May, 21 2009, 01:41pm EDT

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.
To download the press release and view Tom Sanzillo's analysis, please visit www.coalblock.org. For more information on the Sandy Creek Power Plant, visit www.stopthecoalplant.org.
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.
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