Santee Cooper ups cost of coal plant

The price of gasoline isn't the only thing that's going up. Santee Cooper said Wednesday that the first phase of its proposed Pee Dee coal-fired power plant will cost $1.25 billion, up from its original estimate of $998 million.

Surging demand for electricity is driving up prices for new power plants across the world, as utilities scramble for concrete, steel and other construction materials, said Laura Varn, Santee Cooper's vice president of corporate communications.

The costs of new pollution-control equipment coupled with delays in getting state and federal permits also kicked up the Pee Dee price tag, she said.

Ratepayers will pay for the increase, she said, though it's too soon to say how much it might add to people's power bills. The new estimate isn't a deal-killer for the project, she added. "Coal is still the most abundant and cost-effective fuel source."

Santee Cooper wants to build a 600-megawatt plant near the tiny town of Kingsburg in Florence County. Santee Cooper said it needs the plant by 2012 or its customers could face brownouts and blackouts.

The utility is seeking state and federal permits for two 600-megawatt generators, but the power company's board has OK'd only one.

Conservation and citizens groups say the Pee Dee project will foul the air with greenhouse gases and add mercury pollution to areas already suffering with high levels of mercury-contaminated fish. They say that focusing on conservation and renewable energy makes more sense.

Blan Holman, a lawyer for the Southern Environmental Law Center, said Santee Cooper's $1.25 billion price tag is "still a lowball" that "doesn't even include the big rise in coal prices or the Hindenburg-sized" costs that could come with proposed new taxes on carbon emissions.

Ben Moore, climate and energy project manager for the Coastal Conservation League, said that the $1.25 billion estimate is more realistic, but that it "won't be the final number."

Santee Cooper and many other utilities have long depended on coal to provide low-cost, year-round power. But amid rising construction costs and concerns about global warming and mercury pollution, utilities canceled or postponed more than 45 projects in 2007, a new analysis by the U.S. Energy Department found.

In another setback to coal interests, Wall Street investment banks said last month they would include the cost of carbon emissions in their financing calculations, a move that some analysts think will cut coal's cost advantage over other energy options, including wind and some types of solar power.

A look at other coal projects shows Santee Cooper's estimate is on the low end of the spectrum.

Duke Power, for instance, said a new 800-megawatt generator for its Cliffside plant near Charlotte will cost $1.8 billion, plus another $550 million to $600 million in financing costs.

In Florida, a utility recently scuttled a plan to build a 750- megawatt generator for $1.4 billion. In Idaho, another utility abandoned a 600-megawatt plant tagged at $1.4 billion.

Varn said the "very distinct reason why our construction costs are lower" is that Santee Cooper serves as its own general contractor when it builds a plant.

She said this approach is "fairly uncommon in the industry," but that it keeps costs down and ensures employees "know the system inside and out."

She added that the original $998 million estimate was two years old, and that Santee Cooper revised the cost as "a good business practice."

Reach Tony Bartelme at 937-5554 or tbartelme@postand courier.com.