Report: Exelon’s Texas merchant subsidiary looks to address debt
Exelon’s merchant power subsidiary may be the latest indicator of systemic problems in organized power markets. Reuters reports that the company has hired advisers to help it address debt, following a trend of other dim signs for independent power producers.
EGTP owns five power plants in Texas, according to Moody’s: two combined-cycle gas plants, two gas-fired steam boilers, and a small simple-cycle plant. Cheap gas has been pushing coal off the grid in some markets, and Texas’ abundant wind power now appears to be having the same effect on gas.
While the state’s energy demand has continued to climb, Texas now gets more energy from wind farms than nuclear plants. And as wind is dispatched first, it has driven down energy prices in recent years. Alongside declining natural gas and restrictions on coal, revenues for independent producers have dropped precipitously.
Moody’s warned that EGTP’s credit rating “will be downgraded further … should the ERCOT market deteriorate more than expected or should the assets have operating problems resulting in additional calls on capital.”
