Citing "unprecedented low energy prices" in the PJM Interconnection market along with coronavirus pandemic impacts, Longview Power on Tuesday filed for Chapter 11 bankruptcy protection, but said it plans to continue with natural gas and solar power expansion projects.
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"This filing is unfortunate but necessary given the current depressed power prices, which have further dropped more recently due to the terrible COVID-19 pandemic sweeping the nation and dramatic effects of the pandemic on the economy," Jeffery Keffer, Longview Power CEO, said in a statement.
With support from its senior secured lenders, the company is not planning any changes to staffing, expects to pay vendors "in the ordinary course during the Chapter 11 process" and will continue to operate, Keffer said.
Longview made the decision to file for bankruptcy protection as a result of "substantially lessened" demand for electricity due to long-term power pricing pressure caused by "cheap natural gas, an unseasonably warm winter, and the COVID-19 pandemic and resulting economic impact, which collectively have severely depressed power prices," it said.
The company's main asset is the roughly 700-MW Longview coal-fired power plant in Maidsville, West Virginia, near Morgantown. The plant has a supercritical boiler allowing it to operate at an 8,750 Btu/kWh heat rate, which "far surpasses that of all other coal-fired power plants in North America," according to the company.
Power prices at the plant's interconnection point with the PJM system have declined steadily each month in 2020. The average April month-to-date price Longview receives for its power is down by roughly half from last year, at around $15/MWh in 2020, compared with nearly $28.40/MWh in 2019.
Longview is in the process of expanding the power generation facility by adding a 1,270 MW gas-fired combined cycle plant that will be supplied by Marcellus Shale production, according to the company.
Additionally, a 70-MW solar installation will be built on 300 acres adjacent to the existing coal-fired plant.
Combined, the generation facilities will produce about 2,000 MW of power for sale into PJM.
The company does not "anticipate any change in the development of the Longview natural gas and solar projects" as the two expansion project entities are not part of the bankruptcy filing, Keffer said.
This is not Longview's first trip into bankruptcy, having filed for Chapter 11 protection in 2013, due to "construction defects" when the $2.0 billion plant was built and "major changes" in power markets, the company said.
Longview emerged from bankruptcy in April 2015 with new ownership led by private equity firms KKR, Tennenbaum and Ascribe. Construction of the coal-fired plant was completed in 2015.