Nationwide energy giant Exelon Corp. said Tuesday its Texas merchant unit, ExGen Texas Power (EGTP), on Tuesday filed for Chapter 11 bankruptcy protection after succumbing to massive swings in energy prices.
Exelon said it would pay ExGen lenders $60 million to retain and operate the three-unit, 1,265-megawatt, natural gas-fired Handley Generating Station near Fort Worth after it goes through a competitive bidding process and is approved by the court.
Prior to the announcement, ExGen Texas Power owned five gas-fired power plants in Texas, Kallanish Energy reports. Lenders agreed to exchange the debt they currently hold in EGTP’s other four plants for equity in the plants, effectively taking ownership of all but Handley.
In a statement, the company said Exelon Generation "remains committed to working with all stakeholders to ensure the best outcome for our employees, customers, communities and shareholders.”
The bankruptcy 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."
Exelon blamed the financial woes on "historically low power prices within Texas" that created "challenging market conditions for all power generators, including the five EGTP plants."
EGTP owns two combined-cycle gas plants, two gas-fired steam boilers and a small simple-cycle plant. Cheap gas has been pushing coal off the grid in some markets, and Texas' wind power is now having some of the same effect on gas.
The bankruptcy was filed in the United States Bankruptcy Court for the District of Delaware.