Montville's AES Thames coal plant files for bankruptcy

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Montville - A coal-fired power plant that filed for bankruptcy protection Tuesday shut down its operations a week earlier, cutting off a side-business selling steam to its own landlord.

Calling the shutdown temporary, AES Thames LLC filed for Chapter 11 in the state of Delaware and intends to honor its obligations to 43 employees while restructuring, according to a bankruptcy court affidavit filed by its president Brian Chatlosh.

AES Thames is a top-10 taxpayer in Montville and a subsidiary of the Arlington, Va.-based AES Corp.

The power plant generates 181 megawatts of electricity, Chatlosh told the court. A megawatt serves about 1,000 average homes.

AES Thames notified Connecticut Light & Power Co. in advance of the Jan. 26 shutdown, which CL&P says will not impact existing electric supplies or service to customers. The company generates and sells electricity to CL&P. ISO-New England said the remaining 32,600 megawatts of power across the regional grid should be enough to meet demand.

AES Thames also supplies unused steam, a byproduct of electric generation, to Smurfit-Stone Container Corporation, which owns the property and runs a recycled paperboard mill.

In explaining its descent into bankruptcy, Chatlosh cites the increased cost of energy production and an "uneconomic and onerous" contract with Smurfit-Stone's predecessor. According to documents filed in New London Superior Court by Smurfit-Stone, AES Thames notified Smurfit-Stone on Jan. 24 of the closing because of "unexpected market conditions" and "regulatory uncertainties."

Smurfit-Stone sought a temporary restraining order and injunction, which were to be heard by the court on Wednesday, but AES Thames filed for bankruptcy Tuesday.

Reached Thursday, Smurfit-Stone acknowledged its dispute but said it is working toward a resolution.

"We are currently operating the mill on natural gas, which is a very costly alternative," said Lisa A. Esneault, director of communications and public affairs for Smurfit-Stone. "We are working to quickly resolve the situation as cost-effectively as possible and with the least impact on employees, customers and the community."

Montville Mayor Joe Jasckiewicz, who learned of the problems last week, said he's talking to both companies. AES Thames pays about $1.2 million in taxes, he noted.

"It's unfortunate," said Jaskiewicz. "I was caught off guard. I'm hoping there's something we can do to help them and work it out."

Public relations spokespeople for AES Thames did not return calls seeking comment. The person who answered the phone for their bankruptcy attorney, Landis Rath & Cobb LLP of Wilmington, Del., said lawyers there don't comment on pending cases.

The parent company, AES Corp., operates 132 power generation facilities worldwide, including such diverse fuel sources as coal, diesel, hydropower, gas, oil and biomass.

p.daddona@th6eday.com

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