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DG&T WINS MORE TIME IN ITS QUEST TO SAVE BONANZA POWER PLANT

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Under a new restructuring plan, creditors have given Deseret Generation & Transmission until Sept. 30 to show how it will save the $1.2 billion southeastern Utah Bonanza Power Plant from financial ruin.

DG&T General Manager Merrill Millett said it is the third time creditors have extended their so-called "standstill" agreement with the electric cooperative.The extension followed extensive negotiations between DG&T, the U.S. Rural Electrification Association, the trustee for Shell Leasing Corp. and the National Rural Utilities Cooperative Finance Corp.

The most recent extension had been scheduled to expire June 30.

Last year, DG&T ran into financial difficulty paying creditors for the Bonanza Power Plant, located southeast of Vernal near the Utah-Colorado state line.

"We paid everything up until a year ago," Millett said. "(That's) when we couldn't make our full obligations. During the past 12 months, we've paid everything we could and the rest is deferred."

He acknowledged DG&T is about $30 million behind in its payments.

Millett would not say what form the debt restructuring would take, saying negotiations are continuing.

However, he said that by the time details are wrapped up Sept. 30, DG&T will be in a position to take the restructuring plan to regulators, including the state Public Service Commission, for approval.

That and other regulatory approvals are expected by the end of the year and "we will be back on a regular payment schedule," Millett said.

The Bonanza Power Plant has the capacity to generate 400 megawatts of power, which it sells to cooperative members and to Los Angeles-area customers on an hour-by-hour, day-by-day spot-market basis.

The plant was originally built with two 400-megawatt units in mind to serve the potentially lucrative oil-shale industry and MX-missile activities in the West.

But before the plant's first generating unit was completed, the bottom had fallen out of oil shale, and MX plans were scrapped by Congress.

Power sales to cooperative members are not enough to fully support the plant, and spot-market sales to the West Coast don't bring in enough long-term revenue to sell off the balance of electricity generation.