Westar Energy delays selection of coal plant site

29 December 2006 -- Kansas, US-based Westar Energy, Inc. has decided to re-evaluate its baseload coal-fired plant plans for the state because a surge in demand for coal-fired equipment has caused a high jump in projected costs of construction.

The company said that most major engineering firms and equipment manufacturers of coal-fueled power plant equipment are at full production capacity and yet are not indicating any plans to significantly increase their production capability. As a result, fewer manufacturers and suppliers are bidding on new projects and equipment prices have escalated and become unpredictable. Westar Energy said that these dynamics have caused the gap in cost between coal plants and other methods of meeting customers' need for energy to narrow. If demand for new baseload coal-fired plants slows, these trends could quickly change.

The utility announced that it continues to evaluate potential plans and possible sites for a future plant, but that it is postponing a decision to allow further study. Earlier the company indicated that it expected to announce a preferred site for a plant by year-end.

"Our forecasts continue to show annual increases in our customers' needs for electricity. When we started this process over a year ago, the lowest cost means to satisfy these needs was with a coal-fueled power plant. With the recent increases in the estimated cost of coal plants, however, that assumption does not necessarily remain valid," said James Haines, Westar Energy CEO. "When equipment and construction cost estimates grow by $200 million to $400 million in 18 months, it's necessary to proceed with caution. Fortunately, we have been planning well in advance of our customers' needs and are not forced into a difficult decision today," added Haines. "We will continue to evaluate how best to meet our customers' needs looking at all options and monitoring market conditions."

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