Chevron Sues Mission EnergyMonday, December 31, 2012
A bankrupt Santa Ana-based unit of Edison International has been sued by Chevron Corp. affiliates.
The suit claims that the Edison unit unfairly rejected a buyout offer and is now forcing them to take on unwanted partners in their joint ventures.
San Ramon-based Chevron’s affiliates are partners in two cogeneration joint ventures with Edison Mission Energy, which filed for bankruptcy protection this month. The cogeneration ventures—known as Kern River and Sycamore—are next to Chevron oil fields near Bakersfield; they generate electricity and steam used to treat crude oil from adjacent fields.
The Chevron affiliates had offered to buy out Edison Mission Energy’s share of the cogeneration ventures last June for $82.5 million, which Chevron claims is above book value. But Edison Mission Energy rejected that offer as insufficient, according to court filings cited in a Bloomberg News online report.
Edison Mission Energy filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Chicago on Dec. 17. The unregulated generation unit of Rosemead-based Edison International listed $3.7 billion in unsecured debts in its bankruptcy filing. The debt apparently stemmed in part from recent losses in business for several of its Midwest coal plants, which have seen utility customers switch to cheaper natural gas.
Edison Mission Energy now plans to cede its share of the cogeneration ventures to its creditors as part of the bankruptcy reorganization plan, according to documents filed as part of the Chevron affiliates’ lawsuit and cited by the Bloomberg News story.
“The prospect of an involuntary partnership, much less with uncertain or unqualified partners, is contrary to the law and abhorrent to plaintiffs,” the Chevron affiliates said in their filing, as cited by Bloomberg News.
Spokespersons for Edison International and Edison Mission Energy did not immediately return queries seeking comment on the filing.
This report is based on an earlier posting by Howard Fine of the Los Angeles Business Journal, a sister publication of the Orange County Business Journal