Aquila, DPL Energy Drop Ohio Projects

SAN FRANCISO, California -- - Plans to build new power plants in Ohio were dropped this week by two big energy companies, reflecting the weak economy and soft market for more generating capacity.

Aquila Inc. withdrew a plan for a 320 megawatt natural gas-fired "peaker" plant, and DPL Energy, a unit of DPL Inc., also pulled back a 300 MW gas-fired peaker station, a spokesman for the Ohio Power Siting Board said.

Aquila also decided not to go ahead with a second 320 MW peaker unit that had not yet reached the Ohio board, which is responsible for reviewing and approving new energy projects in the state.

The projects would have added enough generation to the Ohio grid to power more than 900,000 homes.

"The market is just not there," said Al Butkus, vice president of corporate communications at Aquila. "There is low demand for power and it's not economical to proceed," he said.

U.S. energy companies have scaled back expansion plans due to the slumping economy and a credit squeeze and loss of investor confidence in the aftermath of the collapse of Enron Corp.

Aquila, based in Kansas City, Missouri, dropped power projects in the Ohio towns of Nashport and Baltimore, while DPL Energy, of Dayton, Ohio, withdrew a plant near the city of Springfield.

Peaker plants typically generate electricity during periods of high demand, especially in the summer.

Aquila, caught in the energy market meltdown after Enron Corp's 2001 collapse, announced last year it was exiting the merchant power business and plans to sell about $1 billion of assets to bolster its flagging share price.