Court approves AES Eastern sale of four dead coal plants

After an Oct 10 hearing, a federal bankruptcy judge on Oct 11 issued an order approving the sale by AES Eastern Energy LP of four shut coal-fired power plants, basically for scrap.

In December 2011, facing significant constraints on liquidity, AES Eastern and related companies commenced Chapter 11 cases, which were later combined into one case, at the U.S. Bankruptcy Court for the District of Delaware. Since then, AES Eastern has sold its two operating coal-fired plants – Somerset and Cayuga – in New York. But there are four other plants – under AES Greenidge LLCAES Westover LLCAES Jennison LLC and AES Hickling LLC –that have been shut and have lately been up for sale.

AES Eastern has told the court that in March 2011, it put Westover and Greenidge into “protective lay-up” status, which means that while they were expected to be off-line for some time, they were being maintained. Westover has two existing units, 7 and 8, with a combined net capacity of 126 MW, while Greenidge has two existing units, 3 and 4, with a combined 161 MW of net capacity, the company told the court. Jennison and Hickling were officially retired in 2002.

On Oct. 11, Judge Kevin Carey signed an order approving the plant sale to GMMM Holdings I LLC, an affiliate of GMMM Holdings Corp. There were some minor changes in the sale agreement leading up to the approval.

AES Eastern told the court the purchaser intends to permanently retire the idle plants, salvage or scrap the equipment, and demolish the buildings so the sites eventually can be redeveloped. The buyer has extensive experience with power plant demolition, asbestos abatement, and other necessary skills.

AEE2 LLC, an AES Eastern subsidiary that is also in bankruptcy, filed a Sept. 18 notice with the New York Public Service Commission that Westover Unit 8, which was placed in protective lay-up in March 2011, would be permanently shut on Sept. 21. Westover Unit 8 is an 84-MW, coal-fired facility.

AEE2 also told the New York commission on Sept. 18 that Greenidge Unit 4, in protective layup since March 2011, would be permanently shut on Sept. 21. Greenidge Unit 4 is a 108-MW coal- and biomass-fired facility.

AEE2 said in a September 2010 notice to the New York commission about the plans to idle Westover Unit 8 that Westover Unit 7 also is owned by AEE2, was operated by AES Westover and is located on the same site. It was permanently retired at the end of 2009 and no other generating facilities are located on this site, the notice added.

“Since AEE2 purchased the Westover Unit 8 facility, it has invested $60M in environmental retrofits including an SCR, a Dry Scrubber, and a Baghouse to limit the emissions of this facility,” the September 2010 notice said. “As a direct result of these significant investments in these state-of-the-art environmental controls, the Westover Unit 8 facility is one of the cleanest coal-fired facilities in New York and the Northeast with removal rates of 95% for SO2 and NOx and more than 99% for mercury (Hg). Moreover, it has invested substantial additional dollars in the facility to improve its heat rate, reduce its outages and otherwise improve its operating capability. During the past 10 years, the facility has achieved an availability factor of 91.3%. The site employs 37 direct employees, is one of the largest taxpayers in Broome County paying millions of dollars in property and other taxes annually and provides significant economic benefits and indirect employment benefits to the Broome County area.”

However, based on the current and forecasted wholesale electric prices in Central New York, and current and pending environmental regulations, Westover Unit 8 is, and will continue to be, operating at a net loss, the September 2010 notice said.

AEE2 sent a January 2009 notice to the New York commission that it planned to permanently retire Unit 3 at Greenidge and Unit 7 at Westover as of the end of 2009. It attributed this decision to a 2005 consent decree over emissions worked out with the state of New York and filed in a federal court. Greenidge Unit 3 is a 55-MW net electric generating unit. Westover Unit 7 is a 40-MW net facility.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.