LITTLE ROCK — The Public Service Commission focused on potential cost overruns and environmental issues Monday during closing arguments in hearings on Southwestern Electric Power Co.'s request to build a $1.4 billion coal-fired power plant in Hempstead County.
The hearings took 18 days, making it the longest case before the panel in more than 20 years.
The Public Service Commission's staff, which is independent of the commission, reiterated its recommendation that the three regulators approve the plant.
A group of Hempstead County property owners, including members of six hunting clubs, oppose construction of the plant because of concerns that coal dust, mercury emissions and other emissions would harm their property and the wildlife. They own 18,000 acres of private property in the area, including Grassy Lake, which is home to alligators, migratory birds and some of Arkansas' last cypress swamps and stands of virgin timber. Two animals found in the area are on the federal endangered list.
Testimony during the case indicated that various expenses could push the plant's cost to as much as $1.8 billion, which concerned Commissioner Daryl Bassett.
"We have no idea what the additional costs [for the plant] are going to be at this point," Bassett told Shawn McMurray, senior assistant attorney general. "What would be your recommendation to the commission in light of [cost overruns]?"
The property owners' attorneys speculated that some cost overruns could include $231 million for carrying costs on the plant, $136 million for transmission line upgrades and $20 million to $30 million for ordering necessary spare parts.
McMurray said that the commission should protect Arkansas customers from higher rates due to the increased costs.
Fuel costs also could place more of a burden on customers.
There are three sources a utility can use - coal, natural gas or nuclear energy - to supply baseload electric power, or power that is available continuously. The testimony showed that itisn't feasible for a nuclear plant to be built by 2011, when SWEPCO has determined it needs to have the power. That means that from a practical perspective the plant needs to be fueled by coal or natural gas. Coal is considered a less expensive but dirtier option than natural gas. If SWEPCO were required to build a natural gas plant instead of a coal plant, natural gas prices, which are volatile, could "go through the roof" and SWEPCO customers could face 100 percent to 200 percent increases in their bills, McMurray said.
"And if coal is used, there is also a risk that there could be much higher [costs] than anticipated," McMurray said. "But it is very difficult to project what is best for these customers in this area."
The commission ruled last year that SWEPCO has a need for the additional power.
Interim Commissioner David Newbern, appointed to hear the SWEPCO case, asked, "Which is more speculative, the projected additional costs to the completion of the plant or the volatility of natural gas prices?"
McMurray answered that both are very speculative.
Chairman Paul Suskie was concerned about what the panel could do until Congress decides what limitations to put on carbon dioxide emissions.
"What do we do in the interim?" Suskie asked Rick Addison, attorney for the property owners.
Addison said the staff has to prove to the commission that coal is the best option for fuel for the plant.
"That demonstration has not been made and I don't believe it can be done," Addison said.
Little was mentioned in the hearings about the impact that the plant might have on carbon dioxide emissions and global warming. That's because there are no federal or state regulations on the allowable limits on carbon dioxide, said Susan D'Auteuil, the commission staff's lead attorneyin the case.
The commission will make a decision whether to approve the plant by Dec. 21, 60 days after Monday's hearing and the closing of the record in the case.
Additional chairs were brought in to accommodate the overflow crowd Monday. More than 100 Hempstead County residents from McNab, Fulton and Hope dominated the audience of about 135.
The group drove to the meeting Monday morning to show their support for the plant, said James Conway, mayor of tiny McNab, which has a population of 74.
"Our city board and all of our citizens, together with the people of Fulton ... we're 100 percent in support of the plant," Conway said.
David Johnson, vice mayor of Hope, said the people there also support the plant being built.
About 111,000 of SWEPCO's 450,000 customers are in Arkansas. The remaining customers are in Texas and Louisiana.
Venita McCellon-Allen, SWEPCO's president, said the company has several options if the commission denies the utility's application for the plant.
If the application is denied because for technological reasons, SWEPCO may be able to adjust the plant to meet the commission's concerns, she said. But if the commission denies the application because of the plant's location in Hempstead County, SWEPCO would have to look at other locations, probably outside Arkansas, to build the plant, she said.
Business, Pages 23, 24 on 10/23/2007