Swepco Ratepayers Could Be on Hook for Cost of Turk Plant

by Jamie Walden  on Monday, Aug. 10, 2009 12:00 am  

PSC Chairman Paul Suskie: "If the Court of Appeals' ruling stands, I don't see how a plant can get built anywhere in the state of Arkansas, period."

If Southwestern Electric Power Co. can't complete its embattled John W. Turk Jr. coal-fired power plant in Hempstead County, Swepco customers in Arkansas and elsewhere could be on the hook for more than $876 million.

The case, now on appeal to the Arkansas Supreme Court, appears to hinge on three major issues, one of which could permanently alter the approval process for power plants in Arkansas.

In early 2007, three private hunting clubs and a family trust launched an offensive on the Turk plant, claiming it would harm the environment. In June, the plaintiffs won their case in the Arkansas Court of Appeals. The argument by Hempstead County Hunting Club Inc., Po-Boy Land Co. Inc., Yellow Creek Corp. and Shultz Family Management Co. targeted the approval procedure by the Arkansas Public Service Commission and simultaneously argued that Swepco didn't adequately document a need for the Turk plant or its evaluation of alternative locations.

The PSC regulates the construction and location of power plants under the Utility Facility Environmental & Economic Protection Act of 1973. A company must obtain a Certificate of Environmental Compatibility & Public Need, or CECPN, to build a plant.

The PSC also wields the authority to approve the transmission lines that transport the power generated by the plant.

Ever since legislators wrote the utility act in 1973, the PSC has interpreted the method of handing down these approvals in one consistent way. But recently the Arkansas Court of Appeals said the PSC has been doing it wrong all this time.



The contentious clause grants the Public Service Commission exclusive and final jurisdiction "for the expeditious resolution of all matters concerning the location, financing, construction and operation of electric generating plants and electric and gas transmission lines and associated facilities in a single proceeding."

The PSC has, for the past 36 years, interpreted the "single proceeding" to mean an issue is heard solely by the commission. "Not in a district court or a circuit court here, not in front of one state agency here, have it all in one place," PSC Chairman Paul Suskie said.

Furthermore, the use of the word "and" in that construction - "electric generating plants and electric and gas transmission lines and associated facilities" - has led the PSC to handle the construction of a plant in one docket and the transmission lines in another docket. Despite the division of those hearings, the PSC thought it was following the law because the proceeding was held by one body.

The Arkansas Court of Appeals, however, interpreted that phrase to mean the plant construction, transmission lines and associated facilities should all be part of one hearing.



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