Power companies split on future of coal

By Steve James

NEW YORK (Reuters) - Two major U.S. power companies were split on Tuesday over whether to continue using America's abundant, but not so clean, coal reserves to generate electricity.

Their divergent positions, expressed during the Reuters Global Energy Summit, illustrated the current debate over the future of coal-fired power plants in the United States, where an estimated 50 percent of electricity is generated by coal.

Last week, President Bush laid out a proposal to set a long-term carbon emission target for the world's biggest industrial nations, including India and China, which both burn huge amounts of coal. Environmentalists are putting pressure on industry to develop technologies that cut greenhouse gases.

Asked during the Reuters summit about future coal use, Thomas Farrell, chief executive of Dominion Resources Inc. (D.N: Quote, Profile, Research, Stock Buzz), said: "I don't know how you can maintain even where we are today without using coal.

"Not taking into account growth ... if you want electricity, you're going to have to have coal."

In fact, Farrell, whose company is based in Richmond, Virginia -- a coal-mining state, said Dominion is building a coal plant in the southwest of the state. "It will be very environmentally friendly -- about 20 percent biodegradable."

However, his sentiments were not shared by John Bryson, chief executive of Edison International (EIX.N: Quote, Profile, Research, Stock Buzz), a California power company committed to building or buying more power plants fired by natural gas.

Edison has no plans to invest in any new coal-fired power plants, Bryson told Reuters journalists, though it does operate several plants fueled by coal from the Powder River Basin of Wyoming and Montana with contracts running through 2012.  Continued...