AEP agrees to shut Welsh coal unit to settle dispute over Turk coal plant

American Electric Power (NYSE: AEP) and operating unit Southwestern Electric Power Co. (SWEPCO) announced Dec. 22 that they have settled all legal actions brought by the Sierra Club, the National Audubon Society and Audubon Arkansas related to the John W. Turk Jr. coal-fired power plant.

The plant, located near Texarkana, Ark., has been under construction while various legal actions trying to stop it had been pursued. The 600-MW plant is more than 80% complete and scheduled to begin commercial operation in late 2012.

The parties to the settlement anticipate filing a consent decree Dec. 22 in U.S. District Court for the Western District of Arkansas. Upon court approval of the consent decree, later filings to dismiss all other challenges will be made at other courts and regulatory bodies. The deal resolves all issues raised by the groups’ combined or individual challenges to the U.S. Army Corps of Engineers Section 404 permit, the air and wastewater permits issued for the plant, as well as a complaint recently filed at the Arkansas Public Service Commission.

“We have long believed that the Turk Plant is the right generation solution for our customers in three states, our electric system and the economy in Southwest Arkansas,” said Nicholas Akins, AEP President and CEO. “The provisions of the agreement are consistent with our commitment to renewable energy, energy efficiency and overall environmental stewardship. Now that all of the legal challenges are resolved, we can focus on completing the advanced ultra-supercritical coal technology of our Turk Plant to provide reliable and affordable power for SWEPCO, the Arkansas electric cooperatives and our other partners in the project.”

Highlights of the settlement include that all legal challenges to any permits or certificates required to build and operate the Turk plant will be withdrawn. A preliminary injunction in place in U.S. District Court will be lifted, allowing work to be completed on the plant’s water intake structure and transmission river crossings. AEP agrees not to construct any additional generating units at the Turk site. As long as the Turk plant operates, AEP also will not build any new coal-fueled generating units at any location in Arkansas within 30 miles of the Turk site.

Once the Turk plant begins commercial operation, the 528-MW, coal-fired Welsh Unit 2 near Pittsburg, Tex., will be limited to no more than 60% of its annual capacity. SWEPCO also will seek regulatory approval to retire Welsh Unit 2 no later than Dec. 31, 2014. The retirement date may be extended to no later than Dec. 30, 2016, if needed to complete transmission mitigation work related to the unit’s retirement, as identified and approved by the Southwest Power Pool. A fact sheet on the SWEPCO website shows that Welsh has three coal units, units 1-3, with a total capacity of 1,584 MW.

SWEPCO and its affiliates will construct or secure 400 MW of new renewable energy resources. Any new wind projects developed to satisfy the renewable energy resource commitment must meet U.S. Fish and Wildlife Service guidelines for minimizing impacts from wind development on birds and wildlife, and must be located outside of any Important Bird Areas — including the Mississippi flyway — identified by the National Audubon Society.

The Turk plant, under this deal, will burn low-sulfur coal only from the Powder River Basin in Wyoming or other subbituminous coal with similar sulfur characteristics. U.S. Energy Information Administration data shows Welsh currently burning only Wyoming PRB coal, so coal producers there will gain from Turk coming on-line and will also lose when Welsh Unit 2 shuts. Coal suppliers to Welsh in August 2011 were the Belle Ayr mine of Alpha Natural Resources (NYSE:ANR) and the North Antelope Rochelle mine of Peabody Energy (NYSE:BTU), EIA data shows.

No future transmission lines associated with the Turk plant will cross the Nacatoches Ravines Natural Area; the Little River Bois D’Arc Management area; property currently owned by The Nature Conservancy or the Arkansas Natural Heritage Commission within Hempstead County; property currently owned by the Hempstead County Hunting Club, which includes the Grassy Lake area; or along the Kiamichi Railroad in Hempstead County.

SWEPCO has also committed to test total annual particulate matter emissions from the plant to evaluate the potential for a lower emission rate; perform an additional analysis of wastewater discharge quality during the first year of operations; perform additional groundwater monitoring at designated intervals; and conduct baseline mercury sampling tests to assess conditions prior to operation of the Turk plant.

SWEPCO, which owns 73% of the $1.7bn Turk plant, serves 520,400 retail customers in three states. Co-owners of the Turk plant are Arkansas Electric Cooperative, 12%; East Texas Electric Cooperative, 8%; and Oklahoma Municipal Power Authority, 7%. 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.