Power-plant battle a classic game of maneuver
Posted on Sunday, December 28, 2008
Arkansas Democrat-Gazette/BENJAMIN KRAIN The coal-fired power plant under construction in Hempstead County has been the target of a number of appeals.
There are so many appeals in the John W. Turk Jr. power plant project near Texarkana that it takes a scorecard to keep up with them.
Despite approvals by two Arkansas agencies and utility regulators in three states, four appeals or similar reviews of Turk's authorization are being pursued by plant opponents - and possibly a fifth by Southwestern Electric Power Co. itself.
For a facility where costs already have escalated to $1.6 billion from $1.3 billion since 2006 - and related costs that push the total near $2 billion - it raises two basic questions.
Could such maneuvers by the Sierra Club, Audubon Society, private retreats such as the Hempstead County Hunting Club and nearby landowners one day pull Turk's plug - particularly with energy policy changes expected from the administration of President-elect Barack Obama? Or is SWEPCO fully charged to ride out the storm regardless of cost?
According to one expert in environmental law, the latter seems most likely to emerge - even if new environmental legislation imposes controls and stiff financial concessions for carbon dioxide emissions.
"It's like a song and dance in public. Or that scene in the middle of Casablanca where Claude Rains says, 'Round up the usual suspects,'" said Steve Sheppard, a law professor at the University of Arkansas at Fayetteville.
"The environmentalists talk about how coal power is so dangerous and how [SWEPCO] needs to do better. And the utilities often profess shock and surprise after all they've done to explain why coal is the best solution.
"But they [SWEPCO] have known from the beginning the kind of obstacles this plant would face. If they didn't, I'd be shocked. If they didn't put contingencies in the timeline for everything - including regulatory changes - I'd be surprised."
An appeal filed by power plant opponents Dec. 1 automatically halted full-scale construction at the plant, threatening layoffs for as many as 375 workers. Work resumed Dec. 8 after state regulators voted to allow construction during the appeals process. The appeal is scheduled for trial March 9.
PROJECTS TARGETED
For numerous reasons, blueprints for new coal-fired plants have served as targets for environmental groups and regulators - with 59 canceled or shelved in 2007 alone, former Arkansas Public Service Commission Chairman Sandra Hochstetter said at a coal-industry conference in July.
In some cases, global-warming arguments won over regulators. In others, environmentally friendly alternatives such as wind and solar power gained traction - or utilities simply walked away from rising construction costs and financial markets that grew increasingly skittish.
That's not the case with SWEPCO. It is staunchly committed to coal as a source of base-load power that's not exposed to volatile pricing, as is natural gas, spokesman Scott McCloud said. Base-load power stations operate continuously, unlike peaking plants that usually run only when there is a high demand.
While coal prices have steadily hovered around $2 per million British thermal units (MMBtu), natural gas prices dipped to $5.50 per million Btu in September 2007, only to break $13 in July before settling just shy of $6 today. Wind and solar generation, while effective supplements to a utility's plant fleet, are unsuited to the large-scale, nonstop demand that base-load plants must meet, McCloud said.
McCloud said the biggest concern that stems from legal delays is not so much Turk's future, even with the prospect of increased labor, equipment or emissions costs.
It's the growing potential for rolling blackouts during peak demand - specifically in Northwest Arkansas - plus the cost of buying expensive supplemental power on the open market, he said.
McCloud likened the clash of wills between SWEPCO and Turk's opponents to a pair of trains colliding, with the result being unpleasant for ratepayers.
"At some point, our customers may experience something they've seen before," he said. "All these delays are pushing capacity to the brink."
McCloud cited the summer of 2006 and the addition of the $130 million, natural gas-fired Harry D. Mattison peaking plant near Tontitown a year later.
In 2006, SWEPCO made 14 requests of large users such as Wal-Mart, Tyson Foods and the University of Arkansas to curtail nonessential power between noon and 8 p.m. Once the 300-megawatt Mattison came online, such requests dropped to three or four, McCloud said.
"Mattison helps. But it doesn't eliminate the problem," he said. "All it takes is for one turbine fan to break to lose a unit. Then we're buying high-cost gas offsystem - under costs we cannot control - which in turn increases rates.
"These delays are keeping us from getting low-cost fuel on line."
ENVIRONMENTAL FACTOR
Yet environmental advocates like the Environmental Integrity Project's Ilan Levin do not view coal power primarily in terms of fuel costs. There are biological costs as well - particularly from emissions that in Turk's case do not address carbon dioxide.
Despite acknowledgment from the Environmental Protection Agency that carbon dioxide (CO2) is the most important manmade contributor to global warming - such emissions are not currently limited by state or federal rules.
