End nears for coal plant
On Monday, the Houston, Texas based Dynegy Holdings Inc. announced the sale of their two local plants, Roseton, a 1200 mega watt plant and Danskammer, a 493 mega watt plant, in the town of Newburgh.
Dynegy has been involved in bankruptcy proceedings for the past year and recently accepted bids for both plants. Louis Dreyfus Highbridge Energy LLC [LDHE] was the high bidder for the Roseton plant at $19.5 million and ICS NY Holdings LLC successfully bid on the Danskammer plant for $3.5 million.
Under the terms of the Roseton deal, Highbridge Energy will be responsible for all real estate taxes that have accrued or are unpaid for 2012 and 2013. ICS NY Holdings will be responsible for all tax liabilities for the Danskammer plant starting in January 2013 and thereafter. It is unclear at this time what the actual breakdown is of who will pay the outstanding $17.2 million in school taxes to Marlborough and the approximate $7 million owed to the town of Newburgh.
It was announced that the Danskammer plant was rendered inoperable due to the recent hurricane and, after closing and all retirement notifications are completed, the plant will be demolished.
Katy Sullivan, director of public relations and internal
communications for Dynegy, said she was not surprised the plants sold at these figures, “given the challenges in the energy market in New York as a result of natural gas prices and the impending compliance costs for Danskammer to remain in service.” In the past year it was identified that Danskammer would have to meet new 2014 EPA regulations, an upgrade estimated to cost $300 million.
Sullivan said that during the employee strike, which began in early November, Roseton has been operated by management of the plant. She said she believes the new owner LDHE “will operate under the terms of the existing collective bargaining agreement, as modified, and extend offers to Roseton employees.” Sullivan called that agreement “Dynegy’s last, best final offer,” however; the International Brotherhood of Electrical Workers [IBEW] Local 320 had rejected that offer, which triggered the strike. Sullivan said she expects that approximately 70 employees at the Danskammer plant may no longer have a job.
Sullivan said Dynegy has requested a hearing to approve the sale transaction on December 21. She said if the bankruptcy court approves the sales, they would also need approvals from the NYS Public Service Commission and the Federal Energy Regulatory Commission.
“The timing of those processes is a bit out of our control but because of the nature of the auction I would think they would go forward, as expected,” she said, adding, “I would hate to speculate on what an agency would say.”
Sullivan said it may take up to 90 days for this next legal phase to be completed.
In summary, Sullivan said “This is certainly not the future we had hoped for our Danskammer employees. It just reflects the reality of the energy market and the environmental regulations. The process we conducted was a market based auction process and this is the price that the market said these facilities should be valued at.”
Sullivan called criticism that the bankruptcy proceeding was just a manipulative way for the company to protect their assets, “unfounded.”
“We did receive multiple bidders and worked with them to reach the highest value for these facilities,” she said. “We received bids lower than the one that was accepted and the result is a reflection of what the market is willing to pay.”
Marlboro School Superintendent Ray Castellani said he was disheartened upon hearing the news of the sale of the plants.
“I’m disappointed that corporate America and a multi-billion dollar shell game that Dynegy has played since purchasing the plants is going to have such a negative effect on the Marlboro School District, the county of Orange and the town of Newburgh,” he said. “It’s a ploy by Dynegy to purchase the facility for $1.2 billion eleven years ago and now sell it for $23 million; it’s a travesty and that’s what’s wrong with the country today.”
Castellani said it is his impression that the school district, will be made whole on the $17.2 million in taxes owed the district but he is unsure how that will be divided up between the two new purchasers.
Castellani made note that the sale price and the assessment price “are very different.”
“It is my hope that we can now sit at the table with the county and the town and with Mr. Dreyfus or his company and work out some type of structure where we set an assessment and a structure that doesn’t completely hit the Marlboro Central School District over the head with a hammer, but that we can work out something that makes sense for all parties involved,” he said.
Castellani said no matter what the final assessment figure is or what the taxable assessment will be “its going to have a severely devastating impact on what we currently run on. The models that we currently are building on are going to have to be put into effect. We’re going to have to dismantle programs; we’re going to have to look to restructure contracts and we’re going to have to raise taxes at the same time. Those are all perfect storms upon us.”
There are two more open public hearings in December pertaining to Dynegy issues: on Wednesday, December 12 and Wednesday December 19, both starting at 6:30 at the Marlboro High School, 50 Cross Rd. in Marlboro.
Paul Ellis-Graham, president of the Hudson Valley Area Labor Federation [HVALF] issued a press release on the sale of the two plants.
“I am dismayed to learn that the Hudson Valley is losing the Danskammer plant and the electricity, tax revenue and good middle class jobs that it provided,” he wrote. “In addition, it seems that the new buyer [of Roseton] Louis Dreyfus Highbridge Energy will continue with Dynegy and the status quo policy of relentlessly demanding concessions from its workers. Dynegy has proven to be a reckless out-of-state speculator and has left a path of economic destruction in its wake.”
Ellis-Graham concluded his comments, saying he is still hopeful that the new owner will “bargain fairly and honor its tax obligations to this community. The livelihood of our neighbors and the education of our children in our community should not be sacrificed to corporate greed.”
By Mark Reynolds