Power Prices, Utilities - November 7, 2017
Exelon's Texas merchant power biz files for bankruptcy
Citing challenging market conditions for generators caused by low power prices, Exelon Corp. announced Nov. 7 that its Texas merchant power generation subsidiary, Exelon Generation Texas Power LLC, has filed for bankruptcy.
In the company's filing under Chapter 11 of the U.S. Bankruptcy Code for ExGen Texas Power Holdings LLC and ExGen Texas Power LLC, it proposes a two-part plan approved by EGTP's board of directors aimed at debt reduction. The subsidiary currently owns five natural gas-fired plants in Texas; in the bankruptcy agreement, lenders agreed to exchange debt held in four of those plants for equity in them, essentially giving them ownership in all but one: Handley, a 1,265 MW facility in Fort Worth, according to Utility Dive.
Exelon said in a statement: "Historically low power prices within Texas have created challenging market conditions for all power generators, including the five natural gas-fired EGTP plants [...] 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."
In March, Reuters reported that Exelon had brought on an adviser to help deal with mounting debt at the Texas subsidiary that at the time amounted to around $650 million.