Threemonths ago executives at Midwest Generation, operator of six coal fired electric power generating plants in Illinois, announced they were closing twoof the plants in Chicago, as part of an environmental deal to avoid expensivestack gas cleaning installations at the creaky old facilities at the Fisk andCrawford plants. Earlier this week the same executives said they may not beable to keep their other four Illinois coal fired plants open, as low naturalgas prices and resulting low rates for electricity threaten the company withbankruptcy.
Closingof the Fisk and Crawford plants as the company has agreed to do will put about180 employees out of work. The six Midwest Generation plants provideelectricity to power 5 million homes in the state, but the grid operator isobligated to keep supplying electricity to those customers even if all sixplants are shuttered. Nevertheless, closing all six plants would throw 1,000people out of work, and shut down 13.55 of the total power generation capacityin Illinois.
MidwestGeneration’s parent Edison International says it will not provide financialsupport for Midwest. If Midwest filed for bankruptcy, as it is threatening todo, its bondholders would have to decide whether to keep the remaining plantsin Romeoville, Joliet, Waukegan and Pekin open for business, by fundingenvironmental upgrades Midwest does not have the cash to pay for, sell them, ifa buyer could be found, or shut them down and abandon them. In any event,Midwest predicts it will default on a half billion dollar debt repayment duenext June.
Companyofficials are in negotiations to restructure $3.7 billion in unsecured debt inorder to avoid bankruptcy. Analysts predict Midwest’s cash flows will remainnegative until at least 2016 without a sharp upturn in utility rates. ParentEdison International’s profits are down 46% from a year ago.
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