Edison International (NYSE: EIX) said in a filing with the U.S. Securities and Exchange Commission (SEC) that the company’s subsidiary, Edison Mission Energy (EME), expects to have further operating cost losses and may have to consider selling assets or filing for Chapter 11 bankruptcy.
EME said it is experiencing operating losses due to lower realized energy and capacity prices, higher fuel costs and lower generation at the Midwest Generation power plants and those trends are expected to continue for a number of years. The companies have $879 million of cash and liquid assets, including Midwest’s cash of $177 million. The operating losses, in addition to $500 million of debt that will mature in June 2013 and planned retrofits of Midwest Generation plants to comply with emission regulations, will exhaust EME’s liquidity, the filing said.
EME said it will have to consider sales of assets, restructuring, reorganizing capital structure or conservation of cash that would otherwise be applied to payments of obligations. Based on current projections, EME would not have enough money to pay the $500 million maturing debt in 2013 and might have to file for bankruptcy, the filing said.
Under the applicable accounting standards, Edison International would no longer consolidate EME for financial reporting purposes if it filed for Chapter 11 bankruptcy, as Edison International would no longer have a controlling financial interest for accounting purposes.
The filing also said that market costs for power purchased while the San Onofre Nuclear Generating Station (SONGS) through June 30 were approximately $117 million. The plant has been offline since January after workers discovered tube wear in both units’ steam generator.
To read the filing, click here.
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