CHICAGO-Developers of a tires-to-energy incinerator project that was killed by the repeal of Illinois' Retail Rate Law made a second appearance in court last week-this time to file for bankruptcy. Chewton Glen Energy Inc. of Englewood, Colo., filed for Chapter 11 bankruptcy protection March 26 for its tire-burning facility in Ford Heights, Ill., which carries $99.8 million in liabilities-mostly bond debt, the firm said. The completed plant will be close indefinitely.
Chewton Glen had filed two separate lawsuits March 14-one for Ford Heights; another for its Fulton, Ill., plant, in the early stages of construction-against the Illinois Commerce Commission and the local utility, Commonwealth Edison, which would have bought energy from both facilities.
Chewton Glen officials threatened lawsuits prior to the repeal, saying both projects would fold without the subsidies.
The Chapter 11 filing is intended to protect the Ford Heights facility from investors while the original lawsuit proceeds, according to Sandy Fruhman, administrator of financial communications for Houston Industries Inc.
Houston Industries, via its Houston Industries Energy Inc. subsidiary, was a participant in the projects with Chewton Glen and had loaned them about $28 million.
Anticipating the projects' default, Houston Industries took an after-tax charge of $18.4 million against its 1995 earnings.
In another event related to the rate repeal, Foster Wheeler Corp., developer of a waste-to-energy plant in Robbins, Ill., also filed suit March 26 against Illinois Gov. Jim Edgar, the state and the Illinois Commerce Commission.
Denial of the retail rates would result in $300 million to $500 million in lost revenues over 20 years, according to the company, which said it raised $385 million in bond issues in 1994 to finance the plant.
The lawsuit contends that the retroactive nature of the repeal is unconstitutional and invalid because substantial investment already has been made.
Repeal of the Retail Rate Law stripped waste-to-energy incinerator projects of retail rates they would have been paid for energy by public utility companies.