January 12, 2017 Read More →

Coal Plant in Pennsylvania Files for Bankruptcy, Again

Anya Litvak for the Pittsburgh Post-Gazette:

A massive coal-fired power plant in Homer City, Indiana County, is now in bankruptcy, its second reorganization effort in five years.

Homer City Generation LP filed for Chapter 11 bankruptcy protection today, expecting a swift process that will eliminate some $607 million in debt while continuing to operate the power plant without interruption.

The power plant, which employs 245 people and has the capacity to power 2 million homes, was built in the 1960s and 1970s. Its three units have undergone significant upgrades, including a $750 million pollution control makeover funded by GE Capital, which rescued Homer City from bankruptcy in 2012.

Last year, however, GE announced it wanted to part ways with Homer City, which has suffered from competition with low-cost natural gas, low power prices, environmental compliance costs, and shifting market dynamics which transformed the facility from a constant source of baseload power to a plant that must dial up and down to follow the demand curve.

The company “intends to pay suppliers for all goods and services provided after the filing date under normal terms and conditions,” it assured in bankruptcy documents.

In analyzing how the company would fare if it chose to simply liquidate and sell its assets, Homer City concluded it might recover only between $42 and $60 million, mostly from its cash on hand, money owed to it by customers, and existing inventory of coal, oil, and limestone. Its power plant components and the vast expanse of land that hosts the plant would be worth very little, the analysis showed — less than 5 percent.

Homer City expects the bankruptcy process to make its way through the courts within a few months, the company stated. It hopes to exit bankruptcy with a new, $150 million loan.

Full article: Homer City power plant files for bankruptcy, will reorganize

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