Alliant Corp. last week shelved plans to construct its proposed $1.8 billion coal-biomass hybrid power plant in Marshalltown, Iowa, while LS Power “indefinitely postponed” construction of the 1,590-MW White Pine Energy Station near Ely, Nev. Both companies cited a combination of factors—including the economic climate, and environmental, legislative, and regulatory uncertainties—as the reason for their decisions.
The plants are the latest in a string of coal-fired projects abandoned for similar reasons.
LS Power had two months earlier dropped plans to build a $1.3 billion, 750-MW coal-fired plant in Waterloo, Iowa, after dissolving a joint venture with Houston-based Dynegy. On March 5, the company said that instead of proceeding with construction of the White Pine Energy Station, it would focus efforts on completing the Southwest Intertie Project (SWIP), a planned 500-mile high-voltage electric transmission line project.
The 500-kV line would extend from southern Idaho through eastern Nevada to the Las Vegas area. LS Power, through its affiliate Great Basin Transmission LLC, has been advancing the SWIP since acquiring the development rights in 2005. The company said that permitting and design of the project is “now nearly complete” and Great Basin could begin construction as early as mid-2009.
The 630-MW Sutherland Generating Station Unit 4 proposed by Alliant subsidiary Interstate Power and Lighting Co. (IPL) for Marshalltown, Iowa, would have used 90% coal and 10% switchgrass, corn stalks, and similar agricultural products. Plans also called for an additional 19-MW equivalent of steam cogeneration for use by nearby industries.
IPL had proposed to own 350 MW of the facility’s output. The project’s other partners were Central Iowa Power Cooperative, Corn Belt Power Cooperative, and North Iowa Municipal Electric Cooperative Association.
In May 2008, the Iowa Utilities Board granted the project preliminary approval. But earlier this February, it established in a decision concerning ratemaking principles a return on equity of 10.1% and a cost cap of $2,816/kWh—much lower than IPL’s requested return on equity of 12.55% and a cost cap of $3,483/kWh. IPL President Tom Aller said that these conditions presented a number of challenges in the current financial climate and that the company was “disappointed” that the decision “did not take that reality into account.”
Last year, Wisconsin rejected a plan by another Alliant subsidiary to build a coal-fired power plant along the Mississippi River at Cassville, saying that the $1.3 billion plant was too expensive and would create too much air pollution.
“When combined with the Public Service Commission of Wisconsin’s denial of Wisconsin Power and Light Company (WPL)’s proposed expansion of Nelson Dewey last December, the decision not to move forward with Sutherland Generating Station Unit 4 removes the option of adding new coal-based capacity to meet our customers’ future energy needs,” said Bill Harvey, chairman, president, and CEO of Alliant Energy in statement last week. “While we believe the plants we proposed were the best energy options for our customers, we understand that the current financial, political, and environmental landscape made their permitting and construction a significant challenge.”
Alliant said that both IPL and WPL will continue to focus on three key areas where they already have a strong track record of achievement: utility-owned wind energy development; energy efficiency programs, including advanced metering infrastructure investments; and reducing environmental emissions.
“However, the obligation to serve our customers with safe, reliable and environmentally-responsible electric service at a reasonable cost remains. Over the next six to twelve months, we plan to evaluate various energy supply options to meet IPL’s and WPL’s customers’ future energy needs,” Harvey said.
Sources: Alliant Energy, LS Power, Iowa Utilities Board