Danskammer Energy, the owner of the Danskammer Generating Station natural gas plant in the Town of Newburgh, filed for Chapter 11 bankruptcy on June 10, citing deteriorating market conditions and a multimillion-dollar regulatory penalty it says was improperly imposed.

The plant, originally built in the 1950s by Central Hudson Gas & Electric, has changed hands multiple times over the decades. Central Hudson sold it to Dynegy in 2001, and the facility sustained heavy damage during Superstorm Sandy before Danskammer acquired it in 2018. It currently operates as a peaker plant, activating only during periods of peak power demand to supplement the broader grid supply.

Danskammer had already been winding down its Newburgh operations before the filing. The company submitted a deactivation notice to the New York Independent System Operator in December 2025, targeting a closing date of Jan. 14, 2027. NYISO subsequently determined the plant must remain operational through at least August 2026 to preserve grid reliability.

In a declaration filed as part of the bankruptcy proceedings, company President and CFO Thomas Gray said market changes in New York had made continued operation economically unviable. Gray cited revisions to NYISO’s capacity market rules that would reduce revenue from capacity sales — the plant’s primary income source — as well as the recent completion of the Champlain Hudson Power Express, a high-voltage transmission line delivering Canadian power to New York City, which he said would suppress energy prices broadly and further erode profitability.

An earlier proposal to expand the plant was blocked by the state Department of Environmental Conservation and never advanced.

Regulatory penalty loomed over filing
Gray’s declaration also detailed the circumstances surrounding a regulatory penalty that he indicated directly triggered the bankruptcy filing.

Gray said Danskammer was first contacted about potential capacity shortfalls in 2024 and that multiple inquiries followed. He said all but one allegation was ultimately dropped. In January 2026, NYISO informed the company it faced a $13 million penalty. Danskammer entered the dispute process, but Gray said that in June — while the dispute remained unresolved — NYISO began garnishing the company’s revenue to collect the penalty.

On June 9, Gray said, NYISO informed Danskammer that the full penalty balance, minus amounts already garnished, was due by 5 p.m. the following day. The company filed for bankruptcy on June 10.

The bankruptcy filing lists at least 200 creditors, though only five are owed more than $100,000. The largest listed debt is the NYISO regulatory penalty, now recorded at more than $11 million and marked as disputed. The next largest obligations are $764,000 in property taxes owed to Orange County and $204,000 owed to the Town of Newburgh.

NYISO Senior Vice President of External Affairs Kevin Lanahan said the agency could not comment on individual enforcement or bankruptcy matters. “Any compliance issues are addressed through the processes established under the NYISO Tariffs and applicable regulatory requirements,” Lanahan said.

A second-day hearing in the bankruptcy case is scheduled for Wednesday, July 22.