trending Market Intelligence /marketintelligence/en/news-insights/trending/zqomb6gysswfn_qtnq1pqw2 content esgSubNav
In This List

Creditors to take over 4 of Exelon's Texas merchant power plants

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Creditors to take over 4 of Exelon's Texas merchant power plants

Exelon Generation Co. LLC's merchant unit in Texas is moving through bankruptcy and nearing the confirmation of a plan to turn four gas-fired power plants over to seven creditors.

ExGen Texas Power LLC, the merchant subsidiary, filed a prearranged Chapter 11 bankruptcy plan with the U.S. Bankruptcy Court for the District of Delaware on Nov. 7, 2017. The ultimate parent company is Exelon Corp.

A court confirmation hearing of the plan is slated now for March 28, which will be followed the next day by a hearing at the Public Utility Commission of Texas in Austin, according to FTI Consulting's David Rush, who is ExGen Texas' chief restructuring officer. Rush said March 6 that he expects to see the ExGen Texas bankruptcy proceedings concluded, on time, in April.

According to ExGen Texas' reorganization plan, senior secured lenders will be converting their debt into equity and creating a new company, along with a new name, that will own the four facilities.

Those facilities include the 746-MW Wolf Hollow plant located in Granbury County, which sells into the Electric Reliability Council of Texas North Zone; the 561-MW Colorado Bend Energy Center, located in Wharton County, which sells into ERCOT's Houston Zone; the 808-MW Mountain Creek facility in Dallas, which sells into the North Zone; and the 180-MW ExTex LaPorte Generation Station facility in LaPorte County, which sells into the Houston Zone.

The seven creditors are Fidelity Management and Research, Fortress Credit Advisors, GSO/Blackstone Debt Funds Management, Guggenheim Partners Investment Management, Oppenheimer Funds, PineBridge Investments and Avenue Capital Management.

The regulators at the PUCT must approve the deal outlined in the bankruptcy plan.

The Delaware bankruptcy court has already approved the sale of ExGen Texas' 1,265-MW Handley facility located in Fort Worth County, which sells power into the ERCOT North Zone.

A $60 million stalking horse bid in mid-December from parent company Exelon Generation was the only offer ExGen Texas received for the Fort Worth facility. The bankruptcy court declared Exelon Generation the winning bidder and canceled a planned auction. The deal for the facility has not yet closed, however.

Investment firms could benefit from higher prices

The prospective new owners of nearly 2,300 MW of gas-fired generation in ERCOT should be feeling a bit more comfortable today with their decision to take control of the four generating facilities.

In its initial filing for bankruptcy protection in early November, ExGen Texas said, "As a result of the downturn in the energy sector over the past few years, market prices have declined due largely to a confluence of modest demand growth being outpaced by new supply and declining natural gas prices."

ExGen Texas said that since the closing of project financing for some of the projects, it "experienced significant negative impacts on their revenue, cash flow and liquidity."

It also laid some of the blame for its troubles on "public policy initiatives and incentives" that it said "continue to promote the development of additional wind capacity, placing downward pressure on wholesale power prices."

The bankruptcy filing, however, came amid a series of announcements from Dallas-headquartered Vistra Energy Corp., itself the creation of a bankruptcy, that it would retire a large portion of its coal-fired fleet.

Record high ERCOT summer peak load expected

On March 1, market participants in ERCOT were told in a Seasonal Assessment of Resource Adequacy report to expect projected peak load this summer to reach around 73,000 MW, a level higher than the all-time record of 71,110 MW reached Aug. 11, 2016.

Along with the higher demand, ERCOT said it is expecting total available generation resources to be 77,658 MW this summer, an amount less than the year-ago level of 81,600 MW.

Starting in the second half of 2017 and running through to the beginning of 2018, ERCOT approved the retirement of approximately 5,000 MW of fossil fuel-fired capacity. As a result, the reserve capacity is expected to fall to around 4,900 MW this year from 8,700 MW last year, the ERCOT report noted.

The ERCOT numbers have had the effect of pushing summer strip forward prices higher, as the North Hub July-August on-peak package rose about $17 to $162/MWh in the first days of March on the Intercontinental Exchange, while 2019 forwards rose $8 to $105/MWh.

Jeffrey Ryser is a reporter for S&P Global Platts which, like S&P Global Market Intelligence, is owned by S&P Global Inc.