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Bill Gates' Energy Co. Files For Bankruptcy

Tyler Durden's picture


Submitted by Charles Kennedy via OilPrice.com,

Bill Gates’ Texas energy company has filed for bankruptcy protection as the depressed power market results in untenable financial losses.

The company, Optim Energy (EnergyCo LLC), owned by a Gates investment fund, filed Chapter 11 Bankruptcy papers on Wednesday for its three power plants in eastern Texas, citing their inability to counter growing losses in the current market.

"The current depressed economic environment of the electric power industry – particularly with respect to coal-fired plants – and the debtors' liquidity constraints have resulted in continuing losses that, simply put, have left the debtors without alternatives," media quoted Optim CEO Nick Rahn as saying in court documents.

According to the documents, Optim has $713 million outstanding under a credit agreement with Wells Fargo, while its total estimated assets are worth less than $500 million. For 2013, Optim recorded revenues of $236 million.

According to the Wall Street Journal, Optim said its executives had failed to obtain consent to borrow more money under a credit facility.

Optim is reportedly planning to sell its coal-fired Twin Oaks plant during the bankruptcy, while the other two plants natural-gas fired.

Optim was founded in 2007, and electricity prices began to fall shortly afterwards, hindering the company’s ability to repay borrowed money.

Reductions in natural gas prices have hit power companies hard over the past several years, and Optim is the third to file for bankruptcy recently, following Dynegy Inc and Edison Mission Energy.

Optim notes in its court filings that the price of electricity in the company’s market area has fallen roughly 40% in the past five years, from around $63.24 per megawatt hour in 2008 to around $38 per megawatt hour by December 2013.

Optim’s owner, ECJV Holdings LLC, is owned by Cascade Investment LLC, an investment vehicle for Gates, the Microsoft Corp. co-founder and the world’s richest person, according to Bloomberg.

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Fri, 02/14/2014 - 14:02 | 4436903 Croesus
Croesus's picture

Too bad Bill Gates isn't filing for bankruptcy...

Fri, 02/14/2014 - 14:02 | 4436917 VD
VD's picture

so much for peak oil lulz...

Fri, 02/14/2014 - 14:08 | 4436937 Oh regional Indian
Oh regional Indian's picture

Don't Cascades usually flow downwards?

The guy is a freak. 

Energy winter cometh. Tottering house of cards.


Fri, 02/14/2014 - 14:14 | 4436952 NotApplicable
NotApplicable's picture

WAT??? Electric rates have never decreased in my entire life.

Fri, 02/14/2014 - 14:15 | 4436961 Oh regional Indian
Oh regional Indian's picture

Watthour you saying????!?!?!?!???

Fri, 02/14/2014 - 14:17 | 4436980 kliguy38
kliguy38's picture

vaccinate his azz and put him on GMO ...that'll finish that putz off

Fri, 02/14/2014 - 14:59 | 4437135 gmrpeabody
gmrpeabody's picture

"Reductions in natural gas prices have hit power companies hard over the past several years"

What am I missing here...?

Falling jet-fuel prices are causing airlines to cancel flights and layoff workers...<sarc>

Fri, 02/14/2014 - 15:05 | 4437171 firstdivision
firstdivision's picture

Only the spot price has hit rediculous levels.  FWDs are saying NG not going to go very high.  These d-bags probably locked in massive long-term contracts in the summer of '08.

Fri, 02/14/2014 - 15:30 | 4437277 Flakmeister
Flakmeister's picture

If you are burning coal, low NG prices allowing your competitors to squeeze your margins certainly does...

Fri, 02/14/2014 - 17:38 | 4437717 Lumberjack
Lumberjack's picture

Wind, which is intermittent,is the problem here being allowed special preferential access to the grid. The gas plants need to be kept 'hot' and burn fuel inefficiently (and increase costs) so they can ramp up and generate electricity (within 15 minutes) when wind goes offline (same with solar). They cannot be cold started in that 15 minute window. Same goes for coal/oil/biomass.



Fri, 02/14/2014 - 18:38 | 4437895 americanspirit
americanspirit's picture

You nailed it Lumberjack - 100+.  except for biomass. A properly designed biomass-to-biogas generating plant will never go offline. However, it will also never be profitable - unless the designers are able to understand that generating power is only one leg of the revenue stool for AD. And unless they are using something as biomass that is FAR higher yield than what the industry currently uses.


Fri, 02/14/2014 - 18:56 | 4437955 Flakmeister
Flakmeister's picture

That flies in the face of every thing I have heard about NG fired plants, but I may be short on some details...

Sounds like your beef with wind and solar. I'll give you a hint, either we figure out how to make wind and solar work or it is game over...And even if we do get them to work, it may still be game over...

Fri, 02/14/2014 - 19:41 | 4438074 Lumberjack
Lumberjack's picture

The push for more wind requires about an equal amount of firm up/back up power.

