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January 06, 2009
Dynegy Abandons Plans to Build Five New Coal Power Plants
by Robert Kropp
Houston-based energy company has been target of Sierra Club campaign and criticism for exposing
shareowners to risk.
SocialFunds.com --
Dynegy, a Houston-based owner and operator of
power plants that has been a target of widespread criticism for its plans to build seven coal-fired
power plants, has dissolved its joint venture with LS Power and abandoned its efforts to build at
least five of the plants.
Dynegy, called the "The next King Coal" by the National
Environmental Trust, has been the target of a Sierra Club campaign aimed at stopping the proposed
construction of the plants.
According to the Sierra Club, coal is one of the most
polluting sources of energy available, jeopardizing health and environment. Coal-fired power plants
are also major contributors to global warming, accounting for almost 40% of the nation's carbon
dioxide pollution, the prime global warming pollutant, as well as 26% of energy-related methane
emissions.
Added to concerns over environmental factors was a report issued by Innovest and entitled Dynegy: Coal Expansion
Poses Risk to Shareholders. In the report, Innovest asserts that "Despite the likelihood that
Dynegy's proposed coal-fired power plants will face significant CO2 costs and shifts in consumer
demand toward alternative forms of power generation, the company has not demonstrated how it will
protect shareholder value and guarantee a return on investment for the development of over 5,800 MW
of new coal capacity."
In a press release issued by Dynegy, CEO Bruce Williamson
acknowledged the likelihood of a new regulatory landscape for polluters in 2009, saying, "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 order to
dissolve the joint venture, Dynegy will pay approximately $19 million in cash to LS Power during
the first quarter of 2009 to reflect the relative value of assets exchanged. Dynegy will record a
loss in 2009 related to the transaction.
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SRI World Group, Inc. All Rights Reserved.
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