Three subsidiaries of Reliant Energy, which together are known as Channelview LP and operate an 830-megawatt gas-fired power plant in the Houston area, have filed for bankruptcy protection. In a regulatory filing revealing the petition for Chapter 11 relief, Reliant said it is exploring how to deal with its interest in the three wholly owned subsidiaries. The company said it may sell its equity interests or refine some or all of Channelview’s debt.
Houston-based Reliant noted in its filing that the bankruptcy will not affect the power company’s financial standing as Channelview’s debt is non-recourse and thus will not have an impact on Reliant’s assets nor cause a default on any of its other debt.
Fitch Ratings agreed, noting that the bankruptcy filing will not affect Reliant’s ratings. Reliant’s is currently rated a B, and Fitch says its rating outlook is stable. There was approximately $342 million in non-recourse, project-level debt outstanding with Channelview, according to Fitch Ratings.
Reliant has put a net investment of $70 million into Channelview, which began operations six years ago. It was commissioned by the Reliant Energy Wholesale Group and Equistar Chemicals to produce up to 800 megawatts of electricity and steam and provide surplus electricity for Texas residents. Reliant operates about 16,000 megawatts of generating capacity in nine states, according to its Website.