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Is financing killing the Surry coal plant?

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The decision by a Henrico County-based electric cooperative to delay a controversial $6 billion coal-fired generating station in Surry County brought predictable celebration from environmentalists. It also raises questions about if such monsters can be financed.
 
The Old Dominion Electric Cooperative had been on a roll, snagging permit after rezoning ordinance to build its plant in the tiny village of Dendron, about 20 miles or so as the crow flies from Colonial Williamsburg.
 
On Sept. 8, ODEC announced it was "extending its timeline" for building the 1,500 megawatt plant because the "slower than expected growth in the economy" means there's less demand for electricity. Not to fear, an ODEC spokesman said, there will be growing demand in the future and the delay of up to two years doesn't change the cooperative's goal.
 
But it seems that ODEC's announcement is a bit disingenuous. Could it be they can't line up needed financing?
 
Already, consultants have questioned the need for the project and how anxious lending institutions would be to shell out billions. ODEC spokesmen turned aside the concerns.
 
Unlike Dominion Virginia Power which has two nuclear statons, a number of coal-fired and gas-fired plants and hydro, ODEC has never built an electric power station before. Its members are a polyglot of small, rural coops from Delaware to Virginia. Its biggest and most urban member, a Northern Virginia coop, left ODEC in a contract dispute a couple of years ago.
 
One wonders why ODEC needs such a big slug of power. It could be that ODEC needed to partner with another utility to get loans and failed to do so. There's no question that enterprises that easily pass the viability test have a hard time getting loans these days after the Big Money banks like Merrill Lynch, Wachovia, and Bank of America all got greedy with dangerous but highly profitable subprime mortgage lending and their derivatives.
 
Experienced plant builders and operators like Dominion need either special financial deals worked out through state legislation as was the case with its much smaller Wise County coal-fired plant or federal 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.
 
Peter Galuszka

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