PUC Docket No. 40443
Exhibit C
Page 4 of 4
1
of which SWEPCO's 73% share is approximately $986 million. Also, SWEPCO will
2
be required to invest approximately $136 million in transmission as a result of the
3
plant's addition, as explained by Mr. Timothy Hostetler.
4
investment by SWEPCO to $1.122 billion. The estimated amount of allowance for
5
funds used during construction (AFUDC) on SWEPCO's investment is approximately
6
$231 million for the generating plant and approximately $21 million for the
7
transmission facilities, for an overall total cost to SWEPCO of approximately $1.374
8
billion.
9
generating plant and EXHIBIT RVH-2 for the transmission facilities.
10
:
Q.
This brings the total
The development of AFUDC is shown on EXHIBIT RVH-1 for the
IN THE FINANCIAL AND COST INFORMATION YOU PROVIDE IN THE
11
FOLLOWING PARTS OF YOUR TESTIMONY, WHAT DO YOU ASSUME
12
CONCERNING THE HEMPSTEAD PROJECT COSTS ATTRIBUTABLE TO THE
13
PROJECTED OWNERSHIP INTERES TS OF OKLAHOMA MUNICIPAL POWER
14
AUTHORITY,
15
ARKANSAS ELECTRIC COOPERATIVE CORPORATION?
•
16
A.
NORTHEAST TEXAS ELECTRIC COOPERATIVE, AND
I assume that they will pay their pro-rata share of costs as they are incurred, and that
17
SWEPCO, will be made whole for whatever costs it incurs on their behalf.
18
Accordingly, the financial and cost information I present below is for SWEPCO's
19
share of the costs alone.
20
Q.
HOW DOES SWEPCO PLAN TO FINANCE THE CONSTRUCTION COSTS OF
21
THE
22
TRANSMISSION FACILITIES?
PROPOSED
PUC DOCKET NO.
HEMPSTEAD
11
PROJECT
AND
ASSOCIATED
DIRECT TESTIMONY
RENEE V. HAWKINS
50
PUC Docket No. 40443
Exhibit D
Page 1 of 4
.._..,
PUC DOCKET NO. 33891
PUBLIC UTILITY COMMISSION OF TEXAS
APPLICATION OF
SOUTHWESTERN ELECTRIC POWER COMPANY
7'.,.
FOR CERTIFICATE OF CONVENIENCE AND NECESSITY
AUTHORIZATION FOR A COAL-FIRED POWER PLANT IN ARKANSAS
SUPPLEMENTAL DIRECT TESTIMONY ON COMMISSIONERS' ISSUES OF
JAMES A. KOBYRA, P.E.
FOR
SOUTHWESTERN ELECTRIC POWER COMPANY
APRIL 22, 2008
SECTION
Supplemental Direct Testimony
EXHIBIT JAK-1-Supp through JAK12-Supp
FILENAME
PAGE
Kobyra Final.doc
Exh JAK-l-Supp Turk-Specific Siting
Study Process Flow Chart.pdf; Exh
JAK-3-Supp Part 1--Pirkey 600 MW PC
- JK.rtf; Exh JAK-3-Supp Part 2--Pirkey
emails -4-17-08.pdf; Exh JAK-4-Supp -CO2 Production rates.xls, Exh JAK-5Supp -- USC Plants worldwide.ppt; ExJAK-11- Supp - Shaw Contract
Escalation Factors.ppt
1-31
32-68
^UC Docket No. 33891
SWEPCO Exhibit No. 57
^.^_.
PUC DOCKET NO. 33891
I
SUPPLEMENTAL DIRECT TESTIMONY
JAMES A. KOBYRA
'359
51
PUC Docket No. 40443
Exhibit D
Page 2 of 4
1
VI. CURRENT TURK POWER PLANT COST AND SCHEDULE ESTIMATES
2
Q.
WHAT IS THE CURRENT COST ESTIMATE FOR THE TURK POWER PLANT?
3
A.
First, note that the costs presented herein reflect the complete power plant and not just
4
the 73 percent that is owned by SWEPCO. Assuming a start of construction by
5
September 28, 2008, the total (100 percent) capital cost estimate is $1.522 billion.
6
Highly Confidential EXHIBIT JAK-6-Supp is the log of Project Change Requests
7
(PCRs) that have been approved since the project was authorized to proceed. The log
8
shows the original contingency and escalation balance, and how it was allocated to
9
the PCRs. There are two PCRs that make a significant draw on these funds, the
10
execution of the firm priced Engineering, Procurement, and Construction (EPC)
11
contract and the increase in labor estimate for the erection of the boiler and the AQCS
12
with B&W. The latter was recently authorized.
13
The total capital cost estimate, exclusive of Allowance for Funds Used During
14
Construction (AFUDC) has increased from $1.347 billion to $1.522 billion, a
15
difference of $175 million.
