Dynegy Abandons Bid to Build New Coal Power Plants

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HOUSTON, Texas -- Dynegy will pull out of a joint venture that aimed to build several new coal-fired power plants due to credit and regulatory concerns.

The Houston-based power producer said Friday it will dissolve a joint venture with LS Power Associates that formed in 2006 with the intent of building a fleet of coal power plants in Arkansas, Georgia, Iowa, Michigan and Nevada. LS Power will receive $19 million in the deal while Dynegy will take a loss.

"The development landscape has changed significantly since we agreed to enter into the development joint venture with LS Power in the fall of 2006," Bruce A. Williamson, Dynegy's chairman, president and CEO, said in a statement Friday. "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 early December, the company said it was re-evaluating other "greenfield" options and two coal power plant projects now under construction. Instead the company said it will focus on expanding capacity at existing power plants.

Environmentalists hailed the move. "Dynegy, the company that was being called 'the next King Coal' for its extensive new power plant plans -- has all but given up pursuit of that throne," Todd Larsen, director of corporate responsibility for Green America, formerly Co-op America, said in a statement Monday. "Two-thousand and nine promises to be a landmark growth year for clean energy and with this development coal-fired power is one step closer to being mothballed once and for all."

Some of the power plants planned in the Dynegy-LS Power deal may still be built under LS Power's direction.

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