Foes of coal see hope in cancellation of Iowa plant

By Phoebe Sweet

Monday, Jan. 12, 2009 | 2 a.m.

LS Power, a developer proposing a large, coal-fired power plant near Ely, last week canceled plans for a similar plant in Iowa, and opponents of both plants are hailing the decision as yet another sign that coal is in trouble.

The announcement Tuesday that LS would not build a plant in Waterloo, Iowa, came only days after development partner Dynegy dissolved its partnership with LS. The companies had plans to develop coal plants in Arkansas, Georgia and Michigan, as well as Iowa and Nevada.

Dynegy’s stock rose 19 percent Jan. 2 on the news it was shedding coal power development, and the controversy it brings, as part of its business plan. Environmentalists say Wall Street doesn’t think coal is a good bet for investors, let alone ratepayers. Both groups must contend with uncertainty over the future price of coal-fired power, which is affected by escalating coal prices, high construction costs and potential carbon legislation.

But Mark Milburn, director of project development for LS, said his company is “moving forward full speed ahead” with plans to build a 1,590-megawatt plant in Nevada.

“Dissolving the (joint venture) between LS Power and Dynegy (means) that LS Power now has 100 percent control and funding responsibility for development of the White Pine Energy Station and the ... transmission line,” Milburn said. Dynegy’s withdrawal means LS can continue to “do what we do best — develop fundamentally sound projects in attractive markets.”

Western Resource Advocates’ Charles Benjamin said the permitting process for the Nevada plant is too far along for the company to give up on it. Benjamin said most of the money the company planned to spend on permitting for the White Pine Energy Station has been spent.

“But the fact that a big company like Dynegy is pulling back on ... coal plants ... tells you something about the future of coal,” he said.

Environmental groups in Nevada fear the plant, and two others proposed here, would mar pristine air in Zion and Great Basin national parks and contribute to climate change with its greenhouse gas emissions. Many health care professionals also believe pollution from the plants would harm people with asthma and other breathing conditions.

Benjamin and other opponents emphasized the Nevada project is far from a done deal.

Although the plant recently completed a lengthy environmental review and was granted final approval by the Bureau of Land Management, it is awaiting an air permit. That permit, which would regulate emissions from the plant, is unlikely to be released before Jan. 20, when Barack Obama becomes president and brings with him a new Environmental Protection Agency administrator and Interior secretary and possibly a host of new environmental regulations.

Although Nevada’s Environmental Protection Division, which carries out EPA regulations on the local level, at one point planned to release the final air permit for the plant by the end of 2008, division spokesman Dante Pistone said Wednesday it was unclear when the permit would be issued. The division is still reviewing an EPA appeals board’s rejection in November of a similar air permit for a Utah coal plant because it didn’t limit greenhouse gas emissions. Outgoing EPA Administrator Stephen Johnson subsequently issued a contradictory memo saying air permits need not limit greenhouse gases, which sparked a new lawsuit by environmental groups.

The controversy over the Utah plant’s emissions stalled White Pine Energy Station’s permit, and is a prime example of how a coal plant can be far from breaking ground even when its developers have a fistful of final permits.

Even if the White Pine plant gets its air permit and the Nevada Public Utilities Commission decides the plant would not harm the environment more than it would benefit the state with its electricity, LS will face legal challenges from environmental groups.

“Environmental appeals are expected,” Milburn said.

Members of a coalition of environmental groups opposing LS’s plans say they will appeal the BLM decision, and will likely file a separate appeal if the Nevada Environmental Protection Division grants an air permit.

The first challenge will likely be filed by Jan. 21 before the BLM’s Interior Board of Land Appeals, which hears administrative challenges to environmental review and right of way the BLM granted LS in December. That review would be simpler and faster than going to federal court, the next step for environmental groups, said one environmental attorney working with Nevada’s environmental coalition.

Opponents of the plant say they have a strong case under either appeal.

“One glaring point is that the BLM, while acknowledging that there is a problem with global warming, takes the position that you can’t determine the damage from one ... facility,” Benjamin said. “There has been a general avoidance of this issue during the last eight years of the Bush administration ... and it trickles down to specific projects.”

Another environmental attorney said it’s problematic that the BLM approved the plant without a final air permit, which includes the final analysis of the plant’s emissions.

“There has been no determination of whether the air impacts are acceptable or not,” the attorney said. “The BLM shouldn’t have said they were until (the air permit was) done.”

And the coalition says it’s also concerned about e-mails a BLM contractor wrote in 2007 about how thorough the analysis of cumulative impacts on air quality should be. The initial environmental review of the project looked only at future development in the region. It did not consider past and present development. The contractor thought the analysis should take into account all the impacts. So do environmentalists.

Even if LS gets the permits it needs to build the White Pine Energy Station and survives legal challenges, it must secure financing for the project without Dynegy in a tight credit market.

“Losing a significant financial partner has got to impact their ability to construct,” one environmental attorney said. “There is no indication that they have any customers for the power ... (LS is) trying to get permits in place and find a partner when it comes time to construct.”

That partner is unlikely to be NV Energy, Nevada’s largest utility. The company has proposed its own coal plant near Ely, although permitting of the LS plant is much farther along.

The two companies have also had a frosty relationship, marred by, among other things, conflicts over water resources near Ely. And NV Energy’s long-term plan, which will be updated with the Public Utilities Commission this year, does not include plans to buy power from the White Pine Energy Station.

But Milburn, project development director for LS, says the company has buyers interested in the power White Pine Energy Station will generate, and expects no trouble financing the plant.

“There is going to be a great market for this project,” Milburn said. “It’s clean, it’s safe and it’s needed.”