16
estimate for a 13-month delay, (2) the PCR changes including the revised target price
17
for the B&W steam generator and AQCS erection scope that I alluded to at the
18
hearing in October, 2007, and (3) a contingency to cover potential escalation in the
19
contract provisions and scope allowances. The value of the contingency is consistent
20
with the way the contingency was established in the original proposal.
21
contingency amount as well as any reductions in the estimated cost of delay, if not
22
incurred, would not be included in the final plant cost to SWEPCO.
PUC DOCKET NO. 33891
t
t
This increased cost estimate includes: (1) a budgetary
20
The
SUPPLEMENTAL DIRECT TESTIMONY
JAMES A. KOBYRA
52
PUC Docket No. 40443
Exhibit D
Page 3 of 4
1
^
2
In addition to the $1.522 billion estimated capital cost, the cost for capital
.
spares, which was not known at the time of my earlier testimony, is estimated to be
3
between $30 and $36 million. Capital spares are major replacement parts that have a
4
long manufacturing duration, and are maintained in inventory to minimize plant down
5
time should a component failure occur during operation. Since the amount of spares
6
is an owner decision, it was mentioned in the self-build proposal, but not included in
7
the proposal estimate.
,
8
Q.
9
10
^
WHAT ARE THE KEY ASSUMPTIONS UNDERLYING THIS COST
ESTIMATE?
A.
The air permit application has been under evaluation by the ADEQ since it was
11
submitted in August 2006.
12
commence until the air permit is received. The cost estimate is based upon an early
13
August 2008 issuance of the air permit.
On-site construction of permanent facilities cannot
14
The first key assumption is that the schedule and current estimate for the delay
15
are based upon a September 28, 2008 start. This results in a 13-month delay from the
16
original proposal.
17
commenced on January 11, 2008, when concerns associated with an archeological
18
find on the property were resolved.
Site development activities allowed without an air permit re-
19
A second key assumption is that the budgetary estimates received from our
20
two main contractors, Shaw and B&W, are within -0%/+10% when the negotiations
21
for delay claims are finalized. This budgetary estimate was requested and prepared
22
for a September 28, 2008 construction start date.
23
associated with the 13-month delay.
PUC DOCKET NO. 33891
21
The delay claims are those
SUPPLEMENTAL DIRECT TESTIMONY
JAMES A. KOBYRA
53
PUC Docket,No. 404,43
Exhibit D
Page 4 of 4
I
A third key assumption is that there is no significant event that would cause a
disruption in the construction activities once started.
2
3
Q.
4
5
FOR THE TURK PLANT?
A.
6
7
The Commercial Operation Date will be third quarter 2012 if construction
commences on September 28, 2008.
Q.
8
9
WHAT IS THE CURRENT ESTIMATED COMMERICAL OPERATION DATE
WHAT ARE THE KEY ASSUMPTIONS UNDERLYING THIS ESTIMATED
COMMERICAL OPERATION DATE?
A.
The critical path schedule, while further refined from the one included in the self-
10
build proposal, has not changed.
11
receipt of a final air permit in the third quarter 2008; receipt of the Corps of Engineers
12
Section 404 Permit by the end of 2008; and transmission system interconnection in
13
December 2010.
The key assumptions underlying this schedule are
^
14
VII. SWEPCO'S CONTRACTS FOR THE TURK PLANT
15
16
Q.
CONTRACT?
17
18
HOW MUCH OF THE ESTIMATED COST OF THE TURK PLANT IS UNDER
A.
Approximately $1.186 billion is either under contract or has been spent through
19
March 31, 2008. Confidential and Highly Sensitive EXHIBIT JAK-7-Supp provides
20
a breakdown of the estimated costs by contract and includes those values that are
21
firm/spent, target/budget, related to the start of construction delay, and contingency
22
needs allocated to each contract.
23
representation of the project costs and allocations to each contract. Confidential and
PUC DOCKET NO. 33891
EXHIBIT JAK-8-Supp provides a graphical
22
SUPPLEMENTAI, DIRECT TESTIMONY
JAMES A. KO$YRA
54
PUC Docket No. 40443
Highly Sensitive Exhibit E
Page 1 of 1
(Public Version)
This exhibit contains information that is highly sensitive and will be
provided under the terms of the Protective Order (Confidentiality Disclosure
Agreement) entered in this case.
55
PUC^ocket No. 40443
c;. ^ -fxhibit F
Pa^ 1 of 3
PUC DOCKET NO. 33891
^' , `;^
.
