As US reduces coal use, developer in rural Georgia tries building coal-fired power plant

Energy Associated Press

Deep in rural Georgia, a developer is betting he can build one of the last new coal-fired power plants in the United States as the rest of the country moves away from the fuel.

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The project, which is being developed by Allied Energy Services, is an outlier. If constructed, Plant Washington would be one of just two planned coal plants in the United States to dodge pending rules from President Barack Obama's administration severely restricting carbon dioxide emissions. Carbon dioxide is the chief greenhouse gas blamed for global warming.

Still, analysts question whether the estimated $2 billion project, which will be built near Sandersville, Georgia, makes financial sense right now. A booming supply of natural gas has driven gas prices to historic lows, making coal expensive by comparison. Big regional utilities like Southern Co. and the Tennessee Valley Authority are shuttering old coal-fired plants and replacing them with gas-burning units. The only coal plants that could meet the proposed restrictions would have to trap their carbon dioxide emissions, and that technology has proven tremendously expensive.

For starters, it's not clear who will fund the power plant. The developer behind the Georgia project, C. Dean Alford, said he has support from the Taylor Energy Fund to help cover development costs, though he lacks commitments from utility companies to buy the electricity. The last electric companies in the development consortium left last year. The developers also failed to pay their 2013 property taxes for the plant site on time, and the county government threatened to sell off the land until it received a roughly $9,600 payment. Alford said the tax notices were sent to the wrong address by mistake, and he denies the project is under financial pressure.

"We think it really is important to be able to demonstrate that coal can be built and it can be affordable," Alford said. "I think it's in the state's best interest, I think it's in this nation's best interest to not take anything off the table as it relates to energy."

But opponents say the plant is not needed. It would emit needless pollution, prove expensive for customers and should have to follow tight carbon dioxide restrictions for new power plants, said Kurt Ebersbach, an attorney for the Southern Environmental Law Center, which has challenged the plant. The U.S. Environmental Protection Agency may clarify what will happen when it publishes a final rule next year.

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"I think it probably is going to be the last one gasping for life," Ebersbach said, speaking of Plant Washington, "but I think fundamentally they face a different economic and regulatory landscape than was present seven years ago when this plant was first proposed."

The project dates back to 2008 when Alford's firm and a group of electrical cooperatives formed Power4Georgians, which proposed building an 850 megawatt coal plant more than 100 miles southeast of Atlanta. It also proposed another coal plant in Ben Hill County, but that facility was scrapped as part of a legal settlement.

The market began to change soon after the plant was proposed when natural gas prices started falling. That lowered the cost of power and made coal look comparatively pricey. Then, in January 2014 the Obama administration sought to limit emissions of carbon dioxide from newly built power plants. However, regulators must decide how to treat coal plants that were in the works but not yet built.

"If we weren't exempt, it would have killed the project," Alford said.

Independent analysts are skeptical coal plants can be financed unless natural gas prices surge years in the future, perhaps because domestic consumption increases or U.S. gas is exported internationally.

"That's probably why you're seeing some money about, 'Hey, we're going to keep this thing alive, see how it looks five years down the road,'" said Brandon Blossman, managing director of coal and power research at Tudor, Pickering, Holt and Co., an energy investment and merchant banking firm. "The short answer here is it's not viable."

In Sandersville, residents have grown skeptical the plant will be built as time passes. William Young, 42, a barber in downtown Sandersville, said a new power plant would offer new employment prospects in a region where he views the most-lucrative options as working at a prison or in a kaolin mine. Nearly 10 percent of workers were unemployed in September.

"It's just going to help bring some jobs around here that's desperately needed," he said.

But just a block away, Mike Mcabee and his wife, Laura, were planting flowers in front of the county courthouse. Mcabee said the plant would pollute the local environment, and he would be willing to pay a premium on his electric bill to get energy from cleaner sources.

"I just don't want them to push things down people's throats because someone wants to make a buck," he said.

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Follow Ray Henry on Twitter: http://twitter.com/rhenryAP.