On Friday, Dynegy Inc. (NYSE:DYN) canceled its joint development agreement with LS Power to build a new fleet of coal plants, causing celebration among the environmental community.
“Coal-fired power is one big step closer to being mothballed once and for all,” Green America (formerly Co-op America) said in a release.
LS Power retains the right to develop the projects the companies had been pursuing in Arkansas, Georgia, Iowa, Michigan and Nevada. However, without Dynegy’s support LS Power will have a more difficult time raising funds and securing long-term purchase agreements which enable new power plants to move forward.
Dynegy Chief Executive Bruce Williamson said the climate for new power-plant development has changed since the two companies began working together in 2006.
"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," Williamson said in a statement.
Dynegy’s stock rose $0.38 cents following release of the news on Friday.
Bruce Nilles, director of the Sierra Club’s national effort to block development of new coal-fired plants, said, "They’ve seen the writing on the wall … It indicates that 2009 is going to be a very tough year for the coal industry."
Nonetheless, LS Power, which holds a reported 40% of Dynegy shares, said it will move ahead with some of the projects on its own.
But Niles has hope that LS Power can be persuaded to change course. "LS Power has not developed or operated coal plants, and as they stand alone now we encourage them to shift their investments into cleaner alternatives like wind, solar, and efficiency that can create new jobs and economic opportunity while cutting pollution, improving public health, and helping solve global warming.
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