May 21, 2009
Public Citizen Urges Dynegy Shareholders to Pull Out of Coal Projects
New Analysis Outlines Grave Financial Risk of Sandy Creek Coal Plan
AUSTIN – Public Citizen and other environmental groups urge Dynegy shareholders at their annual shareholder meeting this Friday in Houston to send a clear message to the board that they don’t want the Sandy Creek coal-fired power plant, located in Riesel, southeast of Waco, to be built. Dynegy has pulled out of many similar ventures to build new coal plants but has not yet cancelled its plans to invest in Sandy Creek, of which it is a 32 percent owner.
Activist groups are releasing a report today that should lead shareholders to question Dynegy’s financial ability to build new coal-fired power plants.
“Dynegy’s recent actions indicate that corporate executives know building new coal plants is an unnecessary financial risk, yet they keep developing the Sandy Creek plant. It just doesn’t make sense,” said Tom Smith, director of Public Citizen’s Texas office.
Dynegy recently dissolved its joint venture with LS Power to develop its “greenfield” projects – new coal-fired power facilities – in Arkansas, Georgia, Iowa, Michigan and Nevada. It also pulled out of the “Plum Point” coal plant in Arkansas, in which it was a 20 percent owner.
Public Citizen, Sierra Club, The SEED Coalition and Green America recently released an analysis conducted by Tom Sanzillo of TR Rose Associates on the financial risks that Dynegy’s continued investment in the Sandy Creek coal plant poses for the company. Although the most prominent risk is impending carbon legislation from the federal government, others include: the increasing costs of construction, decreasing electric rates in Texas, lower prices of natural gas, deteriorating credit ratings, and the credibility and financial stability of investment partners (including coops). Sanzillo sums it up perfectly: “The general question is: Why was the Sandy Creek plant any less of a financial risk than the six plants that were abandoned?”
“Dynegy was the largest developer of new coal-fired power plants in the country, so its decision this January to drop five planned coal plants signals a major step toward a clean energy future,” said Neil Carman, Clean Air Program director for the Lone Star Chapter of the Sierra Club. “The construction of another coal-fired power plant such as Sandy Creek would be a giant step backward toward dirty air and global warming. We encourage all utilities to abandon their dirty plans for coal plants and to invest instead in clean energy solutions such as efficiency and renewables.”
Sierra Club has filed a lawsuit against Dynegy challenging its failure to meet federal “maximum achievable control technology” standards for hazardous air pollutants – particularly toxic substances such as mercury and hydrochloric acid -– at its proposed Sandy Creek plant.
Sandy Creek is slated to be a 900-megawatt, pulverized coal plant that will import coal from the Powder River Basin in Wyoming. The Texas Commission on Environmental Quality granted Sandy Creek an air permit that will allow it to emit 3,585 tons of sulfur dioxide, 3,226 tons of nitrogen oxides, 1,490 tons of particulate matter and 150 pounds of highly toxic mercury every year, in addition to other pollutants and toxic heavy metals. It is currently under construction and expected to begin operations in 2012.
“Considering increasing construction costs and other financial risks of such projects, especially the expected increased cost of emissions due to pending federal cap-and-trade legislation, Dynegy should halt investment in Sandy Creek now and cut its losses,” Said Karen Hadden, executive director of the Sustainable Energy and Economic Development (SEED) Coalition.
This week, the House Energy and Commerce Committee is marking up the American Clean Energy and Security Act, a landmark piece of legislation that will limit greenhouse gas pollution and put a price on carbon dioxide emissions. Carbon legislation from the federal government will impact plants like this the hardest.
The Sandy Creek coal plant will be even more expensive than existing plants in the area, which use locally mined lignite coal for fuel, because it will require coal to be brought in from out of state. Considering fuel costs and transportation costs, the power provided by Sandy Creek may be more costly than typical coal plants.
Said Yochi Zakai, Climate Action campaign coordinator for Green America, “It is time for Dynegy to pull the plug on all carbon-intensive coal projects, which will see increased costs from any global warming regulation, and instead make a sound investment in America’s clean energy future.”
Four cooperatives in Georgia recently pulled out of a newly proposed plant, the Washington County Power Station. GreyStone Power (a metro Atlanta cooperative), Excelsior EMC, Jackson EMC and Diverse Power Inc. all divested themselves from the project, citing concerns about pending federal regulation. Another newly proposed coal plant in Montana, the Highwood Generating Plant, was scrapped by investors, largely due to the Yellowstone Valley Cooperative’s desire to abandon the project. This shows how all across the country, coops and other investors are waking up and realizing that investing in new coal plants is an unnecessary risk, Smith said.
The Brazos Electric Cooperative, another investor in the Sandy Creek plant, was unable to acquire a loan from the Rural Utility Services (RUS) for investing in the plant, further weakening the financial stability of the project. RUS has publicly stated that it has a moratorium on granting loans for new coal-fired power plants. Coops and partners are not having an easy time funding any of these new coal-fire power plants.