Local Group Supports Dynegy in Rethinking Investments in Coal Plants
Midland People Agree With Questions About Future Coal Plant Costs                
December 2008

Midland, MI: MidlandCARES, a group of concerned Midland citizens, encourage Dynegy to continue their re-evaluation of the role they play in the proposed coal plant for Midland.  As one half of the previous joint venture between Dynegy and LS Power, called Mid-Michigan Energy, Dynegy is reconsidering their use of time and capital in two plants under construction in Texas and Arkansas, and are uncertain about other coal plant developments as well.

Dynegy indicated that high costs of capital and the difficult credit market make coal-fired plants a losing investment.  “That’s good news for the people of Midland,” according to spokesperson for MidlandCARES, Nancy Janoch.  “If this coal plant is not built, we may be saved from huge costs to us as taxpayers and as ratepayers.”

“The rising costs of coal, construction, transportation and the increasing interest rates on borrowed money are some of the major concerns to citizens.  Add those to the uncertain costs of carbon regulation, and the future price of a coal plant continues to look worse and worse.”

President-elect Obama announced this week the appointment of Steven Chu, a Nobel Prize winning physicist, as the new Secretary of Energy.  Dr. Chu has repeatedly questioned the continued use of coal due to concerns about global climate change.

A recent report by analyst Tom Sanzillo of T. R. Rose Associates in New York about a comparably sized coal plant proposed for Rogers City, MI, states that the higher costs for such a plant (600 mgw) would more than double the rates for power by 2017 or before.  With massive increases in the costs for steel, concrete, coal, transportation, operations and management, and higher interest for financing, as well as the uncertainty of future carbon charges, charges for transmission and other surcharges, costs may rise from 7.7¢/kwh (Dec. 07) to 18¢/kwh in less than 10 years.

“If Dynegy pulls out, and LS Power rethinks its part in using coal for energy, Midland has a chance to save money and to save our health and our environment as well,” says Nancy Janoch.  The city of Midland has many uncertain commitments concerning this plant in terms of waste, infrastructure to the city and who will handle the remains and costs, if a partially completed or operating plant is cancelled.

“This is a 50 year commitment to buy power from a dirty coal plant at prices high enough to cover operating costs, pollution costs and costs to pay back loans.  We may be lucky enough to get a second chance in our choices about future energy for our city and our industry in Midland,” Janoch said.  As the Sanzillo Report points out, the Michigan Public Service Commission gave the results of its Capacity Needs Forum (CNF) in Jan 2006.  This report stated that if the Michigan economy continued to grow, our state may need one additional base-load coal plant after 2011.  (As many as eight coal plants are currently proposed for the state.)

The “Big Three” of GM, Ford and Chrysler are cutting back.  Dow Chemical has announced it will be laying-off personnel. With the economy faltering, and Michigan’s population not growing at the predicted rate, higher energy costs will burden local industries trying to maintain financial viability.  Overbuilding energy projects will drive up the rates at a time when there is no money to spare.  People could easily lose jobs as a result, not gain them, if this plant were built. 

Michigan has existing, already paid for, relatively low carbon Gas Turbine power plants that are currently under-utilized and are a potential source of baseload power to provide energy for Michigan as we build a renewable energy economy.  Midland, and Michigan, need not rely on the unstable and rising costs of coal, gas or oil.

LS Power has recently announced a new unit dedicated to development of Renewable energy. We applaud this forward-looking approach and hope that LS Power will apply its expertise to tapping Michigan’s huge potential wind resource.  Michigan State University’s Land Policy Institute has recently completed two studies outlining Michigan’s potential for onshore and offshore wind generation, and as a manufacturing hub for a renewable industry that is experiencing explosive growth.  In addition, several manufacturers of solar energy equipment have recently announced that they will locate in the Saginaw Valley to be close to Hemlock  Semiconductor and a large resource of raw materials for solar fabrication.

If Dynegy decides to withdraw from investing in the Midland coal-fired plant, MidlandCARES encourages them to consider investing here as part of a renewable energy revolution that will jumpstart Michigan’s and America’s economy.  That would be the type of development to put Midland in the front of the nation and to take us into the next generation.

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MidlandCARES (Clean Air and Renewable Energy Solutions) was founded to encourage education and community dialogue about Clean Energy Resources and Energy Efficiency Programs. We promote the development of healthy, sustainable, and renewable energy sources that will allow Michigan to advance as a leader in this new industry.  MidlandCARES Homepage: www.midlandcares.org