MidAmerican Energy objects to Alpha assumption of coal sales deal

MidAmerican Energy on July 11 objected at the bankruptcy court for Alpha Natural Resources to a proposed assumption and assignment by Alpha of a “Coal Purchase and Sale Agreement,” since it said by definition that agreement terminated when Alpha filed for Chapter 11 bankruptcy protection.

MidAmerican and Alpha Coal Sales Co. LLC are parties to a Master Coal Purchase and Sale Agreement dated as of Jan. 1, 1999. Under it, MidAmerican agreed, on certain terms and conditions set forth both in such agreement (and in ancillary confirmations executed by MidAmerican and Alpha Coal Sales), to purchase coal from Alpha Coal Sales.

MidAmerican said the Coal Purchase and Sale Agreement is a “forward contract” by or with a “forward contract merchant.” It calls for the sale of coal at a specified quantity and price for a period of time ending on Dec. 31, 2018.

Said the utility: “Because the Coal Purchase and Sale Agreement is a ‘forward contract’ by or with a ‘forward contract merchant,’ the Coal Purchase and Sale Agreement has terminated as the result of Alpha Coal Sales’ bankruptcy filing. Given the termination of the Coal Purchase and Sale Agreement, an Order authorizing Alpha Coal Sales to assume such contract should not, and cannot be entered.”

The MidAmerican contract was included in a long list of contracts to be assumed that Alpha filed June 30 at the U.S. Bankruptcy Court for the Eastern District of Virginia., The list indicated that the MidAmerican contract is to be assigned to “Newco,” which is an entity (officially known as Contura Energy) that will buy many of Alpha’s mines, including the Belle Ayr and Eagle Butte operations in the Wyoming end of the Powder River Basin. Other mines, mainly in Central Appalachia, will remain with a reorganized Alpha.

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.