Iowa Gains MidAmerican 790 MW Coal-Fired Plant And Loses Entergy 615 MW Gas Fuelled Project

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). MidAmerican Energy (Des Moines, Iowa), a subsidiary of Berkshire Hathaway Incorporated (Omaha, Nebraska) has signed contracts with Japanese companies Mitsui (NASDAQ:MITSY) (Tokyo, Japan) and Hitachi (NYSE:HIT) (Tokyo, Japan) and Sargent & Lundy (Chicago, Illinois) for the design and construction of a $1 billion plus coal-fired power generation plant at Council Bluffs in Iowa. The 790 MW plant will incorporate supercritical technology for the high temperature heating and pressurization of steam. It will be the state's largest and will be sited on property the company owns. It will be adjacent to MidAmerican's three existing units at Council Bluffs Energy Center at Lake Manawa which together put out 800 MW.

Mitsui will manage the construction of the project and Hitachi will provide technical coordination, boilers, power turbines, and environment protection equipment. The Japanese companies} slice of the contract is worth $991 million. Sargent and Lundy will assist in the design of the plant.

Construction on the plant should begin in September this year although MidAmerican must still secure environmental and regulatory approvals and obtain favorable rate-making rulings from the Iowa utilities board. Commissioning of the plant is scheduled for 2007.

The plant will bring quality employment opportunities, tax revenue and reasonably priced electricity to the region. It is estimated that the plant will employ 1,000 construction workers and pay them $300 million in wages and create 80 permanent jobs with a $4.8 million payroll and $3.5 million in property taxes.

MidAmerican Energy Holdings, the umbrella company, has global subsidiaries with around 5 million electricity and gas customers worldwide. MidAmerican Energy is the largest utility in Iowa and is strategically located in the middle of several major markets in the Midwest serving 673,000 electric power customers and 652,000 natural gas customers.

For its electric customers the company supplies 4,400 MW of power with 76% generated from coal, 23% nuclear, and 1% fuelled by natural gas and oil.

Along with the trend of power utilities to stabilize their power generation costs and diversify their fuel energy sources, there is also a move towards coal-fired plants with equipment incorporating leading edge supercritical technology. The new power plant is the first of its type in the US for the Japanese companies who are looking to bring their experience in coal-fired techniques to bear to give them increased market profile and share.

Concurrent with MidAmerican's announcement of the new plant contracts, Entergy Corporation said that it was dropping plans to build a gas-fired 615 MW plant in Orient Township, Iowa. The company cited overbuilt generating capacity in the Midwest and increasingly steep prices for natural gas to fuel the plant. Estimated costs for the plant were between $330-$500 million.

Entergy (NYSE:ETR) (Houston, Texas), which ranks second as a nuclear power provider in the US, last year dropped plans to build two power plants in the Carolinas, which would have generated a 1,800 MW total. Entergy Asset Management, which has about 1,100 MW of non-nuclear generation currently operational or in construction, is looking to acquire distressed assets of existing or partially completed power plants in North America.