Edison Mission Energy Files for Bankruptcy
Facing nearly $5 billion in debt, power company Edison Mission Energy of Edison International has reportedly filed for Chapter 11 bankruptcy protection in order to avoid default.
The power generating company is based in Santa Ana, California, but operates plants in several states. Unregulated, the company runs numerous coal, natural gas and renewable energy plants; but with a decline in power demand and an increase in production, energy and natural gas prices have fallen, and Edison Mission has struggled to keep afloat.
Reports say the power company is looking at a $97 million interest payment that it cannot make. The Chapter 11 filing, which is intended to allow a business to maintain operations while restructuring debts, will let Edison work out a repayment plan with creditors to save from going out of business.
Heightened government regulations around the coal industry have affected companies like Edison in recent years. High costs associated with meeting environmental standards and emission caps have caused large coal-producing corporations to downsize. Reports indicate that Edison chose to close Mid-west plants, including those in Illinois, in lieu of conforming to environmental regulations. Investing some money in cleaner standards, however, may have kept the plants open and potentially helped the company avoid bankruptcy.
Many energy companies are facing the same obstacles, so perhaps it’s a symptom of a bigger industry dilemma. One that can only be addressed through investment of more environmentally sound operations such as wind and solar energy - some of which Edison has investment. And it seems Edison is heading in this direction: staying positive through its bankruptcy, Reuters reports Edison Mission President Pedro Pizarro saying, "We believe this financial restructuring — coupled with the existing strength of our employees and assets — will position us to take advantage of new opportunities while preserving our focus on safe, reliable operations.”
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To read about Chapter 11 bankruptcy filings and what they mean for a company's future, go to the FreeAdvice Bankruptcy Law section.