Ark. Supreme Court Overturns SWEPCO’s Permit for Ultrasupercritical Plant

The Arkansas Supreme Court last week upheld a state appellate court decision that had previously overturned, on technical grounds, a permit authorizing construction of Southwestern Electric Power Co.’s (SWEPCO’s) 600-MW John W. Turk Jr. coal-fired power plant in Hempstead County. The decision could pose a serious setback for the project—the nation’s first ultrasupercritical plant—that is under construction and almost a third complete.

The high court on Thursday agreed with the Arkansas Court of Appeals, which last June overturned the Arkansas Public Service Commission’s (APSC’s) November 2007 decision to grant a Certificate of Environmental Compatibility and Public Need (CECPN) to the $1.7 billion project.

The appellate court ruled on the grounds that APSC had “erred by failing to resolve all matters in a single proceeding as required by Arkansas Code Annotated section 23018-502,” a clause related to the state’s Utility Facility Environmental and Economic Protection Act.

A CECPN is legal authorization granted by the state of Arkansas to a regulated utility to construct a power plant or transmission facilities and is only issued after public and formal review by the state and interested stakeholders. The June 24 ruling favored landowners, including the Hempstead County Hunting Club, Schultz Family Management Co., Po-Boy Land Co., and Yellow Creek Corp.

In a brief to the Supreme Court, SWEPCO—an American Electric Power (AEP) subsidiary—argued that the Court of Appeals had “erroneously reversed the APSC based on an incorrect construction of the Act.” It also said that the “ruling [abandoned] 150 years of final-order precedent,” and that the court’s decision [conflicted] with a prior appellate court case in which it found that “something more than mere error is necessary.”

However, on Thursday the state’s Supreme Court concluded that Arkansas regulators did not conduct a proper hearing for the permit, and sent the case back to the APSC. The court also took issue with the PSC’s conclusion that coal-fired generation using ultrasupercritical pulverized coal technology is a reasonable solution to baseload power needs for SWEPCO customers.

“The problem with the ultra-super critical pulverized coal technology upon which the PSC bets all its chips to render the adverse environmental impact acceptable is that it has not been successfully tested or used in the United States, which renders the Turk plant something of a guinea pig for this technology,” wrote (PDF) Chief Justice Jim Hannah in an opinion delivered on May 13.

“There was testimony that it has recently been used in Japan but that prior attempts to use it in the United States failed due to metal-fatigue problems. To me, that is problematic. Because of this, I cannot say the technology prong is supported by substantial evidence. The simple answer is we do not know whether the ultra-super critical pulverized coal technology will work at the Turk plant. It is described as state of the art, but without sufficient testing and usage, that is completely speculative.”

Justice Hannah also pointed out that the plant’s cost was considerably higher than original 2005 estimates. He added that “an unknown, customer need was determined in a non-public arena, analysis of alternative sites has been given short shrift in the PSC’s order, and the preference given to coal over natural gas seems arbitrary in light of cost and the higher toxic emissions associated with coal.”

SWEPCO spokesperson Scott McCloud told POWERnews on Wednesday that the court’s decision could prove a “serious setback” for the plant. “We were disappointed with the decision, and we are reviewing our options and will issue a decision within 18 days [from the court’s ruling],” McCloud added. SWEPCO also separately said in a recent filing with the Securities and Exchange Commission that it “is studying the decision and evaluating its next actions with respect to the plant."

SWEPCO has said that the project was too large to “kill.” McCloud confirmed to POWERnews that as of mid-April, plant construction and planning costs for SWEPCO, which owns 73% of the Turk Plant, had climbed to $777 million. Added to that, SWEPCO and its partners had contractual construction commitments of $449 million. Winding down the project—just closing down construction—could cost the plant’s owners up to $121 million, according to company estimations. 

If the plant were “killed,” it could also put the region’s energy security in jeopardy, SWEPCO alleges. In addition to the Turk plant, SWEPCO is building the 508-MW combined-cycle natural gas–fired Stall Unit in Louisiana—a project slated for completion in 2010—to meet intermediate load, and it recently completed the 340-MW simple-cycle, natural gas–fueled Mattison Plant in Tontitown, Ark., to help meet peak demand on the SWEPCO system.

On Thursday, meanwhile, AEP Chairman, President, and CEO Michael Morris announced that SWEPCO President and Chief Operating Officer (COO) Paul Chodak had been replaced by Venita McCellon-Allen (who had been SWEPCO’s president from 2006 to 2008). Chodak would move to Indiana Michigan Power as president and chief operating officer, replacing Helen Murray, who was retiring from AEP, Morris said. The moves follow AEP’s announced plans in mid-April to cut 10% of its workforce, measures prompted by a sag in power demand, and which Morris told employees were necessary to keep the company successful.

The Turk plant was expected to begin operating in October 2012. Regulators in Arkansas, Texas (July 2008), and Louisiana (March 2008)—states served by SWEPCO—have approved the Turk Plant project. The plant also received the required air permit from the Arkansas Department of Environmental Quality in November 2008—though that permit is also under appeal before the Arkansas Pollution Control and Ecology Commission.

The Turk Plant’s ultrasupercritical advanced coal combustion technology would use less coal and produce fewer emissions, including carbon dioxide, than traditional pulverized coal plants. The plant would use low-sulfur coal and will include state-of-the-art emission control technologies, including a design that allows for the retrofit of carbon dioxide controls. For a special report on the Turk plant’s steam turbine system, see “Designing an Ultrasupercritical Steam Turbine” in the July 2009 issue of POWER.

Sources: POWERnews, POWER, AEP

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