Sandy Creek Plant

From Global Energy Monitor

The Sandy Creek Plant is a 1,008.0-megawatt (MW) coal-fired power station operated by Sandy Creek Energy Associates in Riesel, Texas (near Waco).

Location

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Plant Data

  • Owner: Sandy Creek Energy Associates 64%, Brazos Electric Cooperative 25%[1], Lower Colorado River Authority 11%[2]
  • Parent Company: LS Power (SCEA)
  • Plant Nameplate Capacity: 1,008.0 MW (Megawatts)
  • Units and In-Service Dates: Unit 1: 1,008.0 MW (2013)[3]
  • Location: 2161 Rattlesnake Rd, Riesel, TX 76682
  • GPS Coordinates: 31.475060, -96.957350
  • Technology: Supercritical
  • Coal type: Sub Bituminous
  • Coal Consumption:
  • Coal Source: North Antelope Rochelle Mine (Peabody Coal)[4]
  • Number of Employees:
  • Unit Retirements:
  • Financing: US$1 billion in debt from Royal Bank of Scotland and Credit Suisse; US$650 million in equity from Dynergy, LS Power, and Brazos Electric Cooperative; US$1 billion in debt from Union Bank of California, ING Group, Natixis, BNP Paribas, Calyon, CoBank, Dexia, GE, Scotia Capital, and WestLB;[5] US$1.202 billion in debt from Goldman Sachs, BNP Paribas, Credit Agricole Group, ICBC, ING Group, and Investec[6]

Ownership shares

Sandy Creek Energy Associates was jointly owned by affiliates of Dynegy Inc. (50%) and LS Power Group (50%). Over several steps Dynegy sold its shares to LS Power, giving LS Power full ownership of the project.[7] In a final deal with LS Power in 2009, Dynegy sold 5 peaking plants, 3 natural gas power plants and its last shares in the Sandy Creek Project in exchange for money and Dynegy shares.[8]

Capacity Ownership

SCEA owns 575 MW of the Sandy Creek Energy Station, Brazos Electric Power Cooperative Inc. owns 225 MW and Lower Colorado River Authority owns 100 MW.[9]

Financing

In August 2007, a financing agreement for the project was closed. US$1 billion in loans was provided by Royal Bank of Scotland and Credit Suisse. US$650 million in equity was provided by Dynergy, LS Power, and Brazos Electric Cooperative. Then, in September 2007, additional banks joined the financing agreement. US$1 billion in loans was provided by Union Bank of California, ING Group, Natixis, BNP Paribas, Calyon, CoBank, Dexia, GE, Scotia Capital, and WestLB.[5]

In November 2013, a refinancing agreement for the project was closed. US$1.202 billion in loans was provided by Goldman Sachs, BNP Paribas, Credit Agricole Group, ICBC, ING Group, and Investec.[6]

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.[10] In Aug. 2007, Dynegy announced that it had finalized funding for the project.[11] As of Dec. 2007, Dynegy had not been granted final permits, but was already prepping the site for construction.[12]

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).[13]

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.[14]

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.[15]

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.[16]

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.[17]

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.[18]

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.[19]

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.[20]

On July 10, 2020, the Wall Street Journal reported that owners of the Sandy Creek Energy Station were in talks with lenders about a possible restructuring of its debt, which could include filing for bankruptcy. The move came after the company said it cannot repay a loan that is coming due in November of 2020.[21]

Citizen Groups

Resources

References

  1. "LS Power Announces Completion of Project Financing For Sandy Creek Energy Associates, L.P." lspower.com, August 30, 2007
  2. "Dynegy, LS Power Announce Transactions with Lower Colorado River Authority Relating to Sandy Creek Project" businesswire.com, June 6, 2008
  3. "Preliminary Monthly Electric Generator Inventory" eia.gov, 860m March 2020
  4. "EIA 923 March 2020" EIA 923 March 2020.
  5. 5.0 5.1 "Preview of Sandy Creek Coal Fired Power Plant | Transaction | IJGlobal". ijglobal.com. Retrieved 2020-12-16.
  6. 6.0 6.1 "Preview of Sandy Creek Coal-Fired Power Plant (900MW) Refinancing | Transaction | IJGlobal". ijglobal.com. Retrieved 2020-12-16.
  7. "Dynegy to rethink new coal-fired power projects" Reuters.com, December 12, 2008
  8. "Dynegy Form 10-k 2009" Sev.gov, accessed July 2020
  9. 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
  10. Texas Commission on Environmental Quality Chief Clerk's Database, accessed January 2008.
  11. Dynegy Announces Completion of Project Financing for Sandy Creek Energy Associates, Dynegy press release, August 30, 2007.
  12. Coal Day in Hell, Texas Observer, December 14, 2007.
  13. "Stopping the Coal Rush", Sierra Club, accessed November 2008. (This is a Sierra Club list of new coal plant proposals.)
  14. "Dynegy to rethink new coal-fired power projects," Reuters, December 11, 2008.
  15. "Stopping the Coal Rush", Sierra Club, accessed May 2009. (This is a Sierra Club list of new coal plant proposals.)
  16. "Judge give Texas coal plant near Waco the OK," Associated Press, September 30, 2009.
  17. "Fifth Circuit Decision Finds Construction of Sandy Creek Coal Plant Unlawful" Sierra Club Press Release, Nov. 24, 2010.
  18. "US Supreme Court shows interest in Texas coal plant MACT case" Platts.com, October 3, 2011.
  19. "Longleaf Cancellation Marks End to Nation's Longest Running Fight Against Coal Plant," Sierra Club press release, December 12, 2011
  20. Terrence Henry, "Mystery Behind Sandy Creek Power Plant Begins to Unravel," StateImpact, August 22, 2012.
  21. "Coal-Fired Sandy Creek Power Plant in Talks on Debt Restructuring" wsj.com, July 10, 2020

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