Duke Public Affairs Director Kate Perez confirmed Monday that the company has pulled the plug on the project. "It is completely gone," she said.

The project had been hotly debated since Duke officials announced it more than three years ago, partly because of its location next to New River Trail State Park headquarters in the Foster Falls area.

The plant project also was controversial because it was going to draw water from an abandoned mine in Austinville to cool its turbines.

That water contains lead, cadmium and zinc, said Jeffrey Scott, executive director of the National Committee for the New River, one of several organizations opposing the project.

Scott said those contaminants could have been spread over the region in steam from the plant, though the Virginia Department of Environmental Quality issued an air permit for the Duke project earlier this year.

Perez said the proposed 620-megawatt plant had been a solid project when Duke officials announced it early in 2001, but the market for electricity has changed and so has Duke.

"We've been working on our overall corporate strategy for the last several months," Perez said. "We have some new management teams in place. ... We're dealing with some industry challenges that are just unprecedented."

The plant was to have used natural gas to heat water, generating steam to power an electricity-producing turbine. But natural gas costs have gone up since the facility was planned, and electricity has become more readily available to buyers.

Earlier this year, Duke announced an agreement to sell all eight of its power-generating plants in the Southeastern United States to KGen Partners LLC, owned by MatlinPatterson Global Opportunities Partners II, for $475 million. The two plants in Georgia, four in Mississippi and one each in Arkansas and Kentucky are powered by natural gas and have a combined total of more than 5,300 megawatts of capacity.

Perez said Duke took a loss on the sale, which is expected to be approved by regulatory agencies later this year, but the move is part of an overall strategy for a smaller and more focused merchant energy business.

The company is getting out of that business in the Southwest and concentrating on its other plants in the North, Midwest and West, she said, reducing its overall electricity generation by a third.

"It's just not a wise decision for us to build a plant in Virginia," Perez said, given all those changes.

Scott said the National Committee for the New River, which has had representatives testifying at all the public hearings on the plant, got a fax from attorneys for Duke saying the plant would not be built.

More than a dozen organizations like the New River group had a gathering at Foster Falls on May 8 and expressed concerns about the plant being next to the popular state park. The Virginia State Corporation Commission also had expressed concerns about that, and the use of the water from the abandoned mine.

"It just didn't make sense. So that captured their attention," Scott said.

SCC Hearing Examiner Michael Thomas last year made a finding that the project was contrary to the public interest. Because there has not been a situation in Virginia where a company used water from an abandoned mine, he said, there are no federal or state agencies that would monitor or regulate it. And the plant's location next to the state park would be like dropping the lights and noise from the movie spaceship in "Close Encounters of the Third Kind" next to the recreation area, he wrote in his opinion.

Opposition from the various citizen groups may have helped delay the project long enough for the economic forces to get it called off, Scott said.

"The citizens of Wythe County came together and got organized," he said. "I think there were a lot of lessons learned."

The Wythe County Board of Supervisors and the Joint Industrial Development Authority of Wythe County, Wytheville and Rural Retreat supported the project, because of the potential revenue. So Duke's abandoning the project was not good news to them.

"We're not totally surprised, given the current status of the merchant power market out there," Alan Hawthorne, executive director of the Joint IDA, said Monday. "They're divesting themselves of that activity. They were one of the lead players a few years ago when the project was first proposed."