A debt restructuring plan for Deseret Generation and Transmission Cooperative, expected to be finalized Jan. 9, has been approved by the Utah Public Service Commission.
Deseret, an association of six eastern Utah rural electric companies, has had severe financial difficulties for the past two years and has been working with two federal agencies to restructure its debt.The heart of the problem is a $1 billion power plant near Vernal. The 400-megawatt Bonanza plant was intended to serve a growing energy market and the MX missile system. The plant was only half finished when the bottom fell out of the energy market and the MX missile system was canceled.
While Deseret has managed to sell most of the power generated at the plant, it has been unable to secure the firm contracts needed to meet the plant's repayment obligations. For the past two years Deseret has operated under a standstill arrangement with creditors while it negotiated debt restructuring.
Under the arrangement to be completed in January, debt obligations will be divided into two categories. The "A" category includes about 81 percent of the existing debt and all obligations in this category must be repaid by the year 2025.
The 19 percent in the "B" category will be paid on a sporadic basis when Deseret revenues surpass projections.