TCEH Corp. announced Oct. 4 that it and certain of its subsidiaries, including operating businesses Luminant and TXU Energy, have emerged from Chapter 11 as a standalone company effected through a tax-free spinoff from Energy Future Holdings Corp.
The emergence follows satisfaction of all necessary conditions, including regulatory approvals required by the Third Amended Plan of Reorganization for Energy Future Holdings (EFH), which was approved by the U.S. Bankruptcy Court for the District of Delaware on Aug. 29.
EFH and Energy Future Intermediate Holding Co. LLC, which own an indirect 80% equity interest in power delivery company Oncor, remain in Chapter 11 and are proceeding toward confirmation and emergence on a separate, standalone schedule.
Concurrent with emergence, TCEH Corp. has issued 427.5 million shares of its common stock, as well as other proceeds, to the pre-emergence first-lien creditors of Texas Competitive Electric Holdings Co. LLC (referred to as “Former TCEH”). Beginning Oct. 4, this common stock is publicly traded on the OTCQX market under the ticker symbol “THHH.”
TCEH Corp. has appointed a new board of directors consisting of Gavin Baiera, Jennifer Box, Jeff Hunter, Michael Liebelson, Cyrus Madon, Curt Morgan and Geoffrey Strong. Curt Morgan will assume responsibilities as chief executive officer of TCEH Corp., effective immediately. During his 35-year career, Morgan has held leadership responsibilities in nearly every major U.S. power market. Most recently, he had been serving as a consultant for Former TCEH’s first-lien creditors. Prior to that, he was an operating partner at Energy Capital Partners, a private equity firm focused on investing in North America’s energy infrastructure. Morgan previously served as the president and CEO of both EquiPower Resources Corp. and FirstLight Power Resources Inc. He recently served as a director of Summit Midstream Partners and has held leadership positions at NRG Energy, Mirant Corp., Reliant Energy and BP Amoco.
“TCEH Corp. emerges from the restructuring process with a superb integrated business,” said Morgan. “This includes TXU Energy and Luminant – both of which are competitive, well-resourced and positioned for continued operational excellence in the growing Texas market with a strong balance sheet and the potential for stable earnings and significant cash generation. This outcome would not have been possible without the support of key stakeholders, including the company’s valued people, customers and business partners. So while industry conditions remain challenging – and we must continue to adapt accordingly – the long-term potential of our integrated business, combining an innovative, customer-focused retail business with a safe, reliable, cost-effective generation company, is extremely powerful.”
TCEH Corp. consists of Texas’ largest electric power generator, Luminant, and TXU Energy, a competitive retail electricity provider, with almost 17,000 MW of generation and 1.7 million retail customers, respectively. TCEH Corp. believes this operating platform is now complemented by a strong balance sheet and liquidity position, as it has eliminated more than $33 billion of debt and other obligations through the Chapter 11 restructuring process.
At emergence, the company’s available liquidity position is estimated to be approximately $1.65 billion, including $750 million of undrawn net borrowings available under the company’s new $4.25 billion exit financing facility.
Luminant generates and sells electricity and related products from a diverse fleet of generation facilities totaling approximately 17,000 MW of generation in Texas, including 2,300 MW fueled by nuclear power, 8,000 MW fueled by coal and 6,000 MW fueled by natural gas. It is a large purchaser of wind-generated electricity, as well.
A key question for Luminant now is whether and when it plans to build a series of new power plants. Energy Future Holdings on Sept. 7 filed with its bankruptcy court an updated disclosure statement, and in it noted its efforts to permit new or repowered gas-fired facilities through the Texas Commission on Environmental Quality (TCEQ). “In recent years, the TCEQ granted air permits to Luminant to build natural gas fueled generation units at certain of our existing plant sites. We believe current market conditions do not provide adequate economic returns for the development or construction of these facilities; however, we believe additional generation resources will be needed in the future to support electricity demand growth and reliability in the ERCOT market.”
The potential facilities that form the basis of such air permits are:
- DeCordova Combustion Turbine, two units, 420 MW to 460 MW, air permitting granted
- DeCordova Combined Cycle, one unit, 730 MW to 810 MW, air permitting pending
- Eagle Mountain Combined Cycle, one unit, 730 MW to 810 MW, air permitting pending
- Lake Creek Combustion Turbine, two units, 420 MW to 460 MW, air permitting granted
- Permian Basin Combustion Turbine, two units, 420 MW to 460 MW, air permitting granted
- Tradinghouse Combustion Turbine, two units, 420 MW to 460 MW, air permitting granted
- Tradinghouse Combined Cycle, two units, 1,460 MW to 1,620 MW, air permitting pending
- Valley Combustion Turbine, two units, 420 MW to 460 MW, air permitting granted
At DeCordova and Tradinghouse, the combined-cycle projects are alternatives to the simple-cycle projects at each site.