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Dow Jones
November 14, 2007: 05:44 PM EST
NEW YORK -(Dow Jones)- Citing uncertainty surrounding future greenhouse gas rules in the U.S., a consortium of power companies on Wednesday canceled plans to build an advanced coal-burning power plant near Orlando, Fla..
The announcement is the latest in a string of aborted attempts to build an advanced coal plant that uses so-called integrated gasification and combined cycle, or IGCC, technology, which transforms coal into a synthetic gas before running it through generation turbines. The process allows carbon dioxide, the main global warming gas, to be captured before it's released into the atmosphere.
Executive orders signed by Florida's Republican Gov. Charlie Crist earlier this year set statewide greenhouse gas caps for the power sector and require increased investments in energy efficiency and clean energy technology. Such regulations are usually put in place to create financial incentives for cleaner forms of power generation, such as IGCC. But in this case, the policies caused the utilities to cancel the project at the Stanton Energy Center.
"The orders created long-term uncertainty, and they created risk," said Mike Tyndall, spokesman for Southern Co. (SO), the giant utility holding company that was one of the partners in the project.
Other firms have recently canceled their IGCC projects. TECO Inc. (TE) recently said it would cancel a planned $2 billion IGCC plant in Florida, also due to uncertainty created by Crist's new executive orders. Southwestern Power Group recently canceled plans to build an IGCC plant in Bowie, Arizona, because of the project's high cost and uncertainty surrounding federal greenhouse gas regulations.
The total cost of the Stanton Energy Center project, which would have had a generating capacity of 285 megawatts, was estimated at $557 million, with the U.S. Department of Energy paying $235 million of that sum. The other partners were the engineering firm KBR Services (KBR) and the Orlando Utilities Commission.
Southern Co. said it expects to record a $50 million pretax impairment loss in the fourth quarter due to the termination of the project.
American Electric Power Co. (AEP), Duke Energy (DUK) and NRG Energy Inc. (NRG) are still moving forward with plans to build coal gasification plants.
-By Matthew Dalton, Dow Jones Newswires; 201-938-4604; matthew.dalton@ dowjones.com