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Friday, January 2, 2009

Dynegy pulls out of Early County coal plant project

Dynegy, a Texas-based energy company that proposed what would've been Georgia's first new coal power plant in 20 years, announced today that it has pulled out of the project.

From a company press release:

Dynegy Inc. (NYSE:DYN) today announced that it has entered into an agreement with LS Power Associates, L.P. to dissolve the two companies' development joint venture. Under the terms of the dissolution, Dynegy will acquire exclusive rights, ownership and developmental control of all repowering or expansion opportunities related to its existing portfolio of operating assets. LS Power will acquire full ownership and developmental rights associated with various "greenfield" projects under consideration in Arkansas, Georgia, Iowa, Michigan and Nevada, as well as other power generation and transmission development projects not related to Dynegy's existing operating portfolio of assets.

The reason?

"The development landscape has changed significantly since we agreed to enter into the development joint venture with LS Power in the fall of 2006," said Bruce A. Williamson, Chairman, President and Chief Executive Officer of Dynegy Inc. "Today, the development of new generation is increasingly marked by barriers to entry including external credit and regulatory factors that make development much more uncertain. 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."

Or, in English: These plants are damn hard to finance and risky at a time when federal carbon legislation seems increasingly likely.

The proposed Early County plant — called Plant Longleaf — generated national headlines this summer when a Fulton County Superior Court judge ruled that the state Environmental Protection Division needed to take carbon emissions into account during the permitting process. That ruling — the first of its kind in the United States — was appealed by Dynegy. A company spokesman told CL that LS Power, the energy company's partner in the Early County project, is now in control of Plant Longleaf's development. An LS Power spokesperson was not available for comment. We'll update when we hear word.

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