As another indication that the energy industry’s growing number of distressed assets aren’t easy to move, PG&E Corp.’s bankrupt National Energy Group (NEG) announced Wednesday that it again is postponing the shift of six power plants to groups of lenders led by French and U.S. banks.

As industry experts keep pointing out, many legal, operating, financial and regulatory problems have to be worked through in the distribution of major new power plants that suffering through defaults by their developers, such as NEG, which is delinquent in paying more than $2 billion in debt related to its merchant energy operations.

NEG was slated on Tuesday to turn over four plants to a lenders’ group, headed by Societe Generale, of Paris, France, and two other plants to a lending group headed by New York City-based Citibank as a way of technically avoiding default on the hundreds of millions of dollars in loans used to build and begin operating the plants.

Last month, Dick Heenan, an executive specializing in distressed power assets for the Kansas-based Black & Veatch’s global engineering company, said that although no assets had actually gone back to the banks yet, the overall situation in the industry was “far worse than anything I have seen in my (40-year) working lifetime in the energy industry.”

Heading up a new “generation portfolio management” unit at B&V to carve out a niche helping banks and other non-energy industry owners manage their assets, Heenan said there was no question that the situation has a direct impact on the industry’s financial health. “If you don’t believe that, look at the health of the firms with the assets, look at the bankruptcies and the decrease in credit-ratings and stock prices. It will probably continue to have an impact for some period of time.”

NEG is an example, with the firm having agreed to turn over six plants representing more than 5,000 MW of capacity: Millennium in Massachusetts (360 MW); Athens in New York (1,080 MW); Covert in Michigan (1,170 MW); Harquahala in Arizona (1,092 MW); La Paloma in California (1,121 MW) and Lake Road in Connecticut (840 MW). Originally, the first of the plants were to be turned over to banks last March.

Three of the plants — Athens, Covert and Harquahala — are in their pre-start-up phase and are scheduled to be in operation by the end of the year. Others are already operational.

Jeff Bodington, the principal in Bodington & Co., an energy asset sales consulting firm in San Francisco, told an industry conference last week that nothing is moving among merchant plants in the distressed sales market; the only activity is for qualifying facility (QF)-type plants with contracted revenues, and renewable plants. “A lot of the biggest buyers in 2000 were the biggest sellers in 2002 — AES, Allegheny Energy, Calpine, Mirant and NRG.”

Among the deals done in 2002, just two were for merchant projects, Bodington said. “The other 60 all had contracted revenues, primarily old QF projects.

“Some estimates are that there are 150,000 MW worth of merchant plants for sale, while only two deals have been done; so there seems to be a huge gap between the bid-ask prices.”

B&V’s Heenan said his new unit at the engineering firm is geared to “actually putting yourself in the position of managing these assets for nontraditional power plant owners. Most of the distressed assets will involve taking over the management of the assets where the owners are banks, funds and nontraditional owners.”

A firm like B&V is banking on marketing its deep construction management and operational capabilities, and Heenan said they can also help identify ways to maximize the value of those assets — either in operations or as part of a sale.

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