Edison Mission Energy seeks final court decision on Chevron cogens

As it tries to clean up various issues prior to a planned sale of its assets to NRG Energy (NYSE: NRG), Edison Mission Energy on Oct. 23 asked its bankruptcy court to allow it to assume two contested partnerships related to gas-fired cogeneration plants in California.

Practically since its bankruptcy case began in December 2012, Edison Mission Energy has been battling plant co-owner Chevron (NYSE: CVX) over these partnerships. Chevron during this battle has appealed adverse opinions out of the bankruptcy court to the local district court. The court handling the Chapter 11 case for EME is the U.S. Bankruptcy Court for the Northern District of Illinois.

Chevron has said it doesn’t want to take on new partners with any sale of Edison Mission Energy’s shares of the plants, and that such a sale would violate the partnership agreements, so it wants the bankruptcy court to order EME to sell its shares in the plants to Chevron. EME has said these two partnerships are very lucrative and that Chevron was trying to force it to sell its shares in the plants at bargain basement prices.

On Oct. 23, EME affiliates Western Sierra Energy and Southern Sierra Energy filed a motion with the court asking for the assumption of these partnerships so they can be sold to NRG. The assumptions involve the “Sycamore Cogeneration Company Partnership Agreement” and the “Kern River Cogeneration Partnership Agreement.” The motion is due for hearing on Nov. 6.

The two EME companies also asked the court to deny Chevron Kern River’s and Chevron Sycamore Cogeneration’s motion to re-open and supplement the record. Those companies are the Chevron affiliates for its side of the partnership agreements.

“In light of two recent rulings by the district court, the time has come for the Court to enter a Final Order granting the Motion to Assume,” the EME companies wrote. “The Gas Partnership Debtors have navigated Chevron’s procedural morass and reached a point where there is zero risk that a Final Order on the Motion to Assume will interfere with the pending appeal. Indeed, on September 17, 2013, just one day after the Court issued its decision granting the Motion to Assume, the district court entered an order denying Chevron’s request for leave to appeal this Court’s denial of Chevron’s motion for a preliminary injunction. And, on October 4, 2013, the district court denied Chevron’s belated request, made after this Court granted the Motion to Assume, to consolidate the lift stay appeal together with the Motion to Assume before this Court enters a Final Order on the Motion to Assume. In doing so, the district court made clear that it is entirely within this Court’s jurisdiction to issue a Final Order on the Motion to Assume.”

Each of the subject gas-fired cogens, called Kern River and Sycamore, has 300 MW of total capacity, is 50% controlled by EME affiliates, and is located near Bakersfield, Calif. They serve adjacent oil processing operations.

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.