Yet in April 2007, the U.S. Supreme Court found that carbon dioxide is a pollutant and - as Levin argues - obliges permitting agencies such as the Arkansas Department of Environmental Quality to include carbon dioxide limits in the permitting process.
"As a matter of law, we believe CO2 is clearly a regulated pollutant. Call it what you want, but we regulate all kinds of carbon compounds that are emitted into the air. Plants even have to track and record CO2 emissions. Even in that sense, CO2 is already regulated," said Levin, whose organization was founded by former EPA lawyers in 2002 to push for what it considers more effective enforcement of environmental laws.
"The debate in Arkansas is a little different. Some prefer to keep their head buried in the ground, but regulation is coming - and they [SWEPCO] know it's coming. Whether emissions limits are set in this permit remains to be seen. But CO2 regulation is coming."
Levin said he could not speak for various strategies in play by each of Turk's opponents - or whether delay tactics are being employed to increase the likelihood of untenable construction or environmental costs for SWEPCO.
Yet there's no secret concerning their overall goal, he said.
"Our objective is to block this plant from being built and see more environmentally friendly channels pursued that don't fry the planet and won't harm human health," said Levin, who also represents the Sierra Club and the Audubon Society in appeals before the EPA and Arkansas Pollution Control and Ecology Commission.
If they cannot block Turk, they want its emissions to be as clean as possible under existing statutes, he said.
"We don't want to put people out of work. We would like to see double the amount of those workers building scrubbers or baghouses [which filter and collect particulates]. And if we cannot clean up plants where they need to be under the law, we like to see workers hired to decommission and retire old plants."
Should the appeals process prove ineffective, the effort against Turk already has proved worthwhile, Levin said.
"All pollution control is based on how much money a company wants to spend. You can either buy a top-of-the-line version that reduces mercury emissions by 90 percent, or buy an economy version and get less," he said.
"If no one's looking over their shoulders, the bean counters prevail and the utility goes with the economy version. But when folks start paying attention - it was the hunting clubs and landowners who first sounded the alarm - people start asking more questions. And the emissions plans for Turk now are vastly better than they were a year ago."
NOT TYPICAL
Several aspects about the Turk debate make it politically atypical among other cases in which coal plants have faced significant opposition.
To begin with, government leaders - particularly at the local level - strongly support Turk, while counterparts in other areas of the country have opposed such projects, said Brooke Ackerly, an associate professor of political science at Vanderbilt University.
In either case, a common driver is often economics.
For Turk, it means creating up to 1,400 short-term jobs, 110 permanent jobs and millions of dollars a year in tax revenue to help fund schools, cities and other services.
Yet in 2007, TXU Corp.'s plan to build 11 new coal-fired units was opposed by nearly three dozen mayors because of air quality concerns that could hinder future economic development. Ultimately a $45 billion buyout of TXU by two private capital firms scrapped plans for at least eight of the plants.
"Ultimately the local community is going to bear the brunt of any development," Ackerly said. "While the first four years might seem attractive now, leaders and residents also need to weigh the negative impacts that could occur once the plant is built."
While most coal plant casualties occurred in the current political climate, Turk faces the challenge of being conceived in one era and entering service in another.
"One thing that is certain is that you can expect change and that environmental policy will be a major part of it," she said.
"Another is the outlook from the Obama team that emphasizes the need to take on policy and the economy together. Instead of seeing these challenges as separate, they see them as linked. And that could have explicit implications for the energy industry."
For its part, SWEPCO says it has done the best it can to anticipate such changes, ranging from ongoing research and trials in carbon-capture technology to designing Turk to accommodate such equipment when ready.
Turk already is designed to be the first plant of its kind, using "ultra-supercritical" technology - very high pressures and steam temperatures - to produce more power with less coal and emit 4 million fewer tons of carbon dioxide over 30 years than conventional designs.
"But it's almost like the environmental groups and other opponents don't even want to give us a chance," McCloud said.
Based on the number of appeals SWEPCO faces, that's a safe assessment. As to how successful their efforts may prove, UA's Sheppard predicts that the state ecology commission will likely affirm the environmental department's approval of the air permit - citing the department's familiarity with what the commission will closely examine.
"But once that gets appealed to state court - and it probably will regardless of who prevails - that becomes another scenario," he said.
Sheppard added that while appeals cost the public time and money, regulated monopolies like SWEPCO need such scrutiny because of the long-term economic and ecological costs at stake.
"There are a lot of valid questions that have been raised by [Turk's] opponents and 'we the people' have the right to ask them," he said. "It's not enough to approve a project just because a utility says it's the right thing to do."
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