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$75M Exposure into $220M Profit

Pittsfield Generating

Introduction

PurEnergy specializes in turning around struggling energy assets. Our expertise was recently showcased in our work with a power plant in Pittsfield, Western Massachusetts. The plant was facing a significant financial challenge, with a $75 million exposure threatening its viability. Through strategic negotiations, operational optimizations, and innovative solutions, we successfully converted this liability into a $220 million profit.

Key Actions and Outcomes

1. Negotiated Settlement and Buy-outs

  • Challenge: The plant was encumbered with several costly steam host agreements that were draining resources.
  • Solution: We successfully negotiated settlements and buy-outs for these agreements, freeing the plant from these financial burdens.
  • Outcome: The elimination of these agreements significantly improved the plant’s financial stability and operational flexibility.

2. Maximizing Value from Gas Supply and Transportation Agreements

  • Challenge: Existing gas supply and transportation agreements were not optimized, leading to unnecessary expenses.
  • Solution: Our team extracted maximum value from these agreements through strategic renegotiations.
  • Outcome: The optimized agreements reduced costs and improved the plant’s profitability.

3. Identifying Additional Capacity and Renewing Interconnect Agreement

  • Challenge: The plant was not utilizing its full capacity due to outdated interconnect agreements.
  • Solution: We identified an additional 5MW of capacity and renewed the interconnect agreement to realize this potential.
  • Outcome: This increased the plant’s production capacity and revenue potential.

4. Installing Fogging Overspray in Turbines

  • Challenge: The plant’s turbines were not operating at maximum efficiency.
  • Solution: We installed fogging overspray in one of the turbines, adding another 5MW of capacity.
  • Outcome: The upgrade resulted in increased power output and improved efficiency.

5. Reducing Station Service Cost to Wholesale Rate

  • Challenge: High station service costs were impacting the plant’s profitability.
  • Solution: By participating in an ISO program, we reduced the station service cost to the wholesale rate.
  • Outcome: This reduction in operational costs directly enhanced the plant’s bottom line.

6. Renegotiating Property Taxes

  • Challenge: High property taxes were a significant expense for the plant.
  • Solution: We renegotiated the property taxes, reducing the financial burden on the plant.
  • Outcome: Lower property taxes improved the plant’s financial health and operational sustainability.

7. Optimizing All Plant Operations

  • Challenge: Inefficiencies in plant operations were limiting profitability.
  • Solution: Our team conducted a comprehensive review and optimization of all plant operations.
  • Outcome: Streamlined operations led to reduced costs and increased efficiency, contributing to the overall profitability.

Conclusion

Through a series of strategic actions and operational improvements, PurEnergy transformed a $75 million exposure into a $220 million profit for the Pittsfield power plant. Our holistic approach to negotiation, capacity enhancement, cost reduction, and operational optimization ensured the plant’s turnaround and long-term profitability. This case study exemplifies PurEnergy’s commitment to delivering exceptional value and innovative solutions to our clients in the energy sector.