PORTLAND, Maine — The new owner of a power plant that formerly served a shuttered Verso Paper mill in Bucksport wants out of two contracts signed when the mill was operating, saying they have hampered the new “reduced scope” of the business.
Those different demands prompted Bucksport Generation LLC’s Chapter 11 bankruptcy filing Tuesday, according to an affidavit filed by the project manager overseeing the power plant’s restructuring.
AIM Development LLC in January bought the former Verso Paper mill and the adjacent 303-megawatt power plant. It operates each as separate subsidiaries: Bucksport Generation LLC and Bucksport Mill LLC.
The mill entity, which did not file for bankruptcy protection, also has a minority stake in the power generation assets.
AIM wants to give its subsidiary Bucksport Generation a $10 million line of credit to continue operating the power plant through the bankruptcy, retaining its 18 employees, according to court filings.
Kyle Nenninger, a partner in Energy Advisory Partners and employee of the power plant, wrote to the court Wednesday to explain what led to the bankruptcy filing, detailing how the business had changed as the power generator no longer provided energy to the mill.
“With the closure of the mill, the need for the energy plant to constantly provide steam and electricity to the mill ended,” Nenninger wrote.
The power plant had two contracts — one with Bangor Gas for gas supply and another with General Electric International, Inc. for maintenance on its primary 185-megawatt gas turbine unit (G4) — that Nenninger wrote don’t suit the new “reduced scope” of the power plant’s operations.
“The energy plant’s change in operations … reduces the amount of natural gas the energy plant requires to operate and completely changes the necessary timing and amount of maintenance G4 needs,” Nenninger wrote.
Nenninger wrote that Bucksport Generation tried to get out of the annual maintenance contract with GE and to renegotiate the $1.1 million fixed-rate contract with Bangor Gas, which was set to expire in January 2016.
Under Verso’s ownership, the power generator had argued with utilities regulators that Bangor Gas had recovered its costs for building the line and that the mill and power generator should pay a lower service rate, estimated by the company to be lower than $200,000 and by the Office of the Public Advocate to be between $300,000 and $350,000 per year.
Nenninger wrote that Bucksport Generation in May terminated its contract with GE, arguing the industrial giant did not abide by the service contract, for which the company claims it is owed about $12.6 million.
GE disputed that contract termination and claims it is owed about $15.1 million.
Bucksport Generation has filed motions to keep possession of the power generation assets through the bankruptcy, during which Nenninger wrote it seeks to reject the Bangor Gas and GE contracts.