Midwest Generation parent company eyes bankruptcy
By Cindy Wojdyla Cain Sun-Times Mediaemail@example.com August 1, 2012 5:50PM
Midwest Generation's Crawford Generating Station, a coal-fired power plant, in Chicago is shown earlier this year. AP file photo
Updated: September 3, 2012 1:24PM
The parent company of Midwest Generation — which operates six coal-fired plants in Illinois, including two in Chicago that it plans to close — may file for bankruptcy protection because of declining profits and looming debt and lease payments.
The bankruptcy possibility was raised Tuesday by company officials during a conference call with analysts on lower second-quarter earnings. Edison International second-quarter earnings shrank 46 percent to $103 million compared to a year ago.
Midwest Generation is owned by Edison Mission Energy, a subsidiary of Edison International. Midwest Generation was formed in 1999 when it bought six power plants from ComEd: Fisk and Crawford stations in Chicago; Waukegan station; Joliet station; Will County station in Romeoville, and Powerton station in Pekin.
The company agreed to close the two Chicago coal-fired plants — Fisk, in Pilsen, and Crawford, in Little Village — by September.
Midwest Generation may default on leases for its Powerton and Joliet plants and file for Chapter 11 bankruptcy protection, according to company officials.
Edison International Chairman and CEO Ted Craver said his company is looking for ways to “financially stabilize” Edison Mission Energy, including:
† Accelerating the closing of uneconomic plants.
† Reducing operating and overhead costs, including a workforce reduction by the end of 2012.
† Minimizing capital spending on environmental retrofits while complying with state and federal emissions laws.
Meanwhile, operations are continuing normally as the company works with creditors to restructure debt, Edison International spokesman Charles Coleman said.
“Formal disclosures like the discussions and documents filed yesterday must identify risks, and we have been very open about that with our employees — and the Joliet station continues to perform well,” he said. “The focus today is on running the business and that means operating the Joliet Station with the intent to do that for the long haul.”
New pollution-control measures were installed at the Joliet plant in late 2011 and the company is in the engineering phase for another round of controls to will be installed in the next couple of years, he added.
In recent years, Midwest Generation has spent millions to reduce the amount to nitrogen oxide, sulfur dioxide and mercury emitted by its Illinois plants. The pollutants contribute to smog and acid rain.
Midwest Generation has about 1,100 employees, about 70 percent of whom are represented by the International Brotherhood of Electrical Workers.
One reason coal-fired power plants may be struggling is the low cost of natural gas, said Tyson Brown, a statistician with the U.S. Energy Information Agency. Technological advances have made it easier to get natural gas out of the ground, and burning it creates fewer emissions, Brown said. That makes natural gas plants a cheaper, cleaner option for the future, which could give companies incentives to close older coal-fired plants and build new natural gas plants.
Coal-fired plant closures are expected to quadruple in the next five years, according to the agency, and in April natural gas produced as much power in the United States as coal. “That’s never happened before,” Brown said.