Colstrip pension issues surface in bankruptcy court | News


Questions remain over Colstrip employee pension funds as Colstrip operator and co-owner Talen Montana goes bankrupt.

Talen Montana, in a separate lawsuit from its May 9 bankruptcy filing, claims it still owes hundreds of millions of dollars to Talen Colstrip’s predecessor, PPL, and lacks sufficient funds to cover the obligations. retirement and environmental sanitation.

The lawsuit reiterates claims first made in a 2018 class action lawsuit filed by Talen Montana Pension Plan and Talen Energy Marketing in Rosebud County.

The pension fund is not fully funded, Talen confirmed on Wednesday, although he expects it to be by 2025.

Talen claims that PPL wrongfully took $733 million of the net proceeds from the sale of its Montana hydroelectric dams before it sold its coal-powered properties to Talen Montana in 2015. PPL sold its Montana hydroelectric dams to NorthWestern Energy in 2014.

After the dams were sold, only Colstrip Power Station and the former JE Corette Power Station in Billings remained, according to Talen. Initially, these assets were held by PPL’s ​​Montana subsidiary, PPL Montana, which was spun off to become Talen Montana.

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“By extracting this value from PPL Montana and ignoring PPL Montana’s substantial liabilities, Defendants have rendered PPL Montana insolvent and unable to fund its substantial obligations – both for environmental remediation, as well as obligations to other creditors such as its employees’ and former employees’ retirement plan,” Talen told the court.

“After the sale, PPL Montana was left with only its coal-fired assets, which are expected to generate negative cash flows for the foreseeable future and which are burdened with significant environmental and other liabilities.”

PPL filed a countersuit against Talen, in 2018, in which the Pennsylvania-based energy company alleged that it was Talen’s parent company, Riverstone Holdings, that siphoned off capital from Talen upstream, putting the operator Colstrip in a bad financial situation.

The two 2018 lawsuits, Talen and PPL, were consolidated on May 10 in U.S. Bankruptcy Court for the Southern District of Texas. Neither lawsuit had progressed toward resolution in the four years since it was filed.

This week, Colstrip employees, past and present, received letters from Talen Energy CEO Alex Hernandez outlining how the bankruptcy of Talen Energy Supply and its subsidiaries would affect pensions. Lee Montana Newspapers obtained a copy of the letter.

Hernandez notes that prior to the bankruptcy, Talen continued to make required payments into the pension fund and would continue to make contributions. Court records show Talen is seeking approval to spend up to $14.7 million on an interim basis to pay co-ownership bonds during the bankruptcy. The share of Talen Montana’s pensions and payroll is included in these costs. The spending cap was set at $22.8 million.

If the pension is underfunded or terminated, the United States Pension Benefit Guaranty Corporation would take over. PBGC is a federal government agency that bails out struggling private pension plans.

More than 80% of retirees from single-employer plans taken over by the government receive full benefits, according to PBGC. On average, the reduction in benefits for retirees who are not fully compensated is 28%.

Talen told Lee Montana Newspapers Wednesday that his goal is to have the pension plan fully funded in three years.

“Talen Montana’s pension plan is very well funded compared to other similar pension plans and is on track to be fully funded by the end of 2025,” the company said in an email. communications director Taryn Williams. “The wages and benefits motion approved by the judge presiding in the Talen Energy Supply Chapter 11 bankruptcy case allows Talen Montana to continue making pension contributions, which we intend to To do.”

Hernandez also tells employees that during bankruptcy, lump sum payments are not an option for former non-union employees. But Williams said the provision does not apply to non-union Colstrip workers. The Colstrip pension plan was never designed for lump sum payments.

Talen is scheduled to testify Thursday about his bankruptcy before the Montana Legislature’s Interim Energy and Telecommunications Committee. Debra L. Raggio, senior vice president of regulatory and external affairs at Talen Energy, is scheduled to make a presentation.

Talen Montana is one of 71 debtor subsidiaries of Talen Energy Supply included in the bankruptcy, which involves a Chapter 11 restructuring in which a core of creditors agreed to exchange $1.4 billion in debt for shares of the society. The company’s total debt is $4.5 billion.

In its bankruptcy filing, Talen Energy Supply says it has pledged to eliminate the use of coal at all of its wholly-owned facilities, which does not include Colstrip, and has begun the process of eliminating .

Bankruptcy is ongoing, while Colstrip faces several other challenges. The exciter that serves the generator in Unit 3 of the power plant needs repairs, which will most likely have to be done in North Carolina.

Two of the owners of the plant confirm that the necessary repairs for unit 3 have impacted the performance of Colstrip for several weeks. The cost of repairs is expected to be significant, which is not insignificant given that the six owners of the powerhouse have been at odds over Colstrip’s maintenance costs for several years, with most owners wanting to spend less than Talen, in as the power plant operator, did ask.

Talen successfully lobbied the 2021 Montana Legislature to empower the state attorney general to dictate maintenance to Colstrip and fine non-compliant homeowners $100,000 a day. But the new law sparked a lawsuit that ensnared the six power plant owners and the state of Montana.

Talen Montana, in a separate lawsuit from its May 9 bankruptcy filing, claims it still owes hundreds of millions of dollars to Talen Colstrip’s predecessor, PPL, and lacks sufficient funds to cover the obligations. retirement and environmental sanitation.


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