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."

Arkansas and Texas didn't require Swepco to solicit bids.

Entegra later tried to intervene in the Arkansas docket. Though Suskie wasn't on the PSC at the time, he said the commission saw that move by Entegra as an attempt to block a competitor from entering the market.

"They didn't bid at the proper time. And then they wanted to intervene in the Arkansas docket essentially to block the plant from being built because it's competition," Suskie said.


Holding the Bag

Although Swepco, which has 113,500 customers in Arkansas, has the most cash in play, other parties stand to be affected by the outcome of the case.

The Arkansas Electric Cooperative Corp., which has about 490,000 Arkansas customers, has a 12 percent ownership stake in the plant.

If the Supreme Court takes on the case and sides with the Court of Appeals, Swepco would be forced to restart what has been a multiple-year application process. And if plaintiffs' attorney Nestrud is right and Swepco can't demonstrate a need for the plant this time around, customers would be left holding the $876 million bag.

According to Swepco's most recent quarterly report, the company would seek to increase its rates to recoup $136 million in contract termination fees plus whatever it has invested in the plant thus far. Swepco had spent more than $740 million as of last week on the Turk plant, spokeswoman Kacee Kirschvink said.

"If the Turk Plant cannot be completed and placed in service, Swepco would seek approval to recover its prudently incurred capitalized construction costs including any cancellation fees and a return on unrecovered balances through rates in all of its jurisdictions," the filing states.

So what are the possible outcomes? Suskie said the Supreme Court could kick the case back to the PSC for more hearings, uphold the PSC's procedure or support the appellate court's decision.

"If the Court of Appeals' ruling stands, I don't see how a plant can get built anywhere in the state of Arkansas, period. Whether it's a solar farm, a wind farm, you're going to have to have, I think, amendments to law," Suskie said. "Because of the way the Court of Appeals interpreted it, you would have to have a fundamental rewrite."



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