Fri, 02/14/2014 - 14:20 | 4437000 krispkritter
krispkritter's picture

 'losses in the current market' Shocking. Rofl...

Fri, 02/14/2014 - 14:25 | 4437008 max2205
max2205's picture

Cntl alt del

Fri, 02/14/2014 - 15:04 | 4437181 Okienomics
Okienomics's picture

"WAT??? Electric rates have never decreased in my entire life."


If that's the case, then you live in a state with a soviet-style monopoly utility regime.  This is a topic with which Okie has more than a little experience.  When natgas prices collapsed in 2008, states with competitive ('deregulated') electricity markets saw prices fall hard.  This is one of the reasons TX is doing well, because so much of the state's power is natgas fueled and the electricity market is fiercely competitive.  But it isn't just TX.  We've helped industrials negotiate power deals across the U.S., and have seen substantial savings for our clients in IL, OH (big savings in OH), MA, MD, NJ, NY, PA.  But we may be turning a corner.  Natgas storage numbers are extremely low and there is much upward pressure on prices.  I've said before, will say again, low natgas prices have been one of the few non-FRB sources of strength for the U.S. economy.  I don't think most people appreciate the impact except in their personal fuel bills, but industrials, petrochemicals, commercial real estate, and utilities are major natgas buyers, and those costs flow through every bit of the economy.  If we see one more cold snap in March and natgas futures hold over $5/Dth, the Fed will get it's inflation.

Fri, 02/14/2014 - 15:13 | 4437216 NotApplicable
NotApplicable's picture

Deregulated??? Fuck, service areas are set "in law" by the state legislature, and that's not even getting into the PSC.

Won't anyone think of the poor bureaucrats?


Fri, 02/14/2014 - 15:16 | 4437238 firstdivision
firstdivision's picture

There's a difference between the wires side and supply side of the electricity markets.  The name on the top of your bill isn't your electricty supplier all the time. 

Fri, 02/14/2014 - 15:18 | 4437246 Okienomics
Okienomics's picture

That's why I put the word ('dergulated') in quotations in my post.  That said, I really don't want multiple sets of competing power lines criscrossing the landscape.  There is something to be said for the concept of "natural monopolies."  Vertically integrated electric utilities is arguably a case in point, but since the Okie makes a good living helping negotiate power deals in competitive areas, he won't argue the point, much.

Fri, 02/14/2014 - 16:00 | 4437375 LMAOLORI
LMAOLORI's picture


Everyone should think about this when they see the common man filing for bankruptcy - people like Gates the WORLD'S RICHEST MAN who also avoids taxes by hiding his wealth in the Gates Foundation could easily afford to pay these bills but files bankruptcy.

Fri, 02/14/2014 - 14:18 | 4436969 Thorny Xi
Thorny Xi's picture

Maroon ... oil has nothing to do with electric power generation, other than in mining and transport of coal and to some degree, natgas.  In that regard, it raises the costs of coal. The wholesale electricity market's been nuked by the hype of shale gas, which slashed those prices, making coal plants untenable - for now.  Since natgas has already more than doubled from recent artificial lows, and shale gas depletion rates are over 60% falloff year one, 30% year two and 10% thereafter, coal plants will become viable again.  Right after Uncle Warren repo's these.

Fri, 02/14/2014 - 15:14 | 4437218 Okienomics
Okienomics's picture

Bill's friend Warren is also in a good position to end up with a piece of the soon-bankrupt "Energy Futures Hodling Company" which was at the time the largest leveraged buyout in history in teh $50B range.  EFH (also known as TXU) will file and Buffet is a creditor.  He also owns generation via MidAmerican Energy. 

Fri, 02/14/2014 - 14:19 | 4436975 Stoploss
Stoploss's picture

Here is how they arrive at the recovery...


Fri, 02/14/2014 - 14:17 | 4436984 Harbanger
Harbanger's picture

They are coal plants, Obama promised to bankrupt the coal industry, what's the surprise.

Fri, 02/14/2014 - 14:46 | 4437087 bluskyes
bluskyes's picture

What's the surprise? How about that he's keeping his promise.

Fri, 02/14/2014 - 15:05 | 4437192 gmrpeabody
gmrpeabody's picture

Well played, sir!

Fri, 02/14/2014 - 15:09 | 4437190 firstdivision
firstdivision's picture

The surprise will be when he reverses that statement due to massive capacity shortfalls with generators shutting down their coal fired plants.  PJM found out first hand last month what relying on NG generation can do.

Dominion is out of the retail energy business, Exelon announced that expected earnings this year to be way down.

Fri, 02/14/2014 - 14:05 | 4436920 viahj
viahj's picture

"The current depressed economic environment of the electric power industry – particularly with respect to coal-fired plants – and the debtors' liquidity constraints have resulted in continuing losses that, simply put, have left the debtors without alternatives,"

he should have bought a railroad instead like Uncle Warren

Fri, 02/14/2014 - 17:31 | 4437698 LMAOLORI
LMAOLORI's picture



Scumbag Warren just bought into the pipeline business (I call him a scumbag not for this pipeline purchase but his other CRONY CRAP!)



