Topeka Westar Energy, the state's largest electric utility, announced Thursday it was postponing a decision on whether it will build a coal-burning plant because of skyrocketing construction costs.
"When equipment and construction cost estimates grow by $200 million to $400 million in 18 months, it is necessary to proceed with caution," said James Haines, Westar's chief executive officer.
Environmentalists said Westar's decision should give Sunflower Electric Power Corp., which has proposed a larger coal-fired project in western Kansas, something to think about.
In May 2005, Westar started considering sites for a new $1 billion, 600-megawatt plant in the eastern third of the state to serve its 670,000 customers in Kansas.
Sunflower Electric has a permit pending for three 700-megawatt plants at a cost of $3.6 billion near its existing 360-megawatt facility in Holcomb. Two of the plants would be owned by Denver-based Tri-State Generation and Transmission and 90 percent of the electricity from the project would be sold out of state.
Environmentalists, eight states and the Lawrence City Commission have opposed the Sunflower project, saying the carbon dioxide emissions will worsen destructive climate change. Sunflower, backed by many supporters in western Kansas, said the plants will be more efficient than older ones, and the project will spur the rural economy.
While the proposals from Westar and Sunflower are different, Westar's decision to postpone a decision probably came because the company looked into the future at possible federal regulations or taxes on carbon dioxide emissions, according to Bill Griffith, president of the Kansas chapter of the Sierra Club.
He said the increasing costs of coal and plant equipment are narrowing the gap between renewable energy sources and fossil fuels.
"This certainly makes wind energy look cheaper," Griffith said.
Topeka-based Westar planned to select a location by the end of this year but has now postponed that indefinitely.
At the outset, a coal-burning plant was seen as the least expensive way to increase capacity, Westar said. But recent demand nationwide for coal plants has increased equipment and construction costs.
The company stated: "These dynamics have caused the gap in cost between coal plants and other methods of meeting customers' need for energy to narrow."
Steve Miller, a spokesman for Sunflower Electric, said Westar's decision would have no effect on Sunflower's proposal.
The increasing construction cost "is an ongoing matter that is always being analyzed," he said.
Conversely, Westar officials said public opposition to the Sunflower project had no effect on Westar's decision. The company also noted that even though it has put off its coal plant proposal for now, it will have enough capacity to handle growing demand for electricity.
Coal-burning power plants
- Proposed coal plants spark broad response (12-24-06)
- Sebelius: Coal plants likely (12-21-06)
- Sebelius still mulling ban on coal-fired plants (12-20-06)
- Feds weigh in on coal plant (12-18-06)
- Read letter from the United States Department of the Interior concerning the proposed coal power plants in Western Kansas (.pdf)
- Power plant resistance grows (12-13-06)