The company said it will redirect its resources to other projects.
"We feel like this was a good site for a proposed project, but we're focusing our efforts elsewhere," said Mark Milburn, an assistant vice president with LS Power. "It's clear for us that other projects in the region are at a more advanced stage and can serve the same need."
Milburn said the nation's economic downturn had pushed the company to prioritize projects and move ahead with other, more advanced proposals.
"Each project... has various permits that are required and if you look at each of the permits and the costs involved and look at the timetable to get those permits, it's clear we have other projects I would characterize as being at a more advanced stage and thus better for us to pursue."
The Elk Run project had been criticized by environmental groups and health advocates who were concerned about pollution from the plant.
The project had plenty of supporters, however, in the business community and city government. They saw the project as a potential economic boon that could bring in short term and more permanent jobs.
"It's a lost opportunity," said Waterloo Mayor Timothy J. Hurley. "We were looking forward to a great relationship, one with tangible benefits, including construction jobs, permanent jobs, property tax revenues and community investment.
"It's the opportunity lost that is real disappointing, but we're going to go on."
Milburn denied pressure from environmental groups had been a significant factor in the company's decision to pull out of the Waterloo project, but activists celebrated the announcement as a victory nonetheless.
Carrie La Seur, president of the Cedar Rapids-based environmental group Plains Justice, said she wasn't surprised the project didn't come to fruition.
"Really, with the kind of developments we've seen over the last several months in the credit markets and for coal fired plants in particular, I guess we were waiting to hear the final nail get hammered into the coffin," said La Seur, whose group has been a leader in opposing the plant. "I'd have been very surprised if they were able to build a coal plant."
She said the decision was vindication for her group's stance.
"Our position all along has been that there are far better and less risky options available to the Cedar Valley and Iowa as a whole for development," she said.