Other oil deals

It also will be expanding its stake in ExxonMobil, the world's biggest oil company, by $3.5 billion. 

Buffett put money into the Alberta oilsands earlier this year, investing $500 million in a stake in Calgary’s Suncor Energy Inc.

He has expressed a lot of faith in energy stocks, paying $5.6 billion to buy utility NV Energy within the past year and investing in exploration company National Oilwell Varco,

He also has publicly endorsed the Keystone XL pipeline, which would carry oil from Alberta to refineries in the southern U.S.

Fri, 02/14/2014 - 14:11 | 4436942 whatsinaname
whatsinaname's picture

Did he invest in Weight Watchers and Crumbs bake shop too ? Weight Watchers "shedding some serious weight" today and Crumbs bake shop has been "crumbling like cookies" lately. Maybe the debt burdens are too high ?

Fri, 02/14/2014 - 14:15 | 4436962 James_Cole
James_Cole's picture

You ought to write for bloomberg. 

Fri, 02/14/2014 - 14:17 | 4436981 Matt
Matt's picture

Maybe compounding interest during economic contraction is bad.

Fri, 02/14/2014 - 14:02 | 4436904 Croesus
Croesus's picture


Fri, 02/14/2014 - 14:19 | 4436976 Levadiakos
Levadiakos's picture

It should be illegal to wear bangs past the age of 50. I mean really! Why not just wear denim pants paired with a denim shirt and denim jacket! Top it off with some knd of denim hat whay don't cha?

Fri, 02/14/2014 - 14:27 | 4437019 HamRove
HamRove's picture

Thas what they call a Canadian Tuxedo. ;)

Fri, 02/14/2014 - 14:02 | 4436908 Son of Loki
Son of Loki's picture


Fri, 02/14/2014 - 14:02 | 4436916 JLee2027
JLee2027's picture

If Gates owns it, he should personally cover the debts.

Unless he wants to shaft his Wells Fargo bro.

Fri, 02/14/2014 - 14:05 | 4436921 Cult of Criminality
Cult of Criminality's picture

Hey Gates

We here you use vaccines to murder.Is this true?

Fri, 02/14/2014 - 14:07 | 4436923 Bunga Bunga
Bunga Bunga's picture

Can't they upgrade their coal plants to Vista? BTW 95% of all ATMs run on XP.

Fri, 02/14/2014 - 14:17 | 4436959 NotApplicable
NotApplicable's picture

I know of Pentium II, Win98 PCs running critical systems in our local power plant

Fri, 02/14/2014 - 14:06 | 4436924 MsCreant
MsCreant's picture

Step right up, step right up, get your coal fired power plant. Do I hear a bid of $1? $1? $1? Anyone?

Fri, 02/14/2014 - 14:06 | 4436929 Bokkenrijder
Bokkenrijder's picture


Fri, 02/14/2014 - 14:11 | 4436930 ThroxxOfVron
ThroxxOfVron's picture

Gates skates and Warren's Fargo either takes a write-off or dumps the defaulted debt onto the FED at face value.

These fuckers are employing the same tired old bullshit: if they make a profit on an investment they keep it for themselves and if they make a loss they pass it off to the taxpayers or get bailed out.

Fri, 02/14/2014 - 14:11 | 4436936 RacerX
RacerX's picture

he must be long[er] windmills and alternative power. One way to squash the competition--buy it out, suck it dry, then push it overboard.

But that's just my paranoia. I'm sure stuff like this doesn't happen for real.

Fri, 02/14/2014 - 14:15 | 4436964 Emergency Ward
Emergency Ward's picture

You are probably onto something there.  The taxpayer subsidies for the windmills would more than offset any losses suffered by the coal plants.  Bill Gates is not stupid.  Too bad he turned out to be a crony-corporatist spy-state prick.

Fri, 02/14/2014 - 15:15 | 4437224 NotApplicable
NotApplicable's picture

Kinda like how Tesla is nothing but a carbon-credit company.

Oh, and BillG is definitely stupid. He left that idiot Balmer with the keys to his castle.



Fri, 02/14/2014 - 14:09 | 4436940 Unknown Poster
Unknown Poster's picture

Didn't Biden promise to bankrupt coal users?

Fri, 02/14/2014 - 14:11 | 4436951 Fight-Club
Fight-Club's picture

And watch out for more American cities to file for bankruptcy soon:


Fri, 02/14/2014 - 14:15 | 4436954 Spungo
Spungo's picture

Blue flame of death?

Fri, 02/14/2014 - 14:18 | 4436967 Chief_Illiniwek
Chief_Illiniwek's picture

Has the fad to blame the weather for anything undesirable passed already?

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