The owner of llinois peak demand power plants has filed for bankruptcy protection in Delaware after failing to provide enough reserve power during the cold spell around Christmas.
Lincoln Power LLC made the filing on the last day of March as it faces a liquidity squeeze and looming fines from regional electric grid operator PJM, Energy Now reported.
Even though the problem plants are a long distance from the Mid-Atlantic region, PJM advised utility customers to conserve as it found that one in five generating plants were not living up to their commitments to provide peak power.
Problems included difficult conditions at natural-gas powered “peaker” plants that are designed for quick start-ups and benefit from elevated electricity prices during periods of high demand.
Fines from PJM to poorly performing power plants could reach $2 billion, Bloomberg (paywall reported).
The territory of PJM, the nation’s largest grid operator, extends from Delaware and other areas of the Mid-Atlantic to Chicago.
PJM is now working on measures that deal with winter surges in demand. The PJM system has traditionally focused on the summer, a period when demand is the highest.
The Illinois power plants are expected to remain in operation during bankruptcy proceedings, with PJM working with companies on the issue of financial stability and the fines that come when generation falls short.
The Lincoln natural gas peak power plants are owned by Cogenix, which is funded by the Carlyle Group, a private equity giant. Private equity holdings often carry high debt loads, but operate as LLC’s that can file for Chapter 11 without affecting the parent company
