) was
assessed at multiple levels: First, for the separate financial statements of the Subsidiaries, and

 United States Securities and Exchange Commission

 Attention: Mr. James A. Allegretto

 September 12, 2005

  Page
 4

second, for the consolidated financial statements of the Company as guarantor. The Subsidiaries are consolidated in the Company’s financial statements.
As disclosed in our Form 10-K, the Company guarantees the Subsidiaries’ performance and payment obligations under the leases for the benefit of the Owner Lessors. Based on the guidance of EITF 90-14 and the existence of the guarantee, the
Subsidiaries are precluded from accounting for the DNE Leveraged Lease as a sale-leaseback in their separate financial statements. The Subsidiaries did not transfer any financial assets to the Owner Lessors. The Subsidiaries account for the
facilities as owned assets and recognize debt for the proceeds of the sale. However, under the guidance of EITF 90-14, the DNE Leveraged Lease is accounted for as a sale-leaseback in the consolidated financial statements of the Company.

 FIN 46R and FAS 140 are not applicable to the accounting of the
Subsidiaries given the consolidation of these entities and given that the Subsidiaries did not transfer and do not service any financial assets.

 Danskammer OL LLC and Roseton OL LLC (the “Owner Lessors”). With respect to FIN 46R, we concluded that both of the Owner Lessors are
special purpose entities (“SPEs”), given that (i) substantially all of their activities involve assets that are leased to single lessees, and (ii) the Owner Lessors were established for the sole purpose of owning the interests in the
facilities for the primary purpose of the Subsidiaries’ use.

 Additionally, we concluded that the Owner Lessors should not be consolidated, at the inception of the lease, under the guidance of EITF Topic No. D-14, EITF 90-15, EITF 96-21 and EITF issue 97-1, due to (i) the substantial residual equity
investment of $138 million (13 percent of the purchase price of the facilities) made by the unrelated third-party parent of the Owner Lessors, (ii) the substantial residual risks and rewards of the leased assets reside with the Owner Lessors and
their unrelated third party parent, and (iii) the nonperformance related default provisions of the lease do not entitle the Owner Lessors to put the facilities to the Subsidiaries.

 Furthermore, with respect to FIN 46R, we concluded that the Owner Lessors were not variable interest entities
(“VIEs”) at the inception of the lease, since (i) the equity investment at risk in the Owner Lessors was sufficient to permit the entities to finance its activities without additional subordinated financial support, (ii) the unrelated
third party parent of the Owner Lessors has the ability to make decisions about the activities of the entities, (iii) the unrelated third-party parent, through its equity contribution, has both (a) the obligation to absorb the expected losses of the
Owner Lessors if they occur, and (b) the right to receive the expected residual returns of the entity if they occur, which is the compensation for the risk of absorbing the expected losses, (iv) the unrelated third-party parent has voting rights
proportionate to its economic interests, and (v) the assets of the Owner Lessors reside with the equity holder upon completion of the lease.

 With respect to FAS 140, the Subsidiaries did not transfer any financial assets to the Owner Lessors. Therefore, we concluded that FAS 140 is not
applicable to the Owner Lessors.

 United States Securities and Exchange Commission

 Attention: Mr. James A. Allegretto

 September 12, 2005

  Page
 5

 Item 15. Exhibits, Financial Statement Schedules, page 77

3.
In future filings, please include a list of all of your subsidiaries including the percentage of ownership of each subsidiary as exhibit 21. Refer to Item 601 of Regulation S-K.

 Response:

 The Company is a wholly-owned subsidiary of Dynegy Inc. We believe the Company meets the conditions set forth in General Instruction
I(1)(a) and (b) of Form 10-K referring to “Omission of Information by Certain Wholly-Owned Subsidiaries.” As permitted by General Instruction I(2), the Company may file its Form 10-K with a reduced disclosure format. Based on this
authority, the Company wishes to continue to omit the information required by Item 601 of Regulation S-K relating to a list of subsidiaries of the Company as permitted by General Instruction I(2)(b).

