SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K
                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

         DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): July 3, 2003

                              DYNEGY HOLDINGS INC.
             (Exact Name of Registrant as Specified in its Charter)

   Delaware                            0-29311                    94-3248415
(State or Other Jurisdiction    (Commission File Number)        (IRS Employer
  of Incorporation)                                          Identification No.)

                           1000 Louisiana, Suite 5800
                              Houston, Texas 77002
                    (Address of Principal Executive Offices)

       Registrant's telephone number, including area code: (713) 507-6400

                                 Not Applicable
          (Former Name or Former Address, If Changed Since Last Report)







ITEM 5. OTHER EVENTS

     On July 3, 2003,  Dynegy Inc.,  the wholly owning parent  company of Dynegy
Holdings Inc.,  announced  that it reached a settlement  with the Kroger Company
related to four power supply contracts. The settlement agreement,  which must be
approved by the Federal Energy Regulatory Commission,  provides that Kroger will
pay Dynegy $110  million to  terminate  two of the four power  contracts  and to
restructure the remaining two contracts through which Dynegy indirectly provides
electricity to Kroger  subsidiary  stores in  California.  The parties have also
agreed to resolve an  outstanding  FERC  dispute  related to  contract  pricing.
Dynegy expects to record a pre-tax, non-cash charge of approximately $30 million
in its customer risk management segment in the second quarter 2003 in connection
with the settlement.  The $110 million cash payment is expected during the third
quarter  and  represents  an  accelerated   payment  under  the  terminated  and
restructured  contracts.  The Dynegy Inc.  press release  announcing  the Kroger
settlement is attached  hereto as Exhibit 99.1 and  incorporated  herein by this
reference.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

a) Financial Statements of Business Acquired - Not Applicable.

b) Pro Forma Financial Information - Not Applicable.

c) Exhibits:

   99.1     Press Release of Dynegy Inc. dated July 3, 2003.







                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                                   DYNEGY HOLDINGS INC.


                                                   BY:   /s/_J._Kevin_Blodgett__
                                                          J. Kevin Blodgett
                                                          Corporate Secretary


Dated: July 7, 2003