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Sandy Creek Plant

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The Sandy Creek Plant is a 900 MW pulverized coal plant in Riesel, TX (near Waco) that began operating in the spring of 2013.[1]

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Background

On July 18, 2007, the Texas Commission on Environmental Quality (whose three-member decision-making body was appointed solely by Gov. Perry, a long-time TXU campaign-cash beneficiary) issued an air permit for the project.[2] In Aug. 2007, Dynegy announced that it had finalized funding for the project.[3] As of Dec. 2007, Dynegy had not been granted final permits, but was already prepping the site for construction.[4]

In April 2008, construction of Sandy Creek began.

Since construction began, there have been a number of challenges to the plant by environmental groups. On August 28, 2008, the Sierra Club and Public Citizen filed a complaint against Sandy Creek Energy Associates for failure to obtain a Maximum Achievable Control Technology (MACT) determination for the plant. The Sierra Club and Public Citizen further argued that this failure violates the Clean Air Act (CAA). The two groups have requested that construction be halted until a MACT permit is obtained.

On September 9, 2008, the Sierra Club filed a federal lawsuit against against the United States Department of Agriculture (USDA),under the Freedom of Information Act (FOIA), for failure to disclose public information regarding federal loans for the construction of the plant.

On August 26, 2008, the Sierra Club submitted a letter to the USDA and its Rural Utilities Service (RUS), stating that they are in violation of federal law for approving investments in several new coal projects, including the Sandy Creek plant, without assessing the projects' environmental impacts under the National Environmental Policy Act (NEPA).[5]

In December 2008, Dynegy CEO Bruce Williamson announced that the company was reevaluating its role in developing new power plants, including Sandy Creek. Williamson cited the tightening credit markets and difficulty in permitted new coal plants as reasons for reconsidering its involvement in the siting, permitting, financing and construction of several new projects. Other plants include the Longleaf plant in Georgia, LS Power Elk Run Energy Station in Iowa, Midland Power Plant in Michigan, Plum Point Energy Station in Arkansas, West Deptford Project in New Jersey, and White Pine Energy Station in Nevada. As an alternative, the company will look at adding generation to its existing sites in the Northeast, Midwest and Western U.S.[6]

As of May 2009, Sandy Creek has yet to obtain a MACT permit for the plant. The company claims that it received a MACT determination in 2006, however the air permit contained inadequate limits for mercury and failed to include limits on other hazardous air pollutant emissions.[7]

In September 2009, a federal judge in Austin threw out the final remaining legal challenge to the Sandy Creek Plant. The ruling against the Sierra Club and Public Citizen found that the plant's permit includes the proper pollution control technologies. Sierra Club is considering an appeal.[8]

On November 23, 2010, the U.S. Fifth Circuit Court of Appeals ruled that the Texas Commission on Environmentally Quality (TCEQ) unlawfully approved the construction of the Sandy Creek coal plant - the plant had begun construction despite not complying with Section 112 of the Clean Air Act, as TCEQ did not obtain a Maximum Achievable Control Technology (MACT) determination. The case will go back to the district court, and the Sierra Club said it will seek an injunction on any further construction unless and until the plant has limits on its emissions of mercury and other hazardous air pollutants.[9]

In October 2011 the U.S. Supreme Court indicated that it may be interested in weighing in on the Sandy Creek Energy Associates v. Sierra Club et al. case to determine whether or not the Clean Air Act requires the Sandy Creek Plant to install technology to control mercury and other air toxins regardless of when the plant began construction.[10]

On December 12, 2011, the Sierra Club announced a legal agreement between LS Power and Sierra to cancel Longleaf, a 1200 MW proposed coal plant in Georgia, and Plum Point II, a 665 MW proposed coal plant in Arkansas. In addition, as part of the agreement, Sierra dropped its opposition to the Sandy Creek Plant in Texas and LS Power agreed to stricter air pollution controls at Sandy Creek. Sierra Club noted that Longleaf, which had first been proposed in 2001, was among the first coal plants among the hundreds of coal plants proposed -- and mostly defeated -- in the recent coal boom.[11]

According to a press release from Standard and Poor's, on October 17, 2011, during start-up testing, "a number of tubes overheated that badly damaged the boiler." As a result, S&P downgraded the credit rating of the project to B+, a "speculative" grade. The plant was expected to come online in Spring 2013. If the plant is not operating by July 2014, groups that have signed long-term contracts for power can terminate the agreements.[12]

Ownership shares

Sandy Creek Energy Associates is jointly owned by affiliates of Dynegy Inc. and LS Power Group. SCEA owns 575 MW of the Sandy Creek Energy Station. Brazos Electric Power Cooperative Inc. owns 225 MW. Lower Colorado River Authority owns 100 MW.[13]

Project Details

Sponsors: Dynegy and LS Power
Location: Riesel, TX
Capacity: 900 MW
Type: Conventional pulverized
In service: 2013
Ownership shares: Sandy Creek Energy Associates (575 MW), Brazos Electric Power Cooperative (225 MW), Lower Colorado River Authority (100 MW)

Financing

8/30/07 - Credit Suisse and RBS Securities acted as lead arrangers to establish a $1 bilion financing package for Dynegy/LS Power’s Sandy Creek 900 megwatt coal-fired power plant in Texas. The project financing, includes an $800 million construction loan and a fully drawn $200 million term loan.

Citizen Groups

Resources

References

  1. "Gas' role in Texas generation mix to grow despite price advantage," Platts, June 12, 2013
  2. Texas Commission on Environmental Quality Chief Clerk's Database, accessed January 2008.
  3. Dynegy Announces Completion of Project Financing for Sandy Creek Energy Associates, Dynegy press release, August 30, 2007.
  4. Coal Day in Hell, Texas Observer, December 14, 2007.
  5. "Stopping the Coal Rush", Sierra Club, accessed November 2008. (This is a Sierra Club list of new coal plant proposals.)
  6. "Dynegy to rethink new coal-fired power projects," Reuters, December 11, 2008.
  7. "Stopping the Coal Rush", Sierra Club, accessed May 2009. (This is a Sierra Club list of new coal plant proposals.)
  8. "Judge give Texas coal plant near Waco the OK," Associated Press, September 30, 2009.
  9. "Fifth Circuit Decision Finds Construction of Sandy Creek Coal Plant Unlawful" Sierra Club Press Release, Nov. 24, 2010.
  10. "US Supreme Court shows interest in Texas coal plant MACT case" Platts.com, October 3, 2011.
  11. "Longleaf Cancellation Marks End to Nation's Longest Running Fight Against Coal Plant," Sierra Club press release, December 12, 2011
  12. Terrence Henry, "Mystery Behind Sandy Creek Power Plant Begins to Unravel," StateImpact, August 22, 2012.
  13. Lower Colorado River Authority Buys 200 MW from Sandy Creek Energy Associates: Agreement will bring new competitive base-load generation, Lower Colorado River Authority press release, June 6, 2008

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