US power companies await mandatory carbon cuts

More than half the US power industry believes the US will enact mandatory limits on carbon dioxide emissions in the next ten years, according to a survey carried out by PA Consulting Group. Nearly half the respondents believed mandatory limits would come sooner – within five years.

PA surveyed senior managers involved in developing and implementing environmental policies at 19 US generating companies during the first half of 2004. The companies, including large and small investor-owned utilities, non-regulated generators and co-operatives, accounted for 29 per cent of the US’s electric power generation in 2003. PA said the survey was intended in part to allow companies to benchmark themselves, on environmental issues, against their peer organizations.

The questionnaire, titled Environmental survey 2004, found that respondents “overwhelmingly” believed greenhouse gas buildup was a political problem, although less than half the respondents saw the buildup as a scientific problem. Less than half the responding companies said they were incorporating carbon dioxide emission limits into business planning, blaming their lack of plans on regulatory uncertainty.

The survey also investigated other environmental planning issues including cap and trade programmes, mercury regulation, compliance planning, and the likely effect of the election on planning.

Brazilian bank plans bailout

Four Brazilian distribution network operators (DNOs) are expected to receive formal approval early 2005 for loans totalling Reals2bn ($695m). The loans, from Brazilian national development bank BNDES, are part of an extensive bailout for the country’s power sector.

BNDES stock investment department head Valter Manfredi told BNAmericas that loans had already been approved for Guarania group (controlled by Iberdrola of Spain), AES Eletropaulo (controlled by AES of the US) and Brazil-owned Grupo Rede. The fourth loan, due for final approval in January, is thought to be EDF-backed Light, of Rio de Janeiro.

The loans are part of a rescue programme for power companies to help them improve their balance sheets following power rationing in 2001 and 2002. However, the loans come with conditions: companies must agree greater transparency, greater accountability and shares listed at level two on the Sao Paulo stock exchange. The companies have also been restructuring. BNDES has lent the power sector Reals5.4bn so far during 2004.

Dynegy acquires Sithe Energies

Dynegy is to increase its generating capacity in the northeast US by acquiring Sithe Energies from ExelonCorp. The acquisition will bring Dynegy the 1042 MW Independence combined cycle plant, along with four gas-fired merchant plants in New York and four hydropower plants in Pennsylvania.

Subject to regulatory approvals, Dynegy will make a cash payment of $135 million and take on debt of $919 million to acquire Exelon’s ExRes subsidiary, which owns both Sithe Energies and Sithe Independence. The latter holds a 750 MW firm capacity agreement with Con Edison, which lasts until 2014.

Dynegy said the acquisition would transform an array of tolling and swap contracts into Dynegy intracompany agreements, retaining cash flows within the group and mitigating their financial effect. Dynegy’s Bruce A Williamson, chairman, president and CEO, said the deal addressed one of the company’s three long-term tolling obligations. Dynegy were also pleased to be expanding their power generation business in the recovering New York market.

EPRI boost for clean coal

The Electric Power Research Institute (EPRI) is to join with 18 US utilities with coal-fired generation interests to accelerate work on cleaner, more efficient coal power stations. The initiative, “CoalFleet for Tomorrow”, also aims to develop options to manage carbon dioxide emissions.

Announcing the programme, EPRI noted that coal provides over half the US’s electric power, and the US and other countries have extensive coal reserves.

Hank Courtright, EPRI’s vice president of generation and distributed resources, said the programme would “preserve this abundant source of fuel as a vital component in the electricity generation mix.”

He said the focus in the first year would be on accelerating market integration of integrated gasification combined cycle (IGCC) technology, aiming at 2005 to 2015. Later the programme would move to ultrasupercritical pulverized coal, supercritical circulating fluidized bed combustion, and other firing technologies, and to options for capturing and sequestering carbon dioxide.

News digest

Argentina: Argentine distributor Edenor has approved a cash offer for its entire $500m debt, according to Business News Americas. The offer is part of a strategy to reduce debt.

Brazil: A consortium of Brazillian companies has jointly won an auction with Spanish engineering company Abengoa for the construction and 30-year operating licences of transmission lines. The auctions were held by Brazil’s electricity regulator, Aneel, on the Sao Paulo stock exchange.

Canada: Irving Oil has announced plans to build a 500-750 MW gas fired power plant in New Brunswick, tieing in the approval it has gained for an LNG terminal near Saint John harbour. The plant could supply one-third of the province’s power needs and would head off a looming energy crunch.

Central America: Bids may be called in April next year for a transmission line that will connect six central American countries, according to the Regional Commission for Electricity Interconnection. The 300 MW, 1800 km line, is due in operation in December 2007.

USA: Jerry Abramson, mayor of Louisville, Kentucky, discussed the future of LG&E Energy with E.ON chairman Wulf Bernotat. There have been rumours the German parent wanted to sell the company; Bernotat said the company has not decided whether to leave the US.

USA: Santa Rita Jail in Dublin, California, is to be powered by fuel cell. The jail will be the site for Fuel Cell Energy’s first 1 MW unit, which will be installed in partnership with Chevron Energy Services.

USA: Nevada Power Company has selected Flour Corp to complete a combined cycle power station in Clark County. Work ceased on the 1200 MW plant in 2003; now the first unit should start up in late 2005.

USA: The US DOE is to award $75 million in grants in its new Hydrogen Fuels Initiative. The grants follow recommendations in a recent National Research Council report on the hydrogen economy.

USA: Las Vegas Valley Water District has approved a $22.6m contract to initiate the development and construction of a 3.1 MW photovoltaic solar energy project that will be one of the largest ever built by a public agency in the US.

Uruguay: UTE, Uruguay’s state owned power company, has asked for revised bids on the turnkey contract to build a 350-400 MW combined cycle thermoelectric plant after none of the companies proposals complied with the technical requirements. The plant will cover one third of Uruguay’s peak demand.