Optim’s bankruptcy court considers plan to auction two gas-fired plants

Optim Energy LLC and related companies in bankruptcy on April 21 filed a second amendment to their reorganization plan and disclosure statement that makes some nips and tucks in the prior version, but still contemplates an auction of their two gas-fired power plants in Texas.

The U.S. Bankruptcy Court for the District of Delaware is holding an April 22 hearing where it may approve the bid procedures outlined in this plan. On March 18, the Debtors filed the bidding procedures motion in an effort to maximize the value of the “Gas Plant Portfolio” through a potential sale. The Debtors propose to sell the Gas Plant Portfolio at a reserve price of at least $355 million in cash, on terms satisfactory to the Debtors and certain parties, to serve as a floor for further bidding.

One change relates to an April 2 objection from the Texas Commission on Environmental Quality (TCEQ) that the sale plan seemed to improperly seek to immunize a purchaser from liability for future environmental regulatory issues, and to transfer certain permits and certifications without compliance with Texas state law. The Debtors have agreed to incorporate language meeting that concern.

The plants in the “portfolio” going up for sale are:

  • The Altura Cogen Plant is a natural gas-fired plant capable of producing 600 MW, located in Harris County, Texas. It sells the majority of its energy in the ERCOT market. The plant is owned by Debtor Altura Cogen LLC. The Altura Cogen Plant has been commercially operating since 1985 and is located within a complex of petrochemical facilities owned by Lyondell Chemical Co. Limited objections by Lyondell to the sale plan have been resolved.
  • The Cedar Bayou Plant is a gas-fired plant capable of producing 550 MW, located in Chambers County, Texas. It operates in ERCOT‘s Houston Zone. Debtor Optim Energy Cedar Bayou 4 LLC owns a 50% undivided interest in the Cedar Bayou Plant and NRG Cedar Bayou Development Co. LLC owns the remaining 50% undivided interest. The Cedar Bayou Plant began operating in 2009. It is located within a complex of generation facilities owned by NRG Texas Power LLC, which owns the real property upon which the Cedar Bayou Plant is situated.
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.