Midwest Gen asks FERC to hold off on coal plant lease case

Midwest Generation LLC on Oct. 25 asked the Federal Energy Regulatory Commission to put a hold on a proceeding where it was seeking approval to relinquish leases for coal-fired plants in Illinois.

Midwest Gen now wants to sell those leases to NRG Energy (NYSE: NRG). Midwest Gen, like affiliate Edison Mission Energy, has been in Chapter 11 bankruptcy protection since December 2012. Edison Mission Energy (EME) recently announced a deal to sell assets to NRG, including the Illinois coal plants, pending various approvals, including nods from the bankruptcy court and from FERC.

On May 6, Midwest Gen initiated this proceeding by filing an application pursuant to section 203 of the Federal Power Act requesting that the commission grant such approvals as might be deemed necessary for it to relinquish possession of and control over: the Powerton Station, a 1,538 MW coal-fired plant located in Tazwell County, Ill.; and Units 7 and 8 (together totaling 1,036 MW) of the Joliet Station, a 1,358 MW coal-fired plant located in Will County, Ill. There is a third unit at Joliet that Midwest Gen owns directly.

Midwest Gen leases those facilities from financial parties and it filed the application with FERC in case it was unsuccessful in working out new lease arrangements. It has worked out such arrangements in conjunction with the asset sale to NRG. Midwest Gen/EME and NRG have a separate application pending with FERC for NRG to buy these assets.

If the commission approves the NRG/EME joint application and NRG and EME complete the transaction, Midwest Gen would assume and remain obligated under the Powerton and Joliet leases, thus eliminating the risk of the rejection of the leases that formed the predicate for the application in this proceeding, Midwest Gen told FERC in the Oct. 25 filing.

Midwest Gen said it will withdraw the application in this proceeding once the transaction described in the NRG/EME joint application is completed. “Applicant believes that it would be premature to withdraw the application in this Proceeding at this time because, if the Commission does not approve the NRG/EME Joint Application or the transaction described therein does not proceed, the issues presented in this Proceeding might once again require resolution by the Commission,” the company explained.

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.