Midwest Generation parent company eyes bankruptcy
By Cindy Wojdyla Cain firstname.lastname@example.org August 1, 2012 3:24PM
Updated: September 3, 2012 1:15PM
The parent company for Midwest Generation — which operates six coal-fired plants in Illinois, including two in Will County — may file for bankruptcy protection because of declining profits and looming debt and lease payments.
The bankruptcy possibility was raised Tuesday by company officials during a conference call with analysts on lower second-quarter earnings.
Edison International second-quarter basic earnings were $74 million in 2012 compared with $176 million in the second quarter of 2011. Second-quarter core earnings were $103 million in 2012 compared to $182 million in 2011.
Midwest Generation is owned by Edison Mission Energy, which is a subsidiary of Edison International. Midwest Generation was formed in 1999 when it bought six power plants from ComEd: Fisk and Crawford stations in Chicago, Waukegan Station, Joliet Station, Will County Station in Romeoville and Powerton Station in Pekin.
Midwest Generation may default on leases for its Powerton and Joliet plants and file for Chapter 11 bankruptcy protection, according to company officials.
Edison International Chairman and CEO Ted Craver said his company is looking for ways to “financially stabilize” Edison Mission Energy, including:
Accelerate the closing of uneconomic plants. (Fisk and Crawford are slated for closure by the end of 2014.)
Reduce operating and overhead costs, including a workforce reduction by the end of 2012.
Minimize capital spending on environmental retrofits while complying with state and federal emissions laws.
Edison International spokesman Charles Coleman said in the meantime, operations are continuing as normal as the company works with creditors to restructure debt.
“Formal disclosures like the discussions and documents filed yesterday must identify risks, and we have been very open about that with our employees — and the Joliet Station continues to perform well,” Coleman said. “The focus today is on running the business and that means operating the Joliet Station with the intent to do that for the long haul.”
New pollution control measures were installed at the Joliet plant in late 2011 and the company is in the engineering phase for another round of controls that will be installed in the next couple of years, he added.
In recent years, Midwest Generation has spent millions to reduce the amount to nitrogen oxide, sulphur dioxide and mercury emitted by its Illinois plants. The pollutants contribute to smog and acid rain.
Midwest Generation has about 1,100 employees, about 70 percent of whom are represented by the International Brotherhood of Electrical Workers.
One reason coal-fired power plants may be struggling is the low cost of natural gas, said Tyson Brown, a statistician with the U.S. Energy Information Agency.
Technological advances have made it easier to get natural gas out of the ground, and burning it creates fewer emissions, Brown said. That makes natural gas plants a cheaper, cleaner option for the future, which could give companies incentives to close older coal-fired plants in build new natural gas plants, he added.
Coal-fired plant closures are expected to quadruple in the next five years, according to the agency, and in April natural gas produced as much power in the United States as coal.
“That’s never happened before,” Brown said.