Energy Future files for bankruptcy, company splitting up

Energy Future files for bankruptcy, company splitting up

Energy Future Holdings

Energy Future Holdings filed for Chapter 11 bankruptcy protection Tuesday morning after reaching a debt restructuring deal with creditors to would break up the company and eliminate more than half its $40 billion in debt.

The filing in U.S. Bankruptcy Court in Wilmington, Del. comes seven years after private equity firms KKR & Co., TPG and Goldman Sachs Capital Partners bought out the shareholders of the former TXU Corp. for $45 billion. The company struggled under low power prices and billions of dollars in annual interest payments, producing massive losses few would have predicted at the time of the deal, the largest leveraged buyout in U.S. history.

Under the terms of the restructuring proposal released Tuesday, the Dallas power giant’s generation and retail arm Texas Competitive Electric Holdings would break off from the parent company EFH. First-lien lenders with claims on $23 billion in debt would take over TCEH, which includes Luminant and TXU Energy, according to an EFH news release.

Creditors of the company’s regulated transmission arm, which owns Oncor, would receive equity in the reorganized EFH in exchange for giving up $2.5 billion in debt claims. Unsecured creditors would contribute up to $1.9 billion in cash into the new company. Creditors of the parent company EFH would give up $600 million in debt claims. SOURCE

I’m not a business guru, I don’t claim to be, but I have long suspected that there were issues within this network that were going to cause a great many Texans to lose power at a very critical time.

Our local media always stays on top of the power issues, much to their credit, and I am convinced that they too see some type of mismanagement at the root of this financial debacle.

With the rates that Texans pay for power you would think the generating companies would have a surplus of money and nothing but top-shelf equipment.

If that were the case you wouldn’t expect to see this headline.

Rolling Blackouts Force Texas To Import Power From Mexico

The Texas power grid is usually only taxed in the middle of summer when air conditioners are in overdrive. Yet on Wednesday Texans woke to news of rolling blackouts statewide. Throughout the day Houston saw the power cut to 300,000 at a time for up to 45 minutes. In Dallas the blackouts knocked vital hospitals offline, but spared Cowboys Stadium, where Superbowl preparations continued as planned.

Midday Wednesday Mexico was generously sending nearly 300 mw into the Texas grid via the Sharyland Utilities interconnection, built and owned by the family of Dallas billionaire Ray Lee Hunt. SOURCE

Texas bought electricity from Mexico but homes and hospitals were off-line in one of the biggest ice storms Texas has had in quite a long time, BUT, Jerry World, where Cowboys go to embarrass themselves, was spared because the Jones facility was hosting a football game. No, I don’t see any issues here, do you? Nothing to see… Move along… These aren’t the ‘droids we’re looking for…

ERCOT, the Electric Reliability Council of Texas, is always issuing warnings of *rolling blackouts* when we have very hot or very cold weather. It seems to me that the power generation system just can’t keep up with demand. Supposedly power plant owners had made significant changes to protect plants from cold weather after a February 2011 storm knocked about one-fourth of the state’s power plants out of service.

ERCOT: Texas narrowly avoided rolling power blackout

The state’s primary electricity grid narrowly avoided a rolling blackout Monday morning after two large power plants in north Texas tripped off, officials with the Electric Reliability Council of Texas said.

“I think we were close,” said Dan Woodfin, ERCOT’s director of system operations. “If we had lost another unit, it would have put us into a Level 3” emergency.

ERCOT, which manages the grid that serves three-fourths of the state, including Central Texas, has a three-step emergency system. Level 3 requires rotating outages to keep the grid functioning.

Woodfin said there were 3,700 megawatts of forced outages — half related to the cold weather that brought near-record lows to the state — between midnight and 8 a.m. The other half were typical issues not related to the weather. SOURCE

Personally, I don’t care what anyone says, when you have rolling blackouts in Texas, due to excessive heat or cold, there is a systemic problem in the equation.

These are the kind of headlines and news reports we’re used to seeing, Thousands lose power in heat-related outage, and I have to say, I don’t accept excuses all that well. My hope is that the companies can emerge from this with some degree of success and a much stronger grid structure.

Additional Reading:
ERCOT ends 8 hours of rotating blackouts in Dallas-Fort Worth
Storm turns some Super Bowl plans into Super Mess

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6 Responses to Energy Future files for bankruptcy, company splitting up

  1. Capt Ron says:

    I think in the background unseen are the new, and ever growing, EPA regulations have caused problems with the energy industry, particularly electric, from being able to do things they need to do to make the grid stable and sustaining. These regulations have the sole purpose of giving the government more and more control over our lives. I say this knowing Obama is on record stating “energy costs will have to necessarily sky-rocket”. I’m not a conspiracy theorist, but I do listen, and I think a person’s intentions come out in their words more times than not.

  2. bunkerville says:

    The administration would like nothing better than to slow down Texas, one of the bright spots of the economy. This McCarthy of the EPA is out to give us all rolling blackouts and with the latest Supreme court decision she has carte Blanche. Thanks for this story.

  3. Bloviating Zeppelin says:

    And just what was the last time an electrical generation station was built in Texas?

    For that matter, when was the last time an electrical generation station was built in the US?


  4. mrchuck says:

    We need nuclear power generating stations.
    Texas has a lot of coal here and it is used along with natural gas to power our generating stations.
    I still prefer nuclear.
    These light/mirror generating stations are nothing but a big boondoggle.
    None has or will ever have made or make a profit.
    A lab experiment in my book!

    As for home energy here in Texas,,, we have a website “Power To Choose” that allows you to choose your supplier. All suppliers currently are listed. Very easy to read and choose. Changing suppliers is painless.
    I expect by now, all electricity users have their “new” meters installed.
    Now that more natural gas is here because of “fracking”, tha price for electricity has stabilized.
    I pat 8.9 cents per KWH.
    My supplier is Reliant,,, based in Houston. I have been with them for years, but I still check the suppliers on the website Power to Choose frequently.

  5. BobF says:

    Coal fired power plants are shutting down all over America. Some are converting to natural gas but it’s costing each plant hundreds of millions to do so. Obama told us in 2008 what he’s going to do to coal fired power plants and it’s happening right before our eyes. We’re hearing the excuse that coal is too expensive but is it the coal that’s too expensive or the modifications imposed by the EPA required to keep the plant going? One coal plant in Western NY spent hundreds of millions upgrading its scrubbers only to have it be scheduled for closure with the reason coal has gotten too expensive. Now, the state wants it upgraded to gas at a cost between 500 - 700 million. I grew up right down the street from this plant on Lake Erie. Instead of spending these billions of dollars on upgrading the electrical grid and transmission capabilities, the power companies, through increased rates, are having to spend this money to comply with EPA regulations designed to put them out of business and usher us into a third world existence.

    • BobF says:

      Forget to add my references.,0,6329274.story#axzz309zOz5Ye

      Also, here’s where the head of the EPA is threatening those (Conservatives) who question them on the science they use to come up with their regulations.

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