Edison Mission Energy, the power generation arm of Edison International, voluntarily filed for Chapter 11 bankruptcy protection Monday. The Santa Ana, Calif.-based holding company reported $5.13 billion in assets and $5.1 billion in debt in its filing with the US Bankruptcy Court. Midwest Generation, a Chicago-based subsidiary, was also included in the filing.
The company's financial woes reflect the obstacles coal faces in a energy market increasingly dominated by cheap natural gas and a shift towards renewables.
"Like other independent power generators, EME has been challenged by depressed energy and capacity prices and high fuel costs affecting its coal-fired facilities, combined with pending debt maturities and the need to retrofit its coal-fired facilities to comply with environmental regulations," read the company's press release.
In September, Midwest Generation, which operates a fleet of coal-fired plants in Illinois, closed two plants on Chicago's southwest side under pressure from environmental groups.
In the first nine months of 2012, MidwestGen had a $160 million operating loss, compared with $91 million in operating income during the same period last year, Crain's Chicago Business reported in November.
Meanwhile, Edison Mission also faces the end of a 30-day grace period Monday for a $97 million interest payment on bonds due in November, which the company has yet to pay.
Pedro Pizarro, president of Edison Mission, pledged to emerge from restructuring as a recapitalized company separate from Edison International.
“This is an important first step in the process to reduce our debt, enhance our liquidity profile and position EME for continued operation and future success while preserving our ability to generate power safely and reliably at our electric facilities across the country,” he said in a press release Monday. “Throughout this process, business operations will continue in the normal course, and we will continue to support our customers, suppliers and employees.”