RUMFORD – Calpine Corp. on Monday filed in U.S. Bankruptcy Court in New York a motion to reject the lease agreement with the owner of the local gas-fired power plant as part of the procedures involved in its suit for bankruptcy protection.
John Flumerfelt, spokesman for the California-based energy producing behemoth, said Tuesday that the Rumford power plant cannot start up again until guidance is given by the plant’s owner, which is a subsidiary of Philip Morris Capital Corp., based in Stamford, Conn.
“There are no layoffs yet,” he said.
The local plant employs about 17 people. The plant, located atop Industrial Park Hill off Route 108, has the capacity to produce 265 megawatts of electricity annually. It and a similar plant in Tiverton, R.I., are the first two plants to be affected by the bankruptcy protection procedure, he said.
He said Calpine has 10 days to learn whether a contract can be worked out for Calpine to continue operating the two plants.
The lease by Calpine with Philip Morris was to be until 2036.
Flumerfelt said under bankruptcy protection the court allows Calpine to reject leases or contracts wherever it is losing money. The lease rejection becomes automatic unless objections are raised.
He said the plant hasn’t been running much lately because of the warm weather, not because of the bankruptcy filing in December. He also said that the local plant has been losing money because of the high lease fee it pays to Philip Morris.
He said three options are available for the plant: Philip Morris could hire Calpine to operate it; Philip Morris could bring in another company to operate it; or, Philip Morris could sell the plant for some other energy company to operate.
“It is a very modern plant. I can’t imagine that it wouldn’t sell,” Flumerfelt said.
Chances are, he said, many, if not all of the employees would retain their jobs.
The chosen option will likely not be made until next week, he said.
Calpine, which operates 92 geothermal or gas-fired power plants around the country, Canada and Mexico, filed for bankruptcy protection in December. Flumerfelt said that step was needed largely because the corporation had expanded too fast.
The $165 million plant in Rumford was built in the late 1990s by Energy Management Inc. of Massachusetts. The plant was then purchased by Calpine, which sold it to a subsidiary of Philip Morris in 2000 or 2001.
Whether or how any of Calpine’s other plants will be affected has not yet been determined. In Maine, Calpine also operates a plant in Westbrook, and is part owner of the Androscoggin Energy Center in Jay. Nationwide, the corporation employs about 3,000 people.
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