The bankruptcy court for Longview Power LLC is due at a Feb. 18 hearing to look at a Feb. 6 motion from the company for approval of a contract with Southern Environmental Inc. (SEI) to make repairs at its 700-MW (net), coal-fired plant in northern West Virginia.
“As an integral part of the Debtors’ energy generation activities, Longview’s Power Facility utilizes a pulse jet fabric filter (or ‘baghouse’) (the ‘Fabric Filter’), an air pollution control device required by applicable environmental regulations which removes particulates out of air or gas released from the Power Facility’s combustion process,” said the Feb. 6 motion. “Due to its size, the Fabric Filter has repeatedly experienced elevated pressure loss, which has led to, among other things, repeated cleaning, decreased bag life, and loss of station electrical generation capacity. Because the Fabric Filter suffers high pressure loss, even with high-frequency cleaning, Longview is often forced to ‘de-rate’ the Power Facility (i.e., operate at a less-than-maximum capacity), which causes the Debtors to lose several generating opportunities and, potentially, incur penalties if they are not operating at required levels.
“Accordingly, Longview and SEI have engaged in extensive, arm’s-length negotiations to expand the Fabric Filter so that the Power Facility can operate at max capacity within applicable regulatory permit levels. These negotiations were a success, and on February 3, 2015, Longview and SEI entered into the Agreement, attached as Exhibit 1 to Exhibit A hereto. Specifically, the Agreement provides that: (a) SEI will construct, deliver, and install new compartments to the Fabric Filter over a period of approximately 7 months pursuant to the preliminary project schedule set forth in Attachment 3 to the Agreement; and (b) Longview will pay SEI approximately $22 million over the same period pursuant to the pricing schedule set forth in Attachment 2 to the Agreement.”
In August 2013, Longview Power and related entities, including Northern Appalachia coal producer Mepco LLC, filed a petition with the U.S. Bankruptcy Court for the District of Delaware under chapter 11 of the Bankruptcy Code. Lately the companies have been able to work out issues with all three major contractors that helped it build the plant late last decade, clearing the way for their probable emergence in the next few weeks from bankruptcy protection.