Bankruptcy court lets Sundevil reject gas supply contracts for Arizona power plant

The bankruptcy court for Sundevil Power Holdings LLC on June 29 approved the company’s June 14 request to let it reject certain gas supply agreements since a potential buyer of its power generating assets has no desire to take them on.

Sundevil owns two of the four 550-MW gas-fired power blocks of the Gila River Power Station in Gila Bend, Arizona. Sundevil had entered into certain gas transportation agreements with Transwestern Pipeline Co. LLC and El Paso Natural Gas Co. LLC. Sundevil had released its transportation rights under each of these agreements pursuant to asset management agreements with EDF Trading North America LLC and Twin Eagle Resource Management LLC.

Sundevil has been working to sell substantially all of its operating assets, including the Power Blocks, and to assume and assign certain executory contracts. On May 4, Sundevil advised the court that it had accepted, subject to approval of the court and an agreement on definitive documentation, the bid of CLMG Corp., on behalf of itself and Beal Bank USA, for the purchase of substantially all of the assets related to the Sundevil business.

Said the June 14 motion: “While the Debtors are still finalizing the definitive documentation with the Successful Bidder, the Debtors have been advised that the Successful Bidder is not likely to accept the assignment of the Rejected Contracts. As a consequence and in order to mitigate any additional administrative claims that might arise under the Rejected Contracts, the Debtors have determined to seek the rejection of the Rejected Contracts. The Rejected Contracts are not essential to the Debtors’ businesses or reorganization and otherwise are burdensome to the Debtors’ estates. Based on the administrative cost-savings the Debtors will realize if the Rejected Contracts are promptly rejected, the Debtors request entry of an order rejecting the Rejected Contracts effective as of June 30, 2016.”

Sundevil Power Holdings and a related company on Feb. 11 had filed for Chapter 11 protection at the U.S. Bankruptcy Court for the District of Delaware.

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.