Deadline set for NEA bankruptcy plan

A small Alaska electric cooperative pursing a troublesome geothermal drilling program has until Sept. 15 to file a reorganization plan, U.S. Bankruptcy Judge Donald MacDonald of Anchorage ruled June 8.

The judge issued the order following a hearing with lenders and creditors of Naknek Electric Association, and after considering a detailed status report on the utility’s geothermal project.

Cost overruns and other issues related to the project forced the co-op in September 2010 to file for Chapter 11 protection from creditors.

The utility continues, however, to try to establish a geothermal energy source, which it sees as a way to escape the high costs of importing diesel to remote Southwest Alaska to run power generators. Naknek Electric serves villages around salmon-rich Bristol Bay.

GeothermEx, a subsidiary of oilfield services giant Schlumberger, assessed Naknek Electric’s first well and concluded the utility has a project that “can make economic sense.”

In papers filed with the bankruptcy court, the co-op said it was pursuing a $50 million loan guaranty from the U.S. Department of Agriculture’s Rural Utilities Service. The loan would be used to pay off debt and develop two more wells and a geothermal power plant.

—Wesley Loy