Construction halt on Satsop power plant extended indefinitely
It's the latest casualty of the region's wildly fluctuating energy market. Dozens of power plants started during the energy crunch, when prices skyrocketed, have been scrapped as energy prices dropped.
Duke Energy made the announcement Friday. It also suspended construction on two other gas-powered plants, in Clark County, Nev., and Luna County, N.M., citing rock-bottom wholesale power prices.
The Satsop plant, 40 percent complete, had been scheduled to start producing power next July.
"The Western market has seen a dramatic decline in the economics of bringing any new generation online for the summer of 2003," said Jim Donnell, president and chief executive officer of Duke Energy North America.
He said the construction halt would continue until market conditions and demand for new generation in the region improve.
Regional wholesale electricity prices have been hovering around $20 per megawatt-hour for most of the summer. Energy experts have said a plant such as Satsop needs at least $30 per megawatt-hour to run profitably.
Meanwhile, a Williams Cos. official said Friday the company will finish the 49-mile natural-gas pipeline it's building to serve the Satsop plant.
The $82 million project, which runs from Rainier to Satsop — 15 miles east of Aberdeen — is about 60 percent complete.
"We're going to finish it; it's too hard to stop work and start up again," company spokeswoman Bev Chipman said. "We'll be done with the major work by mid-October."
Duke Energy has a 30-year contract with Williams to start paying a demand charge for the gas in November, regardless of the Satsop plant status, Chipman said.
Duke may consider selling the 650-megawatt plant — which would produce enough power to meet the needs of a city the size of Seattle.
A week ago, Puget Sound Energy Chief Executive Steve Reynolds said his utility was mulling whether to buy or build more power plants. The collapse of Enron and financial woes of other energy companies have made it next to impossible for those companies to undertake such projects, he said.
In the past 18 months, roughly 63 proposed power plants — capable of producing 4,300 megawatts in the Northwest — have been scrapped or left unfinished, Reynolds said.
Regional demand for electricity is expected to grow by about 40 percent by 2025, Reynolds said.
Asked whether Puget Sound Energy has an interest in purchasing the Satsop plant, utility spokeswoman Dorothy Bracken said: "We're just starting to explore the landscape."
Duke spokeswoman Diane Vavrek declined to say whether the companies were talking. But she said Duke Energy is open to possible sale of the plant.
About 130 of the roughly 500 workers employed at Satsop this summer remain on the job, preserving equipment and preparing for winter rains.
The number of workers will continue to decrease over the next three or four months, Vavrek said.