Cogentrix to build power plant in South Carolina

Aug 31, 2001 02:00 AM

A Charlotte company with plans to build a $ 500 mm wholesale power plant in South Carolina joins out-of-staters bringing an electric industry trend to the Carolinas. Cogentrix Energy said it expects to apply for state regulators' approval within two weeks and already has applied for state environmental permits for the plant, which would produce enough electricity to power 800,000 homes.
The company, with 22 operating US power plants, mostly east of the Mississippi, expects to begin construction in Greenville County next spring. During the two-year construction, the project would employ about 300 people. Once operating, the plant would have about 30 workers with average annual salaries of $ 50,000. At $ 500 mm, the project equals half the county's total new investment for 2000, according to the Greater Greenville Chamber of Commerce.
"We're very excited to have their investment, the jobs and the tax base," said Scott Case, vice chairman of the Greenville County Council. Like the half-billiondollars power plant Atlanta-based Mirant announced for Gastonia, the Cogentrix project is what's called a merchant power plant -- not a utility plant. Merchant plants -- accounting for nearly all the generation under construction nationwide -- sell only in the wholesale market to utilities and other power traders. Wholesale power rates are set by the market -- as stocks are -- not state regulators.

The 1992 Energy Policy Act paved the way for wholesale power deregulation, which in the past few years spurred the growth of merchant plants. Merchant builders have only recently started looking at the Carolinas, which have one operating merchant plant each and a total of five in process plus the projects in Gaston and Greenville counties, and one proposed for York County, SC.
Carolinas utility regulators are studying potential impacts of merchant plant construction, including air pollution, water use and congestion on the utilities' transmission lines, which merchant operators use to deliver power. Regulators also are reviewing capacity in the pipelines that carry natural gas -- the main fuel for merchant plants, including the ones proposed for Gaston and Greenville counties.
The SC Cogentrix project would be the first Carolinas merchant project by a Carolinas company. The plant would sit across the street from a $ 400 mm merchant plant that Entergy, based in New Orleans, has applied to build. The two would connect to a Duke Power substation at the site to transmit their power.

Calpine, a power producer based in San Jose, California, operates South Carolina's only merchant plant, in Cherokee County. Calpine also wants to build a $ 400 mm plant in York County, SC, and is building one in Calhoun County, south of Columbia. A Massachusetts company has a permit to build in Anderson County.

Cogentrix, a private company with sales last year of $ 551 mm, is considering two sources for the 4 mm gallons of water a day the SC plant would use -- the Greenville water system or treated wastewater. Cogentrixtypically sells its plants' power on contracts ranging from five to 20 years. Potential customers include Carolinas utilities and municipal power suppliers.
Industry analysts say many of the plants proposed in a national power building boom won't get built. Cogentrix agreed, saying it will monitor demand closely as the S.C. project moves forward. "We have to watch those market conditions, but we're full steam ahead on the development," said Chip Olsen, a Cogentrix vice president managing the Greenville project.

Cogentrix Energy
-- Headquarters: Charlotte
-- Founded: 1983
-- Employment: 500, with 125 in Charlotte
-- 2000 revenues: $ 551 mm
-- 2000 earnings: $ 51.5 mm
-- Operating plants: 22 US plants, generating enough power for 5 mm homes
-- In process: 6 plants under construction, including one in the Dominican Republic, and about 6 more, including the Greenville County, SC, project, in permitting.

Source: The Charlotte Observer
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