June 27, 2009

Arkansas makes an efficient footprint

Arkansas saw a great victory this last week. Let's do the same here in South Carolina; we need a victory. The article below is important because it illustrates how the Arkansas Court of Appeals boosted energy-efficiency in the face of a proposed coal plant. We can do the same in South Carolina, let's follow Arkansas by saying no to coal.

Arkansas Online
6 judges reject PSC approval of approval of power plan Appeals panel says consent given in stages counter to law
Bill W. Hornaday

June 25, 2009

The $2.1 billion coal-fired John W. Turk Jr. power plant project under construction near Texarkana saw a major setback Wednesday as the Arkansas Court of Appeals unanimously rejected its approval by state utility regulators.

A six-judge panel ruled that the Arkansas Public Service Commission misapplied “plain language” law that requires new power plants and related facilities such as transmission lines to be reviewed all at the same time. It also found that the commission failed to adequately establish need for the plant.

The commission exceeded its authority by approving Southwestern Electric Power Co’s need to secure 1,600 megawatts of electricity five months before it approved the plant itself in November 2007 - and more than two years before permitting lines that would link the plant to the electric grid, the court found.

So far, neither SWEPCO nor the commission has decided whether to appeal the ruling to the Arkansas Supreme Court, officials of both parties said. SWEPCO can reapply for approval, as long as all Turk plant related matters are heard simultaneously, the court ruled. Hunting-club attorneys Rick Addison of Dallas and Chuck Nestrud of Little Rock applauded the court’s decision.

Nestrud said SWEPCO can no longer demonstrate a compelling need for the plant and that better locations than Hempstead County exist.

“When SWEPCO does the type of evaluation that the Court of Appeals has now required, if they follow the decision rendered today, they should pull the plug on this project,” Nestrud said. Addison said that given the court’s decision, he expects work to “cease immediately” at the plant site.

“They no longer have a valid [certificate],” Addison said. Commission attorneys argued that the commission followed a legislative directive from 2003 that calls for “resource planning” dockets to precede major proposals such as power plants, a practice that has since become routine.

Yet the court noted that until opposed by the Hempstead County Hunting Club and other landowners such practices had never been challenged.

“The mere fact that the practice has gone unchallenged cannot create a presumption that it is proper,” the court found.

The Turk plant is the centerpiece of SWEPCO’s push to meet growing demand from its 113,500 customers in Arkansas, plus 358,000 more in parts of Louisiana and Texas. Without it, SWEPCO contends that it will soon be unable to provide power to customers without long-term reliance on more costly options such as natural-gas-fired plants, whose fuel prices are historically unstable, or electricity purchased on the open market that largely comes from gas-fired plants.

Opponents contend that coal fired plants harm humans and wildlife, add to global-warming concerns and threaten pocketbooks with soaring construction costs and the prospect of expensive environmental legislation.

State and environmental authorities say the plant is near some of Arkansas’ last cypress swamps and stands of virgin timber.

Few comments were offered by the Shreveport-based company, other than to confirm that construction continued Wednesday at the 3,042-acre plant site in
Hempstead County.

“Obviously, we’re extremely disappointed in the Court of Appeals ruling,” SWEPCO Chief Operating Officer Paul Chodak said in a prepared statement.

Chodak added that the ruling appeared to address how plants are approved and “not whether the Turk plant is the best way to serve our customers.”

Two other Turk plant opponents who are appealing the plant’s air permit before the Arkansas Pollution Control and Ecology Commission also voiced their approval of the ruling.

The court protected our environmental, public and economic health,” said Sierra Club regional director Glenn Hooks. “Today is a tremendous victory for Arkansans.” Audubon Arkansas Executive Director Ken Smith said a recent economic study by his group showed that Arkansas’ current and future energy needs can be met through energy efficiency, renewable fuels and natural gas.

Alternatives do exist to the coal-fired power plant but were not considered by the [commission],” Smith said. Gov. Mike Beebe, whose Commission on Global Warming recommended in September that no new coal-fired power plants be built in Arkansas until 2020, also issued a prepared statement.

