Supreme Court upholds power plant ruling | Arkansas Blog

Thursday, May 13, 2010

Supreme Court upholds power plant ruling

Posted By on Thu, May 13, 2010 at 9:40 AM

Big news. The Arkansas Supreme Court today upheld the Court of Appeals ruling that the coal-fired power plant already under construction by American Electric Power's SWEPCO affiliate in Hempstead County hadn't been properly approved.

Here's some background. The court upheld the part of the lower court's finding that the PSC had failed to adequately assess need for the plant.

Here's today's unanimous opinion (link corrected) written by Chief Justice Jim Hannah. It remands for further hearings because of the PSC's decision to hear the question of need in a separate proceeding apart from the hearing to allow a construction permit and it says the public didn't have adequate opportunity to be heard. Justice Robert Brown, joined by a special justice, also said in a concurring opinion that environmental concerns hadn't been met.

It's worth remembering that Arkansas officialdom, from the PSC to the attorney general, hopped enthusiastically on board this power plant, which may be the last coal train out of the station as the rest of the world begins to consider the folly of burning still more coal to produce still more power. This is particularly questionable when the plant threatens natural resources. Wealthy hunting club members stood up to this express train, with help from environmental organizations.

The Sierra Club chimes in. (Link corrected.)

What next? Very good question. Construction continues at the site, a SWEPCO spokesman said. But by mid-afternoon, the company otherwise wasn't ready to go beyond this statement: "We are very dsappointed. We are reviewing the court's decision and evaluating our options."

A spokesman said the company had had prepared two news releases in expectation of a court ruling (good and bad), but apparently today's ruling made both inoperative.

The biggest question is whether the project can be restarted with a new review and who will pay for the $1 billion spent so far.

Ernest Dumas notes that the EPA has issued a final rule on greenhouse gases. Starting July 2011 new emitters of greenhouse gases exceeding 100,000 tons a year will have to get permits from the EPA. Turk will spew out 5 million tons.  So unless SWEPCO can get PSC approval and get on-line in 14 months, it might have to obtain an EPA permit. That could be difficult. It could be a factor in SWEPCO's decision, he speculates.

UPDATE, a tiny bit more from SWEPCO and also comments from Attorney General Dustin McDaniel, who said the decision could reshape future utility regulatory law in the state:

SWEPCO is in the process of reviewing the Supreme Court decision. We are glad the Supreme Court agreed with the Commission’s use of separate proceedings for the plant and transmission lines. We are evaluating the decision as it pertains to the process of determining the need for additional generating capacity. There is an 18-day period for the Commission, the appellants or SWEPCO to request a rehearing. This is a complicated case and we continue to examine our options.


Attorney General Dustin McDaniel said of the decision, “This is a strong and very harsh rebuke.” He said it could reshape utility regulation by introducing a standard of evidence on need for construction beyond anything ever contemplated.


McDaniel’s office had taken the position that SWEPCO had demonstrated the need for additional generating power and that this was a lower-cost option, though “no one was enthusiastic about building a new coal plant.”

He said his office was taken aback by the court’s circulation of a draft opinion that didn’t include two final pages of the official opinion on the failure of the need procedure. “It’s huge news. We’ve never once seem them reverse for lack of substantial evidence. If there was something in the record where the administrative agency said the evidence was good enough, the appellate court would not inject its own judgment. In this case, there were volumes of evidence supporting need.”

McDaniel said the case could have an impact on a pending settlement of an Entergy rate case. “You have to wonder if any party appeals if we’ll have to meet a whole new standard of evidence.”


McDaniel said this decision takes the case back to its beginning. “If the volumes of evidence in the record don’t constitute substantial evidence, I don’t know how you’d ever meet substantial evidence.”


He said he’d oppose any effort by SWEPCO, should the plant not go forward, to recover the $1 billion spent so far from ratepayers. “I have long thought, wow, this is a really big gamble.”


He surmised, as many have, that SWEPCO’s expensive construction push might have been calculated to discourage a court from disapproving the project. Bad guess.

He doubted SWEPCO could continue with construction on its own without ratepayer support of a plant that would sell power wholesale around the country.

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