 Consolidated Financial Statements, page F-1

 Consolidated Balance Sheets, page F-3

4.
Please tell us why you do not present the number of shares of capital stock authorized, issued and outstanding, the par value per share and the dollar amount thereof separately from
additional paid-in capital at each balance sheet date. Please refer to paragraphs 30 and 31 of Rule 5-02 of Regulation S-X.

 Response:

 The Company is a wholly-owned subsidiary of Dynegy Inc. The Company’s authorized capital consists of 1,000 shares of common stock, par
value $1.00 per share, of which 910 shares were issued and outstanding as of December 31, 2004 and 2003, respectively. The dollar amount of capital stock is not presented separately from additional paid-in capital because the Company reports in
millions and the $910.00 in capital stock was immaterial. In future filings, the Company will reflect separate line items for Capital stock and Additional paid-in-capital on its consolidated balance sheets as follows:

December 31

2004

2003

 Capital Stock, $1 par value, 1,000 shares authorized at December 31, 2004 and December 31, 2003, respectively; 910 shares issued and
outstanding at December 31, 2004 and December 31, 2003, respectively

—

—

 Additional paid-in capital

2,413

2,419

 Notes to Consolidated
Financial Statements, page F-8

 General

5.
In future filings please disclose your balance sheet classification of cash collateral deposited with counterparties and the amount of cash collateral due from counterparties for
each period presented. Please also include similar disclosure in the financial statements of West Coast Power LLC. If cash collateral is not classified as accounts receivable, please tell us your basis in GAAP for your balance sheet classification.

 United States Securities and Exchange Commission

 Attention: Mr. James A. Allegretto

 September 12, 2005

  Page
 6

 Response:

 In future filings, the Company will disclose its accounting policy regarding the balance sheet classification of cash collateral deposited
and due from counterparties. The Company includes cash collateral deposited with counterparties in Prepayments and other current assets and Other long-term assets on its consolidated balance sheets. The Company considers its accounts receivable
balance to represent payments owed to it by third parties for services performed or goods sold by the Company. With respect to cash collateral deposited with counterparties, as a service has not been performed by the Company, nor have goods been
sold by the Company, the Company does not consider accounts receivable to be the appropriate classification of such amounts. Further, in many cases, as the counterparty contract terms associated with the cash collateral allow the Company to utilize
cash collateral to settle future transactions, the Company considers the nature of the cash collateral to be more analogous to a prepaid amount than an accounts receivable.

 Note 2 – Accounting Policies, page F-10

 Principles of Consolidation, page F-10

6.
We note that you include your proportionate share of assets, liabilities, revenues and expenses of undivided interests in certain gas processing facilities in your consolidated
financial statements. Please tell us the nature and extent of your undivided interests in the gas processing facilities you consolidate on a proportionate basis. In doing so, tell us whether the gas processing facilities are subject to joint
control. Please also tell us your basis in GAAP for proportionate consolidation for your industry. We may have further comment.

 Response:

 As of December 31, 2004, we owned undivided interests in eight gas processing facilities, and our ownership percentage varied between .84
and 37.18 percent. A majority of the initial owners of undivided interests in these facilities were engaged in exploration and production activities. Each of our undivided interests was established through the execution of a construction and
operation agreement which expressly specifies that a partnership was not formed between the parties.

 Our undivided interests are not subject to joint control since our liabilities are several and not joint. The rights and obligations under the agreements
are separate for each owner, and each owner is severally liable for their proportionate share of the cost and expenses of the facility. Under the agreements, each owner (i) can sell or assign its interest to third-parties, (ii) has the
right/obligation to take physical possession of its share of production without passing through a jointly owned entity, (iii) individually sells and invoices customers, and (iv) is severally liable for only the indebtedness it incurs with its
interest in the facility.

 During the year ended December 31,
2004, we earned $221 million in reven