LS Power suspends coal plant project

"Making this decision has been especially difficult given the strong support we have received for the project in the local community," said Robert Colozza, vice president for LS Power.

The project has faced many obstacles in the past year that have caused delays and increased the cost and risk of continue development efforts, the company said in a statement.

"Last year's energy legislation in Michigan restricting the available customers for the project, combined with current economic conditions and regulatory uncertainties, has deferred the immediate need for base load energy from the MME project," Colozza said.

"Additionally, securing the air permit is taking longer than we anticipated, with continuing uncertainty regarding applicable regulations and the process to completion. Given these factors, we determined it is not a wise business decision to continue active development of the MME project at this time."

Joy Buchanan, local spokesperson for LS, said it's unlikely LS will try again in Midland.

"It would be very hard to come back," she said. "You can't just come back in. You have to get your permits again, you would have to go through the zoning process (again) with the city."

The site plan for the 750-megawatt plant at the corner of Saginaw Road and Waldo Avenue was approved in 2008 by the Midland Planning Commission and the Midland City Council. The wetland permit from the Michigan Department of Environmental Quality was awarded in 2008.

In January, power producer Dynegy said it would dissolve its joint venture with LS that included the Midland plant. The company cited constrained credit markets and economic uncertainty.

Midland City Manager Jon Lynch expressed disappointment at the company's decision, but said he understood the reasons behind it.

"It would have brought a significant number of jobs and would have been welcomed to the area," Lynch said.

"But we understand the decision they're making considering the economics of the project, and the regulatory hurdles it's faced. You can't expect business to ignore those kinds of challenges."

Scott Walker, executive director of Midland Tomorrow, called LS Power's decision "a very disappointing loss for the community. LS Power is a highly respected player in the energy field, having had great success over the past 20 years. They would have been a good partner for the Midland community.

"Michigan is really losing something today because of the regulatory process and the uncertain economic climate in the state."