Despite the September finding, Beebe told environmental groups in December that he had no authority to stop the plant.

“If the appeals court decision stands, and the applicant chooses to restart this process at the Public Service Commission, [Beebe] encourages the [commission] to give the facts of this case a full and thorough hearing and to seek input from every affected party,” Beebe said in the statement.

In its 19-page decision, the court noted that state law clearly requires “the expeditious resolution of all matters in a single proceeding for generating plants and transmission lines, not one proceeding for generating plants and another for transmission lines.”

The statute Arkansas Code 23-18-502, contains several paragraphs that define environmental quality and “alternative, renewable and nonrenewabletechnologies that are energy-efficient as key considerations in approving the construction of major newutility facilities.

It also calls for “adequate opportunityforindividualsandgroups interested in energy and resource conservation and the protection of the environmentto take part in decisions on such facilities.

By pursuing a “needs docket” that the hunting clubs did not take part in - followed by a plant docket where the need for the Turk plant was established - the commission corrupted “the spirit and letter of the law,” the court found.

Because the need for the plant had already been approved, the hunting-clubs arguments against the plant were hindered, Nestrud argued before the appeals court.

Separating the issues into three distinct proceedings subverted the clear intent of the legislature for the APSC to structure a comprehensive evaluation of proposals in order to determine the economical and environmentally safe provision of utility services to the public,” the court

In failing to properly establish need for the Turk plant, the court noted that the commission did not require SWEPCO to address alternate sites that it considered for the plant.

Such steps also are defined by state law, which requires utilities - in their environmental impact statements - to describe the “merits and detriments” of each alternate location, the energy source considered and why the proposed location and energy source were chosen, the court stated.

According to the ruling, SWEPCO’s application and environmental impact statements cited only a study conducted by engineering consultants Sargent & Lundy that identified nine plant sites - four in Arkansas, four in Louisiana and one in Texas.

The court found “particularly disturbing” that the Hempstead County site ranked seventh on the list and that the study did not list a preferred or alternate site in Arkansas.

The court noted that the Sargent & Lundy study was the only site-selection process cited by SWEPCO in the case.

But in August 2007, SWEPCO told the commission that it evaluated seven bids - four in-house and three from outside companies - before Hempstead County won out over another SWEPCO plant near Hallsville, Texas.

The Hempstead County site cost $16 million less than the Texas site, SWEPCO officials said in 2007. SWEPCO also cited public opposition to 11 proposed coal plants in Texas as another reason for building in Arkansas.

Two of the three outside proposals were rejected because they lacked a minimum net worth of $500 million that SWEPCO requested. The third asked SWEPCO to make the initial fuel purchase, and neither the bidder’s parent company nor its banks would back the proposal, SWEPCO officials said.

In a concurring opinion, Judge Josephine L. Hart took the commission’s staff and the attorney general’s office to task for what she described as their shortcomings in the case. By using only three witnesses to question SWEPCO’s application, the staff offered an “inadequate response” to the Turk plant’s application, Hart wrote.

She also described the attorney general’s role as “almost nonexistent” by raising no objection in the proceeding. She also took issue with the exclusion of Entegra Power Group - operators of a 2,200-megawatt, natural-gas-fired power plant less than 100 miles from the Turk plant - as an option to meet SWEPCO’s power needs.

“It defies understanding that the [commission] could not find good cause to allow Entegra to intervene ... especially in view of the assertion that the purchase of such power would be at a lower cost” than at the Turk plant, Hart said.

However, Entegra failed to submit a bid when SWEPCO sought proposals in 2005 for a project. Entegra argued in filings with the commission in 2007 that the financial requirements were too restrictive in the bidding process.

“SWEPCO did not provide bidders with an opportunity to offer alternative forms of credit, such as property liens or guaranteed letters of credit that could substitute for this requirement,” Entegra attorneys stated. Judge Karen R. Baker wrote the main opinion. Along with Hart, Judges Robert J. Gladwin, Rita W. Gruber, David M. Glover and Waymond M. Brown agreed with the decision.

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