WSJ: Energy Firms Cut Back Building Plans

Jan. 4, 2002

NEW YORK (Reuters) - Power companies are scaling back plans to build new plants to deal with sliding wholesale electricity prices and questions about heavy corporate debt levels, The Wall Street Journal reported on Friday.

Data by compiled by a research group indicated that about 18 percent of announced projects are defunct, double the figure from last year, the newspaper said in its online edition.

This fall-off could pose a threat to the United States when the country emerges from its ongoing recession and demand for electricity picks up, it said.

Energy trader Enron Corp.'s  dramatic meltdown has hurt the power industry in recent months and forced many to cut spending. Once high-flying Enron filed for Chapter 11 bankruptcy in December after it revealing irregularities in the way it did its accounting.

Rivals Mirant Corp., Dynegy Inc.  and El Paso Corp., have all said they would scale back some projects.

Calpine Corp. is expected to make a similar announcement later this month, The Wall Street Journal said.

The newspaper cited data by Energy Insight, a Colorado-based unit of McGraw-Hill Cos. , as showing that 91,139 megawatts of generating plant, out of a total announced portfolio of 503,780 megawatts, had been scrapped or delayed by the end of 2001.

In 2000, the industry had put off or canceled 30,909 megawatts of capacity, which equals about 10 percent of the announced total, it added.

Energy Insight's numbers are based on company releases and may understate marketplace conditions, the newspaper said.

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