Posted on 04/02/2023 5:35:07 AM PDT by george76
Lincoln Power LLC, the owner of two Illinois power plants, filed for bankruptcy after its financial strain was exacerbated by nearly $39 million in penalties levied by the biggest US electric-grid operator. The Chapter 11 filing allows Lincoln, a unit of Carlyle Group-backed Cogentrix Energy Power Management LLC, to keep operating while working on a plan to repay creditors.
PJM Interconnection LLC, which runs the grid that stretches from Washington to Chicago, fined Lincoln after its plants in Elgin and East Dundee, Illinois, failed to generate enough power during a severe winter storm in December. The grid operator in February demanded that those plants provide millions of dollars in collateral to prove Lincoln’s continued creditworthiness, according to bankruptcy court filings.
Ensuing negotiations resulted in PJM withholding a combined $350,000 from the plants each week.
Lincoln isn’t the only company facing the penalties PJM put in place to hold plants accountable for failing to show up in emergencies. The grid operator estimates that these fines may reach $2 billion after widespread power-plant failures during the December storm. PJM has also asked federal regulators to give companies that are at risk of bankruptcy more time to pay these fines.
Both Lincoln plants also filed for Chapter 11 protections, but are expected to still remain operational through the bankruptcy, said Jeff Ingraham, chief operating officer of Cogentrix.
...
The storm penalties and the cash withheld weighed on the company’s already-strained finances, Justin Pugh, Lincoln’s chief restructuring officer, said in a sworn court statement.
“As a result of these factors, the debtors’ debt load is simply no longer workable,” he said.
The company owes lenders more than $150 million across a term loan and revolving credit facility, court papers show. It also has about $8 million in letters of credit outstanding.
“PJM has been working with our members over the last several months to minimize member defaults,” the grid operator said in a statement.
“The grid operator estimates that these fines may reach $2 billion after widespread power-plant failures during the December storm.”
Who gets the $2 Billion?
I'm unclear whether the plants did not produce their assigned loads, or whether they did not produce enough extra to deal with the storm's effects. If the latter, the fines are out of line, IMO.
The debt load for Lincoln look really small for a power plant. If they can’t service debt at those levels, they don’t look to be economically viable.
It would be interesting to know why they failed to provide power. What was it? equipment failure, lack of fuel, demand exceeding capability? What.
Power plants face millions in penalties after failure during Christmas Eve storm.. Maine was hit hardest by outages − approximately 300,000 Central Maine Power customers lost power during the storm ..
Underperforming generators are penalized at $3,500 per megawatt-hour (MWh) and the total penalties for the Christmas Eve event are estimated to be approximately $39 million,
The largest U.S. grid operator saw almost one-fourth of power plants serving 65 million people shut down during the Christmas weekend storm, pushing the region to the brink of blackouts.
The December storm was historic: Temperatures plunged 29 degrees Fahrenheit in a 12-hour period on Dec. 23, the most dramatic drop in a decade.. Plants unable to cope with the cold began tripping offline and more than 90% of them either alerted PJM with less than an hour’s notice - or no notice at all,
https://archive.vn/81BnL#selection-3035.0-3041.180
Do wind and solar power companies face the same fines?
I would guess not as they can’t be relied on to provide power when needed.
Usually, a generator bids into the market with what expects to be able to generate. The market operator, in this case PJM, picks the cheapest generation to meet the load. In real time, if the generator does not meet what they said they would, then they pay a penalty. There is a similar process for “extra” energy that might be needed if the load comes in higher, generators trip off line etc. if generators are called upon to provide the “extra” energy they said the had, they would again have to pay a penalty.
Fact Check: Did Biden Rescind Trump Order Prohibiting Chinese Influence on US Power Grid?
https://www.newsweek.com/fact-check-did-biden-rescind-trump-order-prohibiting-chinese-influence-us-power-grid-1570684
just how in the hell can a power company go broke?? especially now when they have card blanche to double and triple their rates in the name of climate change!!
Seems like a value priced grid for the Regime to acquire.
These are “Peeking” plants. They get paid to stand by and produce energy when the grid needs it. So they are paid all winter while producing little energy. A storm came and outed several regular coal plants because of line damage. And these guys were not able to fill in. So they are being fined. Which really means they are not being paid to do nothing any more.
Gas plants are very important in that they can be turned up or down very quickly. Unlike Coal or Nuclear which are always on. And solar and wind generators which can only sparsely provide power. Gas fills in and also handles the summer peeks.
In order that the grid does not produce extra electricity as it used to do before natural gas became so abundant, the gas plants which are built all over now, just provide backup and peek power. While Hydro, Nuclear, and Coal provide the rest.
If I were Lincoln power I would padlock the plants and walk away.
It would be fun if those bass turds in Chicago didn’t have anywhere to go to charge their EVs and cell phones. ROTFL.
Ditto
[[Who gets the $2 Billion?]]
Theives do
For the record: The power plant is in the tyrannical state of Illinois. There is no mention of possible state rules that prevent good practice.
It takes 24 to 48 hours to warm up generators and produce steam if plants are shut down. Happened in Laredo a few years back. Laredo decided to buy cheap electricity from Mexico so the Laredo Power Station was shut down. Then Mexico calls and says “hey, we’re shutting off your power”. Blackout in Laredo, and everybody blames LPS for it.
Doesn’t matter if it’s gas or coal. Takes time to generate steam.
Electric utilities should never been deregulated
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