Dynegy Bankruptcy and Superstorm Sandy Too Much for Danskammer Power Station

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Researched by Industrial Info Resources (Sugar Land, Texas)--Residents and businesses on the East Coast are still struggling to recover from the effects of Superstorm Sandy. In New York, some are going to find that even harder with the loss of 60 jobs at the Danskammer Generating Station. Energy service provider Dynegy Incorporated (NYSE:DYN) (Houston, Texas) recently completed the auction of two of its plants, Roseton and Danskammer, to two separate companies. While Roseton will continue to operate, Danskammer has been offline since Sandy hit the Eastern seaboard on November 29, 2012, and it is now going to be demolished.

According to a statement by Dynegy: "Danskammer will be sold to ICS for $3.5 million in cash and ICS' assumption of certain liabilities. Danskammer, which was rendered inoperable as a result of Superstorm Sandy, will be retired upon completing the appropriate regulatory processes. Following the closing of the sale and retirement notification process, ICS will demolish any remaining structures and remediate the site. Dynegy is in the process of communicating with employees whose jobs will be affected by the facility sales."

ICS NY Holdings LLC will be removing the four tangentially-fired Alstom/CE Boilers and four GE Steam Turbines, as well as both electro-motive diesel combustion engines, and will demolish the plant. The sale price of $3.5 million for Danskammer and $19.5 million for Roseton does not include the assumption of liabilities that include up to $24 million in back taxes for both plants; $7.1 million of that total is for Danskammer. Including all liabilities, the sale of both plants amounts to $68 million, a far cry from their $890 million tax assessment value in 2012. Sale documents available after the deal was struck say that the Town of Newburgh and the new plant owners must agree to set a new tax assessment, but that this could not be less than 50% ($447.5 million) of the 2012 value.

Judge Cecelia Morris approved the deal in U.S. Bankruptcy Court, but as part of the ruling set a condition that closings for both Roseton and Danskammer must occur within six months of the sale. Newburgh Supervisor Wayne Booth said that the town will probably reach an agreement on a new assessment of the plants sometime before the closing, but how much that assessment will be worth remains open to question.

The plants represent almost 1,700 megawatts of generation capacity, 500 of which was produced by Danskammer. Dynegy has spent $37.3 million on professional fees, including attorneys and financial advisors, since filing for bankruptcy in August 2012.

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