Is financing delaying a Va. coal-fired power plant?
The decision by a Henrico County-based electric cooperative to delay a controversial $6 billion coal-fired generating station in Surry County raises questions about whether such monsters can be financed.
Old Dominion Electric Cooperative had been on a roll, snagging permits and a rezoning ordinance to build its plant in the tiny village of Dendron, about 20 miles or so from Colonial Williamsburg.
On Sept. 8, Old Dominion announced it was "extending its timeline" for building the 1,500-megawatt plant because "slower than expected growth in the economy" means less demand for electricity. Not to fear, said a spokesman for the cooperative; electricity demand will revive, and the delay of up to two years doesn't change the cooperative's goal.
But Old Dominion's announcement seems a bit disingenuous. Could it be that it can't line up the financing?
Already, consultants have questioned the need for the project and how anxious lending institutions would be to shell out billions. Old Dominion spokesmen turned aside the concerns. Other worries remain about how much mercury the plant would emit into the Chesapeake Bay watershed and how it would affect global warming.
Unlike Dominion Virginia Power, which has two nuclear stations, a number of coal-fired and gas-fired plants and hydroelectric facilities, ODEC has never built an electric power station of this size by itself. Its members are a mix of small, rural co-ops from Delaware to Virginia. Its biggest and most urban member, the Northern Virginia Electric Cooperative, left Old Dominion in 2008 in a contract dispute.
One wonders why ODEC needs such a big slug of power. It could be that the cooperative needed to partner with another utility to get loans but failed to do so. There's no question that enterprises that easily pass the viability test have a hard time getting loans after the big banks like Merrill Lynch, Wachovia and Bank of America got greedy with dangerous but highly profitable subprime mortgage lending and derivatives.
Experienced plant builders and operators such as Dominion Virginia Power need either special financial deals through state legislation, as was the case with the much smaller Wise County coal-fired plant, or federal financial help. Plans to build another nuclear unit at North Anna won't fly without massive federal loan guarantees.
With obstacles like these, it's a wonder ODEC's plan has survived as long as it has.
| September 9, 2010; 4:12 PM ET
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