US coal-fired capacity construction paralyzed by uncertainty: NRG

Portland, Maine (Platts)--2May2007

Efforts to build coal-fired generating capacity in the US have been hit
by "paralysis and indecision," in part because of uncertainty surrounding
potential limits on carbon emissions, David Crane, president and CEO of
merchant generator NRG Energy, said Wednesday.

In a conference call with analysts after the company released its
first-quarter earnings, Crane said the market for new power plants is "in more
turmoil than ever," adding that some in the industry believe there is a de
facto moratorium on building coal-fired capacity.

Crane said a number of issues are affecting the development of coal-fired
capacity, including companies waiting for federal funding for integrated
gasification combined cycle projects; rising construction costs, which is
adding to long-term uncertainty; and, a lack of clarity in when and how carbon
emissions will be regulated.

Princeton, New Jersey-based NRG is positioning itself for the possibility
that regulators will need to make emergency decisions if they decide that new
generation is suddenly needed, Crane said.

The company controls sites in key markets, which gives it a natural
advantage over other companies, he said.

Crane added that he believes it is unlikely developers will repeat the
overbuilding mistakes that characterized the last cycle of capacity additions.
He also said there is uncertainty surrounding the wind industry, which Crane
called "overheated." Construction costs are increasing, especially in cases
where developers are using turbines built outside the US and the decline of
the US dollar is making imports more expensive, he said.

NRG is exploring building wind projects in areas where it already owns
fossil-fueled power plants, Crane said, believing it can charge a premium for
wind generation tied to its fossil output.

--Ethan Howland, newsdesk@platts.com