A spokesperson for Calpine, which runs the Westbrook Energy Center, said the corporation’s decision to file Chapter 11 bankruptcy last week will not affect operations in Westbrook.
Calpine filed for bankruptcy in a New York court on Dec. 20, and has received permission from the court to tap into $2 billion in financing to cover operating expenses, including employee wages and benefits.
The Chapter 11 bankruptcy filing means Calpine is seeking protection from its creditors and will continue to operate while it restructures the company under the supervision of the bankruptcy court.
Calpine Spokesman John Flumerfelt said the company does not plan to lay off any employees or close any plants in the immediate future. He said he was not exactly sure how long the restructuring would take, but he estimated it would be at least a year or two. “There’s no way to accurately predict it,” he said.
Flumerfelt said Westbrook residents should not feel any fallout from the bankruptcy filing. He said it would not have any effect on the Westbrook Energy Center’s employees or operations.
“It shouldn’t have any impact on electricity prices for consumers,” he said. “And it shouldn’t have any impact on our ability to pay property taxes.”
City Administrator Jerre Bryant said that Calpine does not owe the city any back taxes. “They’re current on everything,” he said. “My understanding is they have a heavy debt load and they’re going to restructure it and come out fine.”
Calpine, which opened the Westbrook Energy Center on Eisenhower Drive in 2001, is operating under a 20-year tax increment financing district agreement in which the city returns approximately one-half of Calpine’s property taxes. Even with that agreement, Calpine is one of the largest taxpayers in the city.
In 2004, according to Bryant, Calpine paid approximately $3.7 million in property taxes to the city on a total assessed value of approximately $168 million. The city returned approximately $1.8 million to the company and kept the remaining taxes, which came to about $2 million. “They still pay their full taxes, but there’s a return,” Bryant said. “Overall, they get about 50 percent of their taxes back.”
The Westbrook plant is one of Calpine’s three Maine power plants; the other two plants are in Jay and Rumford. Flumerfelt called the Westbrook plant “one of the most state-of-the-art plants in New England.”
The company operates about 100 power plants in the United States and Canada. Flumerfelt said it is possible that some of the plants could be sold as part of the restructuring, but it was premature to say which ones.
“We obviously are going to take a look at all of our assets,” Flumerfelt said. “But it’s too soon to tell which plants may be part of the restructuring and which will continue to be a part of Calpine.”
Since the plants are part of the regional power grid, Calpine has no plans to close any plants. “Our plan calls for power plants to remain available for operation to provide reliable supplies of electricity,” said Robert P. May, Calpine’s chief executive officer. “We intend to move through this restructuring process as quickly as possible to regain our financial health and to take the necessary steps to become a stronger and more competitive energy provider. With our new financing we will have additional financial flexibility and sufficient liquidity to meet our obligations going forward.”
May said the company had considered a number of options before filing for bankruptcy protection.
“After careful consideration of all available alternatives, Calpine’s Board of Directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations, and allow for a successful restructuring,” said May. “Calpine has a strong foundation in place, with high quality assets and a professional and experienced workforce. Chapter 11 protection will provide us with the ability to address our financial challenges without disrupting our ability to continue to provide reliable power supplies to the markets in which we operate.”
Calpine’s power plant on Eisenhower Drive in Westbrook. The company recently filed for Chapter 11 bankruptcy protection.Send questions/comments to the editors.
