2010.11.12 Press Release
Public Service Commission Ignores $250 Million Cost Overrun
Contact: Jordan Macha, 504.861.4837 / jordan.macha@sierraclub.org
Sierra Club's complaint dismissed over cost overruns at SWEPCO Arkansas Turk Plant.
BATON ROUGE, LA – On Wednesday, 10 November 2010, the Louisiana Public Service Commission (PSC) voted to dismiss Sierra Club’s claim that Southwestern Electric Power Company (SWEPCO) has failed to comply with conditions set out by the PSC in connection with its approval of a Certificate of Public Convenience and Necessity for SWEPCO’s construction of the Turk Plant in Hempstead County, Arkansas.
The SWEPCO Turk Plant, a 600 MW coal-fired power plant, currently has exceeded construction cost estimates by over $250 million. Due to the high cost overruns, the Sierra Club requested the PSC to examine and investigate whether the circumstances relied upon for granting the Certificate of Public Convenience and Necessity changed so much that the decision to construct the Turk Plant to supply power to Louisiana ratepayers is no longer in the public interest. The Commission unanimously voted to dismiss the complaint and subsequent law proceedings.
“The Public Service Commission’s decision to overlook the $250 million in cost overruns by SWEPCO does not protect Louisiana ratepayers,” says Jordan Macha, Associate Field Organizer for the Sierra Club in Louisiana. “With continued concerns of high rates for ratepayers, the PSC’s decision to look at the issue once SWEPCO has completed its construction is foolish and will only hurt ratepayers in the long run.”
The SWEPCO Turk Plant, under construction in southwest Arkansas, plans to sell power to Arkansas, Louisiana and Texas, with 85% of the power going out of state. Louisiana approved the SWEPCO plant under procedures which allows SWEPCO to earn a return on overrun costs from Louisiana customers before construction is complete. The Louisiana Public Service Commission’s actions leaves ratepayers at risk for more than their share of the costs of construction and operational costs of the plant, as SWEPCO no longer has a Certificate of Environmental Compatibility and Public Need with the state of Arkansas, which is necessary for the utility to sell their power to ratepayers.
The lax restrictions the Louisiana PSC adopted for this plant potentially leaves Louisiana ratepayers holding the bag as construction costs continue to rise, notes Macha.
At Wednesday’s PSC Business and Executive Meeting, Commissioners acknowledged the validity of the concerns raised, but hardly explained what they planned to do about them. Commissioners spoke of the low rates that SWEPCO could deliver, however, failed to acknowledge the higher rates that will emerge after cost recovery is put in place.
“Currently, there are ongoing lawsuits in Arkansas over Turk’s contested air and water permits. SWEPCO is taking an enormous economic gamble of constructing without knowing the outcome of those cases. It is disappointing that the LPSC is willing to force Louisiana’s ratepayers to essentially underwrite SWEPCO’s risk,” added Lev Guter, Associate Field Organizer for the Sierra Club in Arkansas.
The Sierra Club has 45 days to decide if we will appeal the decision at the state court in Baton Rouge.
Contact: Jordan Macha, 504.861.4837 / jordan.macha@sierraclub.org