Dynegy CEO says U.S. coal plants face uphill battle

HOUSTON, May 14 (Reuters) - Bruce Williamson, chief executive of independent power producer Dynegy Inc (DYN.N), said on Wednesday that only a few of the proposed coal-fired power plants in the United States will be built due to soaring costs and financing hurdles.

"Very few coal plants will break ground in the next several years unless they have already started construction, have an EPC (engineering, procurement and construction) contract or equipment committed to them," Williamson told shareholders meeting in Houston.

Rising global competition for energy in all forms raises costs and limits the ability of new entrants to the power business, Williamson said.

He said these trends have "collided" with growing U.S. electric demand, which he sees continuing despite worry about a U.S. economic recession.

"I don't expect a significant decline for power or in the supply/demand balance," Williamson said.

Turmoil in the capital markets stemming from the subprime mortgage meltdown, along with growing environmental concern about carbon dioxide emissions, will make it more difficult and costly to build needed new power plants, Williamson said.

"New investment (for generation) has been sidelined," he told shareholders.

Williamson said Dynegy's portfolio of 19,000 megawatts of generation, which is 70 percent natural gas fueled, should benefit from higher power prices which will allow its plants to operate more hours.

Dynegy is also building a coal-fired power plant in Arkansas and one in Texas in a joint venture with LS Power Group. Its share of both plants' output is about 480 MW.