By Editors of Power Engineering
Exelon Generation Texas Power LLC, a merchant generation unit and subsidiary of Exelon, filed for Chapter 11 bankruptcy protection.
EGTP’s board of directors approved a two-part plan for the company’s reorganization. First, Exelon Generation negotiated an agreement with EGTP’s lenders to continue ownership of the 1,265-MW Handley Generating Station in Fort Worth in exchange for a $60 million payment.
Additionally, lenders will exchange debts held with EGTP’s other four plants for equity, which Exelon said would have the lenders effectively taking ownership of the facilities.
Exelon said the bankruptcy filing would “help facilitate the planned transactions and provide additional tools to reduce the amount of debt the plants would otherwise take forward.”
A combination of forces, including flat demand, cheap natural gas and low renewable energy prices, are putting pressure on merchant generators, making it hard for them to recoup their costs.
According to a study by the Wilkinson Barker Knauer LLP law firm and the Power Research Group cited by Electric Power and Light, merchant generation funded by private risk capital was once thought of as the future of power generation. Instead, the industry is facing the prospects of more bankruptcies and mergers to strengthen weaker companies.