Credit crisis may stall utility projects

Utilities say that without more generators, power supplies could be strained.

GREAT FALLS, Mont. - The financial crisis is threatening to halt scores of proposed power plants, which could stretch the nation's power supplies to the limit, driving up prices and setting the stage for shortages.

The power industry is under extraordinary financial pressure just five years after North America suffered its worst blackout ever, when rolling outages affected 50 million people.

Even before the extent of the credit crisis was fully known, the nation's largest power providers warned of even bigger blackouts to come with the power grid under ever growing strain.

Without additional power plants, observers say, a shift to more expensive sources could end up soaking customers. The alternative is more frequent and potentially extended outages.

"We have to have new [power generation] capacity at some point, or we'll have brownouts, blackouts," said Mary Novak, an economist with the consulting firm Global Insight.

In Great Falls, work has begun on the Highwood Generating Station, an $800 million coal-fired plant that would produce 250 megawatts. A Nov. 30 regulatory deadline forced developers to start building Highwood with only enough cash to lay the concrete foundation. If additional financing fails, the electric cooperatives behind the project will have to get their power from the more expensive open market.

In the last two years, 76 coal plant proposals have been abandoned or postponed, said the advocacy group Source Watch.

ASSOCIATED PRESS