NRG secures interim deal to aid 550-MW Gregory cogen in Texas

Filed Nov. 22 at the bankruptcy court for Sherwin Alumina Co. LLC was a deal with the Gregory Power Partners LLC unit of NRG Energy (NYSE: NRG) that would protect for the time being the operations of the gas-fired, 550-MW Gregory cogen plant, which is located at a shut Sherwin Alumina bauxite processing plant in Texas.

The deal is among Gregory Power Partners LLC (GPP), Corpus Christi Alumina LLC (CCA) and Sherwin Alumina Co. LLC (Sherwin). GPP operates this cogen in Gregory, Texas, on real property owned by the bankrupt Sherwin companies. GPP holds a leasehold interest on this real property pursuant to an Energy Services Agreement, dated as of June 1998. GPP also claims to hold, with the bankrupt companies disputing such claims, certain easements on and to real property adjacent to the Gregory Power Plant that is also owned by the debtors pursuant to an Amended and Restated Master Easement Agreement effective as of June 1998.

On Jan. 11, 2016, the debtors filed chapter 11 cases before the U.S. Bankruptcy Court for the Southern District of Texas. At the end of September, the bankrupt companies shut their Gregory alumina plant. GPP said that Sherwin’s actions were endangering operation of the plant, which sold steam and some electricity to the Sherwin plant, with most of its electricity output sold to the grid.

Under the deal filed with the court on Nov. 22, the parties reserve their rights as far as future legal disputes, but agreed to take actions in the meantime to facilitate the continued operation of the Gregory Power Plant by GPP and production of electrical power for the Texas public grid by GPP, at the power producer’s sole cost and expense.

During this “Interim Period,” the debtors will provide to GPP with potable water services and sanitary sewage services in accordance with past practices but only for so long as the debtors are providing such sanitary sewage services at the shut Sherwin facility.

Until Sept. 30 of this year, Sherwin Alumina operated a plant in Gregory that produced aluminum oxide (or alumina), which is the primary component of aluminum, from bauxite. Sherwin Alumina’s facility was historically capable of producing approximately 1.65 million metric tons of smelter grade alumina per year.

In 2007, international commodities trader Glencore Ltd., together with certain of its affiliates, completed a series of transactions that resulted in Glencore acquiring a 100% indirect equity interest in Sherwin Alumina. 

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.