Tampa Electric backing off clean coal

Tampa, Fla.-based Tampa Electric said today it's dropping plans to use integrated gasification combined-cycle, or clean coal, technology to meet its 2013 baseload needs.

The utility, a principal subsidiary of Teco Energy (NYSE: TE), said continued uncertainty related to carbon dioxide regulations, particularly capture and sequestration issues, and the potential for related project cost increases, created too high a financial risk.

"We believe there is a role for IGCC in Tampa Electric's future generation plans, but with the uncertainty of carbon capture and sequestration regulations being discussed at the federal and state levels, the timing is not right to utilize it for a baseload facility needed by 2013," said Chuck Black, president of Tampa Electric.

"We are not prepared to expose our customers and shareholders to that risk."

The company said its peak demand is expected to continue to grow by 150 megawatts per year over the next 10 years.

"We sincerely appreciate the $133.5 million in federal tax credits awarded for this project, but with regulatory uncertainty and related potential cost increases, we are concerned that IGCC may not be the most cost-effective technology to use at this time," said Black.

Tampa Electric said it will look into how to meet its needs for more than 600 megawatts of generation in early 2013, evaluating other technologies and fuel options including natural gas, as well as expanded energy-efficiency and conservation programs and renewable resources.

"There is a good, healthy debate on climate change issues, and once that debate produces clearer requirements, significant investments can be made with greater certainty – and lower risks – for customers and investors," said Black.

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