AES Thames, CL&P reach key settlement of electricity purchase dispute

By Caroline Salls

Pittsburgh, Sept. 15 - AES Thames, LLC requested court approval of a settlement with Connecticut Light and Power Co. (CL&P), according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

AES said the settlement resolves disputes with CL&P involving an electricity purchase agreement, which is one of the two major hurdles standing in its way of emerging from bankruptcy.

Specifically, CL&P filed more than $300 million in claims as part of a "wide-ranging and complex" lawsuit.

CL&P also sought relief from the automatic stay to have some issues heard by a Connecticut regulatory commission.

AES Thames objected to the claims and stay relief motion and filed a complaint asking the court to rule that the company validly terminated the electricity purchase agreement, that CL&P's claims are invalid and that CL&P violated the automatic stay by improperly setting off amounts owed to AES Thames without court approval.

Settlement terms

The company said the settlement allows for its assets to be sold free and clear of CL&P's liens and for proceeds to be distributed to creditors under a Chapter 11 plan via an agreed-upon waterfall provision.

Specifically, under the settlement, CL&P's claim will be reduced to $35.7 million, unsecured creditors will share in the net proceeds of the sale of the company's assets with CL&P, rather than having virtually all of the proceeds flow to CL&P because of its enormous secured claim, and AES Thames will receive an immediate $1 million payment to satisfy amounts owed by CL&P.

According to the motion, CL&P and the company's other estate stakeholders will each receive 50% of net proceeds up to $10 million; CL&P will receive 75% of net proceeds between $10 million and $20 million, with the other stakeholders receiving 25%; CL&P will receive 90% of net proceeds between $20 million and $50 million, with other stakeholders receiving 10%; and CL&P will receive 10% of net proceeds over $50 million, with the other stakeholders receiving 90%.

A hearing is scheduled for Sept. 22.

Uncasville, Conn.-based AES Thames is a wholly owned subsidiary of AES Corp. unit AES Connecticut Management, Inc. and operates a coal-fired power plant in Montville, Conn. The company filed for bankruptcy on Feb. 1, 2011. The Chapter 11 case number is 11-10334.

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