The power industry is under extraordinary financial pressure just five years after North America suffered its worst blackout ever, when rolling outages turned out the lights on 50 million people. Even before the extent of the global credit crisis was fully known, the nation's largest power providers warned of even bigger blackouts to come with the power grid under ever growing strain.
The industry has faced criticism for blackouts, but it also faces opposition to new new plants and stringing new power lines.
With the economy teetering toward recession, it may face its toughest obstacle yet.
If credit woes put the brakes on scores of proposed plants, observers say a shift to other, more expensive fuels could end up soaking customers. The alternative is more frequent and potentially extended outages.
"We have to have new (power generation) capacity at some point, or we'll have brownouts, blackouts," said Mary Novak, an economist with the consulting firm Global Insight. "The problem is, too many (utilities) are betting on delay."
For Montana's 250-megawatt Highwood plant, a Nov. 30 regulatory deadline forced developers to start building with only enough cash to lay the concrete foundation. If additional financing fails, the electric cooperatives behind the plant will have to get their power from the more expensive open market with customers footing the bill.
"It's not without risk and a lot of anxiety," John Prinkki, a Southern Montana Electric cooperative board member, said of breaking ground on the project. "But we're between a rock and a hard place. We don't have any choice people are using more power than they ever have before."
Utility representatives insist their projects still deserve financing. Yet even before the credit markets froze up, the industry had delayed dozens of coal plants, over climate change pressures and construction costs that effectively doubled in recent years.
Those cost spikes have reinforced the power industry's position as one of the most capital-intensive in the economy. Before the crisis, investor-owned utilities had plans to spend upward of $1 trillion over the next two decades on new plants, transmission lines and maintenance of the power grid, said Richard McMahon with the Edison Electric Institute, a utility industry association.
Whether they get that money depends largely on the economy.
Some project developers aren't waiting to find out. In recent days, Florida Power and Light trimmed its 2009 capital expenditures plan by nearly 25 percent to $5.3 billion. Instead of 1,500 megawatts of new wind-power generation, the company is now looking at building just 1,100 megawatts.
In West Virginia, Synthesis Energy Systems and Consol Energy shelved an $800 million coal-to-liquid fuels plant, with Synthesis chief executive Tim Veil citing "the current state of U.S. credit markets."
Those are just the latest in what has emerged as a tidal wave of project delays and cancellations over the last two years, according to government sources and interest groups.
The Department of Energy had forecast earlier this decade that 36,000 megawatts of new coal-fueled power supply enough to power an estimated 36 million homes would come online by 2008. Instead, only about 5,000 megawatts of supply were built, or enough for about 5 million homes.
In the last two years, 76 coal plant proposals have been abandoned or postponed, according to the advocacy group Source Watch. In 2007 alone, that amounted to more than $45 billion in shelved projects, the group claims.
Other parts of the energy sector, particularly oil companies, are sitting on large cash reserves that allow them to self-finance major projects such as wildcat exploration and deep water drilling. By contrast, even the largest utilities typically go into debt to finance at least half their capital costs.
Plants like Highwood that are backed by smaller electrical cooperatives are even more heavily leveraged. The five cooperatives involved in the project are investing a combined $40 million about 5 percent of the total cost. Government loans once a mainstay for small cooperatives dried up in March when the U.S. Department of Agriculture indefinitely suspended its rural utilities loan program.
The converging pressures on the industry make the duration of the tight credit market critical to its long-term outlook, said Todd Alexander, a New York lawyer who advises plant developers on financing.
Over at least the next several months, Alexander said everything from coal plants to pipelines to wind farms face an uphill battle to seal deals on debt. He added that could quickly turn around if the markets loosen in the first quarter of 2009.
Some analysts and industry executives see a silver lining for large power projects in the wider economic downturn.
As prices for steel, copper and other commodities stabilize or fall, so too could skyrocketing plant construction costs. And if the recession prompts homeowners and commercial and industrial power users to cut back on the amount of electricity they use, pressure to build new plants could ease.
Similarly, reductions in fuel prices could lower the cost of operating plants that run on natural gas, which are generally cheaper to build than coal plants.
"The warnings we've been hearing about inadequate supply to keep up with growing demand are not as dire if we're in a recession and people are not demanding power," said Doug Larson, executive director of the Western Interstate Energy Board.
Back at the Highwood Generating Station near Great Falls, delay is not an option. If Nov. 30 comes and concrete has not been poured, the plant's air quality permit will expire, forcing it to reapply.
Southern Montana Electric's general manager, Tim Gregori, said he is confident banks will loan the cooperative money as construction advances.
"It is no longer a project in the permitting phase. It is now a project under construction," Gregori said.
Gregori added a claim heard frequently within the utility industry in recent weeks: Good projects can still get financing.
But Lasan Johong, a utility analyst at RBC Capital Markets, said the historic scope of the nation's economic troubles has thrown that adage into doubt.
"I've never had to worry about companies raising money because if there's a good project out there, money was always available," Johong said. "In this type of situation, I don't know for sure if that is true. We have to think about what happens if the mantra doesn't hold."