CHICAGO (Reuters) - A natural gas-fired power plant in California that earlier this year warned it might need to shut down filed for bankruptcy protection on Tuesday, blaming “inhospitable” regulations and a shift toward renewable energy for power generation.
La Paloma Generating Co LLC [CMENGL.UL], a 1,200 megawatt combined cycle plant about 110 miles northwest of Los Angeles, filed for U.S. Chapter 11 bankruptcy in Delaware on Tuesday, citing $524 million of debt.
In its filing, La Paloma said market factors including slower-than-expected growth in electricity demand and a rise in renewable generation resources in California were “exacerbated by an inhospitable regulatory environment.”
La Paloma is owned by Rockland Capital LLC, one of several California plant owners that has asked the state for help in offsetting losses, arguing that it is in the state’s interest to support the natural gas plants because they provide stability and reliability to the power grid.
An unexpected combination of oversupply of natural gas and a boom in solar and other renewable energy has depressed power prices and threatened the viability of natural gas plants that sell power into California’s electricity market.
In its court filing, La Paloma said it had decided that Chapter 11 was in the best interests of the company and its creditors and stakeholders, following consultation with financial and legal advisers.
The company listed Bank of America Corp (BAC.N) and SunTrust Bank [STIHCB.UL] as its lenders. It has trade debt with a number of organizations including Alstom Power Inc, the West Kern Water District and Pacific Gas & Electric Co (PCG_pa.A).
Reporting by Tracy Rucinski; Eiting by Steve Orlofsky