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FirstEnergy asks bankruptcy court to terminate coal contract for Bruce Mansfield

Coal News - Published on Mon, 02 Jul 2018

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Ellwood City Ledger reported that FirstEnergy Solutions wants to terminate an expensive contract it has with a coal supplier, and the company in court documents cited a January fire at Bruce Mansfield as one of the reasons why it should be allowed to end the deal. The contract in question is between FirstEnergy and McElroy Coal Co, which is owned by Murray Energy. The companies signed the deal in 2006 and it stipulates that McElroy would supply FirstEnergy with 6.5 million tons of coal annually through 2028.

But according to court documents filed as part of FirstEnergy Solutions’ ongoing bankruptcy case, “the volume of coal required to operate the Bruce Mansfield plant has decreased significantly” since a fire on Jan. 10 that knocked two units offline at the plant.

As a result of the fire and the reduced capabilities at the plant, FirstEnergy in the court filing said it expects to need only 2.5 million tons of coal for the rest of this year, and only 3.6 million tons of coal for all of 2019.

Based on current market prices for coal, FirstEnergy argued that the bankruptcy court should release the company from its contract with McElroy. Doing so would save the company USD 20 million this year and USD 14.5 million next year, FirstEnergy argued.

The court filing came only after representatives from both companies were unable to reach a compromise that was “satisfactory to both parties.” In the same filing, FirstEnergy also said the court’s rejection of the contract is “appropriate under the circumstances,” referencing the company’s ongoing bankruptcy issues.

The company has asked the court to terminate the contract effective on the same date as the court filing, which was 27 June.

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Posted By : Joykumar Irom on Mon, 02 Jul 2018
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