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Is the Waterloo coal plant dead?

by: desmoinesdem

Sat Jan 03, 2009 at 20:30:23 PM CST


The Houston Chronicle reported on January 2:

Stingy credit markets and high regulatory hurdles have spurred Houston-based Dynegy to step back from new coal-fired power plant projects by ending a joint venture with LS Power Associates.

Dynegy will keep the right to expand its 27 existing coal, natural gas and oil-fired plants in 13 states, and it retains stakes in a pair of Texas and Arkansas coal projects.

But Dynegy will pay New York-based LS Power $19 million as part of the split and let it take full ownership of new projects under consideration in Arkansas, Georgia, Iowa, Michigan and Nevada.

Shares of Dynegy closed up 38 cents, or 19 percent, to $2.38 on Friday.

Dynegy Chairman and CEO Bruce Williamson said the power plant development landscape has changed since the company entered into the joint venture with LS in the fall of 2006. Funding new projects is much more difficult given the worldwide credit crunch and the possibility of new climate change legislation under the Obama administration.

"In light of these market circumstances, Dynegy has elected to focus development activities and investments around our own portfolio where we control the option to develop and can manage the costs being incurred more closely," Williamson said in a statement.

Here is the Waterloo-Cedar Falls Courier's take on the story:

The future of a proposed coal-fired power plant near Waterloo became a little cloudier Friday when Texas-based Dynegy Inc. announced that it and New Jersey-based LS Power Associates were dissolving their joint venture to develop that plant and others in several states.

The move transfers to LS Power full ownership and developmental rights associated with various "greenfield" projects in several states, including the 750-megawatt Elk Run Energy Station proposed for construction northeast of Waterloo.

[...]

Separation from Dynegy puts the Elk Run plans in doubt, said Don Shatzer, a member of Community Energy Solutions, which opposes the Elk Run Energy project.

"LS Power has no experience developing/operating coal plants and so is unlikely to proceed (without) a new partner," Shatzer said in an e-mail note.

Bruce Nilles, director of the Sierra Club's National Coal Campaign, shares Shatzer's opinion, according to The Houston Chronicle.

This sounds quite promising, although neither the Houston Chronicle nor the Waterloo-Cedar Falls Courier were able to get a comment from LS Power on whether it will continue to pursue this project.

Incidentally, the Waterloo plant is not needed to meet Iowa's energy demand; most of the electricity the plant would have generated would have gone out of state.

Many thanks to all those who have worked hard to prevent this plant from being built, notably the Waterloo-based grassroots organization Community Energy Solutions, the Sierra Club Iowa chapter, Plains Justice of Cedar Rapids, and the Iowa Environmental Council (with which I am involved).

Well-organized activists helped prevented LS Power from annexing some farmland for the coal-fired plant.

In March 2008, the Iowa Department of Natural Resources denied a construction permit for the project. Apparently the county zoning for that land was not in order, so the DNR concluded that LS Power "hadn't met our requirement to have the full ability to put the power plant on that property."

These small victories were not themselves enough to kill the project. However, the setbacks delayed the process until "external credit and regulatory factors that make development much more uncertain" prompted Dynegy to walk away.

Lesson for environmental activists: it is worth exercising every legal option to put up obstacles to a bad project.

Lesson for Alliant, which wants to build a new coal-fired power plant near Marshalltown: Dynegy's stock shot up 19 percent in one day after they pulled out of the joint venture with LS Power. The market favors abandoning new coal projects. Dropping your plans to build a power plant near Marshalltown would not only be good for public health and the environment, it could boost your stock price.

desmoinesdem :: Is the Waterloo coal plant dead?
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Stupid investment (4.00 / 1)
A merchant plant like the one in Waterloo is starting to look like a very, very risky investment.  I doubt that project will ever materialize.  I suspect even Alliant is seriously reconsidering their Marshalltown plant.  But as long as they can transfer the cost risk to ratepayers, they may very well go ahead.  

How about the Sierra Club? (4.00 / 1)
With all due respect, The Sierra Club has been working very hard to fight the proposed new coal plants in both Waterloo and Marshalltown and in many instances has taken the lead in this fight. I also am inlvolved with all the groups you credit including the Sierra Club, but to not mention them when giving credit is an obvious oversight. These fights are not over, The DNR should be releasing the draft air permit for Marshalltown very shortly and we must be gearing up for the fight. Stay tuned for further details.
Mike Carberry
Iowa City

yes, sorry for that oversight (0.00 / 0)
Sierra Club has been great on the coal issue and I should not have left them out. Will add them above.

I agree, the fight is not over yet. I'll take good news where I find it, though.

Invite other Iowa political junkies to join us at Bleeding Heartland.


[ Parent ]
Thanks and keep the great work in 2009 (0.00 / 0)


[ Parent ]
All Coal Bad? (0.00 / 0)
Do you think all coal is bad?  

How do we get abundant electricity without using coal?  I understand the needed to harness the carbon - but just being against all coal is dangerous.

Those of us who are struggling here in rural Iowa - we cannot afford to pay already higher electric bills.


every new coal-fired power plant (0.00 / 0)
is a 50-year investment in the wrong direction.

There is no such thing as "clean coal." We need to aggressively promote energy efficiency and renewable electricity generation. Then, eventually, we will be able to take old coal plants offline. That won't happen overnight, but we can start on the right path by not building any new coal-fired power plants, anywhere.

Harnessing the carbon is not currently technologically feasible and doesn't solve the problem of other pollutants such as mercury and fine particulate matter.

The best way to lower electric bills is to use less electricity. We can all do things as individuals to use less energy, and the government can also do things to promote lower energy use.

Invite other Iowa political junkies to join us at Bleeding Heartland.


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