Depressed Market Takes Out Powerplant Builder and Owners
Duke Energy and Fluor Corp. dissolved their 14-year-old partnership, set up to capture the market's upturn. They built 43 plants and have six projects nearing completion. "But now the market has collapsed dramatically and it's not expected to recover for three to five years," says Jeff Faulk, president of Duke/Fluor Daniel, Charlotte.
Fluor, which sought the split, will integrate its power business into the parent firm. "Generally, there is overcapacity in most regions so the merchant work is not there," Faulk says, although there are some "isolated needs." Duke officials say the split was amicable. "This does not reflect any unhappiness between partners," says a Duke spokesman.
The dissolution will take about two years as the joint venture completes remaining work. No decision has been made on disposition of long-term maintenance contracts.
As for the owners, the Chapter 11 filings of Mirant Corp., Atlanta, and PG&E National Energy Group, San Francisco, within days of each other, also relate to market woes.
Mirant, a spin-off of Atlanta utility Southern Co., owns or controls more than 22,000 Mw of electric generating capacity. It voluntarily sought protection July 14 after failed attempts to restructure debt.
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"This put a strain on our liquidity and threatened the feasibility of our business plan," says Marce Fuller, president and CEO. "Add to this uncertainty about the timing of the recovery in power prices and a slow economic recovery in the U.S., and it became clear that a comprehensive financial reorganization was the best approach."
PG&E National Energy Group filed for bankruptcy protection July 8, saying it is in default on $3 billion in commitments. Subsidiaries are defaulting on another $2.5 billion. The firm has agreed in principle to transfer three powerplant construction jobs to respective lenders. They are: Athens Generating, Athens, N.Y.; Covert Generating, Covert, Mich.; and Harguahala Generating, Tonopah, Ariz.
