The owners of the Homer City Generating Station have filed for federal Chapter 11 bankruptcy protection, hoping to secure a $150 million loan and erase a substantial portion of its $607 million in debt. Homer City Generation LP writes in its filing that the power plant will continue to operate as normal.
The bankruptcy filing was made possible when the company settled a lawsuit with Consol Energy, which contended the power plant was not honoring a supply contract signed two years ago. The settlement contains a new two-year supply contract. Other factors in the bankruptcy include fluctuations in the energy market which have required the plant to power up and power down, rather than operate at full capacity all the time. That’s caused wear and tear on equipment and increases maintenance costs, which may delay required installation of more pollution controls and other upgrades.
The filing indicates that the power plant should emerge from bankruptcy in a few months. In the meantime, Homer City Generating LP expects to be able to fully pay all of its vendors on time and is not proposing to lay off employees.
