Three
months ago executives at Midwest Generation, operator of six coal fired electric power generating plants in Illinois, announced they were closing two
of the plants in Chicago, as part of an environmental deal to avoid expensive
stack gas cleaning installations at the creaky old facilities at the Fisk and
Crawford plants. Earlier this week the same executives said they may not be
able to keep their other four Illinois coal fired plants open, as low natural
gas prices and resulting low rates for electricity threaten the company with
bankruptcy.
Closing
of the Fisk and Crawford plants as the company has agreed to do will put about
180 employees out of work. The six Midwest Generation plants provide
electricity to power 5 million homes in the state, but the grid operator is
obligated to keep supplying electricity to those customers even if all six
plants are shuttered. Nevertheless, closing all six plants would throw 1,000
people out of work, and shut down 13.55 of the total power generation capacity
in Illinois.
Midwest
Generation’s parent Edison International says it will not provide financial
support for Midwest. If Midwest filed for bankruptcy, as it is threatening to
do, its bondholders would have to decide whether to keep the remaining plants
in Romeoville, Joliet, Waukegan and Pekin open for business, by funding
environmental upgrades Midwest does not have the cash to pay for, sell them, if
a 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 due
next June.
Company
officials are in negotiations to restructure $3.7 billion in unsecured debt in
order to avoid bankruptcy. Analysts predict Midwest’s cash flows will remain
negative until at least 2016 without a sharp upturn in utility rates. Parent
Edison International’s profits are down 46% from a year ago.
