Guest Post: Eddy Moore – AR Rural Electric Cooperatives’ Coal-Fired Power Plant

coal plantWhile all sides wait for the Arkansas Supreme Court decision on whether the state wrongfully approved a permit to build the John W. Turk coal fired power plant in Hempstead County, press attention has focused almost completely on Southwestern Electric Power Company (SWEPCO). But there are other major business partners in the project. The Arkansas rural electric cooperatives own the second-largest share of the plant, but have managed to escape almost any questioning or scrutiny. Last week, the cooperatives asked the Arkansas Supreme Court to allow it to enter the case and argue as a “friend of the court.”

Usually, such “amicus curiae” arguments are brought by a person or group with broader public interests in the outcome, who bring a different perspective from the party already seeking review. Here, the co-ops are actually co-owners with identical interests. Indeed, if they had something to say, it is surprising they didn’t enter the case from the start.

Maybe the co-ops have avoided attention because they are, for the first time ever, seeking a rate increase under a new, emergency procedure. Their proposed changes in the law authorizing the new procedure shot through the Arkansas legislature earlier this year with hardly a comment. The one comment was from Nucor Steel, by far the co-ops’ largest ($100+ million per year) customer: roughly translated, it asked for a few days to find out what the heck was going on, since even it had been given very short notice.

Back to the new co-op argument to the Supreme Court. Here, the co-ops mention that they have spent $100 million so far on the coal plant! Maybe that is part of why they need a rate increase. The press, or even customers, may begin to ask if it was prudent for the cooperatives to buy into the plant based on projections of very high future growth in electricity sales.

Here is where the broad public interest actually comes in. About thirty years ago, the cooperatives bought into another huge coal-fired power plant based on aggressive future sales projections—that one with Entergy. Even today, Entergy has excess baseload (coal and nuclear) generation, and pollution upgrades to the plant will cost over $1 billion.

Some will argue that, in retrospect, these plants produce cheap power, but the question must be asked. Have Arkansans been talked too early into risky, multi-billion-dollar power generation investments? What is the time value of customer money spent on power plants to serve needs that do not arise, even in a thirty-year timeframe? Investing instead in conservation might streamline our economy for competition, avoiding early capital costs and yielding greater, more diverse economic benefits. Unfortunately, this public benefit argument is unlikely to be raised by the “friend” currently wooing the court.

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