Broke Chicago Power Wholesaler Files for Bankruptcy Protection
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Broke Chicago Power Wholesaler Files for Bankruptcy Protection

December 26, 2012


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Edison Mission Energy, a national power wholesaler, and Midwest Generation, Edison’s Chicago-based subsidiary, are filing for bankruptcy protection, according to a report from the Chicago Tribune.

Sources say the companies are looking to restructure roughly $5 billion worth of debt that has become too big a burden to handle outside of bankruptcy court.

In its petition, which was filed in Chicago’s U.S. Bankruptcy Court, Edison Mission Energy claimed to have $5.1 billion in assets and roughly the same amount of debt, according to sources.

Reports indicate that Edison believed its financial ills were a direct result of unseasonably low power prices, higher fuel costs, and the costs of retrofitting several coal-fired power plants in order to meet the requirements of environmental regulators.

The regional power wholesaler, which is owned by California-based Edison International, hopes to exit bankruptcy as a completely separate company from Edison International, according to sources.

In a news release issued last week by Pedro Pizarro, the president of Edison Mission Energy, the company promised customers, suppliers, and employees that "business operations will continue in the normal course" during the bankruptcy process.

Pizarro also said that filing for bankruptcy was an "important first step" to "reduce our debt, enhance our liquidity profile and position EME for continued operation and future success while preserving our ability to generate power safely and reliably at our electric facilities across the country."

While the effects on Edison Mission Energy are unclear, sources say the filing is unlikely to alter the operations of Midwest Generation’s multiple power plants in Illinois.

And while some of the company’s 1,000 employees could face consequences from the bankruptcy filing, if the company plans to continue its operations as normal, most employees will likely be able to keep their jobs.

Low power prices and high fuel costs have combined to hamper the financial operations of power companies across the country in recent years, according to sources.

In addition, a series of relatively warm winters in the Midwest has reduced customers’ demands for winter heat, which has also played a role in changing the economic realities of the power generation business.

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