Alaska co-op to file new bankruptcy plan

A troubled Southwest Alaska electric cooperative must file an amended bankruptcy reorganization plan by March 16. That’s the upshot from a Dec. 1 hearing in U.S. Bankruptcy Court in Anchorage featuring “extensive testimony,” court records show.

Naknek Electric Association in 2010 filed for Chapter 11 protection from creditors due to problems with a geothermal energy project.

The small co-op, which serves Bristol Bay area villages, had filed a disclosure statement and reorganization plan on Sept. 15. The co-op proposed to, among other things, sell its drilling rig to help pay creditors.

But one major creditor, the National Rural Utilities Cooperative Finance Corp., objected to the disclosure statement and plan, calling them “fatally deficient.” A committee representing co-op members also objected, expressing concern for the welfare of the utility should it decide to press on with the geothermal project.

The co-op has drilled one exploratory geothermal well outside the village of King Salmon. A consultant said it showed some potential for generating power. But the well proved far more costly, and technically challenging, than expected.

In pursing geothermal, Naknek Electric was hoping to supplant expensive diesel fuel for generating electricity.

After the co-op files its amended disclosure statement and reorganization plan, a hearing will be held on April 27, court records say.

—Wesley Loy