After seven years with a financial cloud over its head, the Eastern Maine Electric Co-operative is emerging from bankruptcy.
And James Dean, general manager of the Calais-based utility, is all smiles.
It all started in 1987, when EMEC defaulted on its payments to the Massachusetts Municipal Wholesale Electric Co., a joint owner of the Seabrook nuclear power plant in New Hampshire.
When it defaulted, the utility sought protection from the U.S. Bankruptcy Court so service to its 11,000 Down East electric consumers wouldn’t be threatened.
For a long time, Dean says, the road out of bankruptcy seemed distant. But, finally, forces converged to enable Dean to craft a reorganization plan acceptable to the court.
During the last seven years, EMEC has paid off some debts, making its debt load less burdensome. And when interest rates fell, refinancing long-term debt became easier.
Second, there has been a glut of power and EMEC was able to sign a favorable contract with New Brunswick Power that guarantees favorably priced power for the next 10 years, the period during which the Seabrook debt will be repaid.
And when Massachusetts Municipal Wholesale Electric Co. agreed to accept $15 million as total payment for EMEC’s Seabrook obligation, a plan was in place. According to Dean, the Seabrook debt might have amounted to $18 million, or possibly as much as $30 million. The $15 million figure was achieved through compromise.
Dean now knows that he can pay off the Seabrook debt during the next 10 years while he continues to provide competitively priced power. EMEC customers will pay 12.27 cents per kilowatt-hour, which is about the same as rates charged by the rest of the electric utilities in Maine.
EMEC will continue to get power from Maine Yankee and from Maine Public Service in Presque Isle, but the major part of its supply, or about 15 megawatts, will come from New Brunswick under terms of the long-term contract.
In retrospect, Dean says the bankruptcy proceeding was long and worrisome, but was the proper thing to do.
“The problem at the time (1987) was absolutely unmanageable,” Dean said. “Had we not filed bankruptcy, the rate impact would have been absolutely unthinkable. Competitive rates and reliable service for the consumer drove our search for options. Today the problem is manageable — difficult, but manageable.”