Energy provider AES Eastern Energy LP, which owns 13 power facilities, has filed for bankruptcy. Company officials hope to sell off two coal-fired plants during the Chapter 11 bankruptcy, including AES Somerset in New York's Niagara County.

Published reports say the AES energy group owes creditors $1 billion and owns assets of $100 to $500 million. The stagnant economy was listed in the filing as the main cause of the electricity provider's financial decline. A Niagara County politician claims the business was also hard-hit by expenses related to compliance with federal coal-burning standards.

The county supervisor-elect said AES invested heavily in the Somerset facility to satisfy federal emissions regulations. The plant is Niagara County's largest taxpayer, a situation that may not change if the plant is sold to certificate holders.

A sale of the Somerset and Cuyahoga AES facilities is pending. Bond holders have agreed in principle to take over ownership of the plants, possibly at the end of the year's first quarter. AES has owned the Somerset power plant for 13 years.

The president of AES claimed in the bankruptcy court filing that debtors were "out of options." A year-long attempt by debtors to market and sell off assets was unsuccessful. The debtors concluded that a restructuring sale of the plants without a bankruptcy court's help was impossible.

The Niagara County official stated that AES filed the bankruptcy petition voluntarily and was not pressured by creditors to make the move. With more hope than certainty, the supervisor-elect stated that he expected the bankruptcy and possible plant sale to have little effect on daily Somerset operations.

The Chapter 11 is the reason bankruptcy protection exists. It allows the company time to shed its bad debts while reorganizing in a way that's more efficient. It also allows area citizens to keep reliably receiving the electricity they are paying for.

Source: Niagara Gazette, "AES files for bankruptcy; sale possible," Bill Wolcott, Dec. 31, 2011