Utilities drop joint electricity project for Ozarks

Thursday, December 4, 2003

SPRINGFIELD, Mo. (AP) -- Two utilities have abandoned a partnership to build a coal-fired power plant that would have provided electricity to southwest Missouri.

Empire District Electric said Wednesday it was dropping discussions with Springfield City Utilities to build a 600-megawatt plant that could have cost $1 billion or more.

Brad Beecher, vice president of energy supply for Joplin-based Empire, said the utility had examined the project and determined it was not in the best interest of its customers and shareholders.

The decision means a proposal to build a second coal-fired plant near the existing Southwest Power Station in Greene County returns to the top of the site list, said John Twitty, general manager of City Utilities.

Springfield officials have said the municipally owned utility will be at capacity to provide electricity to its customers by 2007.

City Utilities had planned an Aug. 5, 2003, vote to get approval for $532 million in revenue bonds to build a second plant near the Southwest Power Station. The bonds would have been repaid with a 16 percent increase in rates, instituted over four years.

City Utilities canceled that vote in May after power plant builder Tenaska Energy of Omaha, Neb., introduced the idea of a partnership with Empire.

Possible sites for the plant included La Russell, where Empire already has some operations; near Lamar, in Barton County; and in Labette County, Kan. Some residents near La Russell had expressed opposition to any project in their area.

Empire's decision means Tenaska no longer is involved with City Utilities, Twitty said.

If the project had continued, it would have raised issues over the partnership of a public utility and an investor-owned utility that compete for customers, Twitty said.

"We went into this with our eyes wide open," he said. "You had all those legal and operational and contractual issues that would have had to have been addressed."

Officials with investor-owned Empire said they decided they couldn't afford such a plant, and that regulations governing the project would be tough to overcome, spokeswoman Amy Bass said.

"I can tell you the primary element was, given the magnitude of the project and the regulatory environment under which we are now operating, we just could not get our arms around the financial aspect of this," she said. "It just wasn't the right project for us at this time."

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