Delmarva Power owner Exelon Corporation placed a Texas power plant subsidiary into Chapter 11 bankruptcy proceedings in Wilmington that if successful would give ownership to lenders.
The company cited low electricity prices as the reason for the filing Ex Gen Texas Power. The filing that covers five natural-gas-fired plants. Shares of Exelon were up 1.5 percent in trading on Tuesday.
“EGTP’s Board of Directors determined, after evaluating a range of opportunities, to move forward with a two-part plan,” the company stated. “First, Exelon Generation has negotiated an agreement with EGTP’s lenders that, pending a competitive bidding process and receipt of all necessary approvals, would allow Exelon Generation to continue to own and operate the Handley Generating Station in exchange for a $60 million payment to the lenders. Second, the lenders have agreed to exchange the debt they currently hold in EGTP’s other four plants for equity in the plants, effectively taking ownership of these facilities.”
The statement continued, “To help us achieve our objectives as efficiently as possible, EGTP today filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code for ExGen Texas Power Holdings LLC, ExGen Texas Power LLC. The filings help to facilitate the planned transactions and provide additional tools to reduce the amount of debt the plants would otherwise take forward, thereby maximizing their opportunities for long-term success.”
Exelon operates utilities, like Delmarva Power and PECO, separately from its power generation holdings. Exelon has the nation’s largest fleet of nuclear power plants, which also face long-term financial challenges as power prices fall.
The company is taking steps to close down the Three Mile Island nuclear plant near Harrisburg, PA.
Delaware was the site of the long-running bankruptcy filing of Texas’ largest utility holding company, which struggled with a heavy debt load and a bad bet on the belief that rising natural gas prices would make its coal-fired plants more competitive. Instead, natural gas prices fell.