^,^;,
•c'
^,,
^.^^
PUBLIC UTILITY COMMISSION OF TEXAS
APPLICATION OF
SOUTHWESTERN ELECTRIC POWER COMPANY
FOR CERTIFICATE OF CONVENIENCE AND NECESSITY
AUTHORIZATION FOR A COAL-FIRED POWER PLANT IN ARKANSAS
SUPPLEMENTAL DIRECT TESTIMONY ON COMMISSIONERS' ISSUES OF
RENEE V. HAWKINS
FOR
SOUTHWESTERN ELECTRIC POWER COMPANY
''•"^':;:i S,
^•^^.!.:...^'C
APRIL 22, 2008
SECTION
FILENAME
Supplemental Direct Testimony
Exhibit RVH-1-Supp
Exhibit RVH-2-Supp
Exhibit RVH-3-Supp
Exhibit RVH-4-Supp
Hawkins Final.doc
Moodys SWEP 20080201.pdf
Fitch SWEP 20080408.pdf
Carbon Principles Diligence Final.pdf
(Revised AFUDC)xls
PAGE
1-8
9-12
13-16
17-25
26
PUC Docket No. 33891
SWEPCO Exhibit No. 59
PUC DOCKET NO. 33891
1
SUPPLEMENTAL DIRECT TESTIMONY
RENEE V. HAWKINS
1
,3'5S
56
VI. AFUDC UPDATE
1
2
Q
3
4
PUC Docket No. 40443
Exhibit F
Page 2 of 3
WHAT IS THE CURRENT ESTIMATE OF AFUDC BASED ON THE REVISED
PLANT COSTS THAT MR. KOBYRA DISCUSSES?
A.
As James Kobyra explains in his supplemental direct testimony, the capital cost of the
5
updated plant construction is $1.522 billion of which $1.111 billion is SWEPCO's
6
portion. Based upon the SWEPCO's share of $1.111 billion, the current estimate of
7
the AFUDC for SWEPCO's share of the Turk Plant is $306 million. The calculations
8
are shown on EXHIBIT RVH-4-Supp. The cost of capital assumption remains
9
unchanged compared to my previous assumption.
However, the AFUDC has
10
increased due to the change in the completion date and the additional cost associated
11
with completing the plant.
12
13
VII. CONCLUSION
14
Q.
DOES THIS CONCLUDE YOUR SUPPLEMENTAL DIRECT TESTIMONY?
15
A.
Yes, it does.
PUC DOCKET NO. 33891
8
8
SUPPLEMENTAL DIRECT TESTIMONY
RENEE V. HAWKINS
57
PUC Docket No. 33891
EXHIBIT RVH-4-Supp
PUC Docket No. 40443
Exhibit F
Page 3 of 3
SVVBPCO - BASELOAD FACILITY
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
CAPITAL STRUCTURE SWEPCO
Wei
Equhy,
Debt (as of 1213112007)
Rate of Return
Rate
45.0%
55.0%
6•A6ELAAD WITH AFUDC • 2006 • 2011 tt000
CAPITAL
YEAR
EXPENDITURES
MOM
.
August
2006
2006
September
4,890
October
2006
14,504
Novomber
2
4 ,907
WIP
BALANCE
.
4,890
19,394
24,324
2007
2007
2007
2007
2007
2007
2007
20D7
9,438
7,942
6,888
18,081
23,658
14,737
9.749
12,2 t5
47.596
55,675
64,934
83,529
107,737
123,156
133,735
146,941
September
2007
12,848
160,910
May
June
July
Monthly
Ra os
4.64%
3.38%
821%
0.40%
0.28%
0.68%
0.68%
TotalAFUOC
.
Transfers to
.
InSarvice
Annual
Totals
23
59
rr!^
137
371
514
549
683
830
991
1,120
1,478
2007
23,758
186,141
1,399
2007
12, 941
200,481
1,311
.:,20Q7,7 _,r r:,l,. d^12,^8^^;-;^274.839;',S^d i'.ii.i^^2: .i .a:,.t.:«... . .•.n:!',^.r . .: . . ... .^9. 9$3;
5a .:
,
2008
6,110
221,066
1,483
2D08
8,840
231,186
1,169
2008
13,649
2,058
246,005
2008
17,943
268,008
1,821
2008
2008
2008
19,310
19,045
19,746
207,139
308,149
330,004
1,966
2,109
2,259
August
2008
11,410
343,673
2008
September
28,441
374,467
October
2008
12,990
390,020
November
2008
12 004
404,693
.• !. :1I^
D`e.mmtiaf ^14^^. ,.^i 2 /^Ofl^ LL'".^
^'..1. rrJ
!h1324 r.:':418 .`^t ...^r..
2009
Jan
,0,681
433,049
Feb
2009
13,441
449,454
20D9
March
24,589
477A99
April
2008
25,530
505,898
May
2009
25,856
535,014
2009
June
19,405
558,082
July
2009
23,429
585,331
August
2009
23,200
612,539
September
2009
20,696
837,427
October
2009
25,931
867,122
November
2000
22,689
894,577
6 'ecom'
boi•.M1i:':;°-120A9
Va
Jan
2010
26,840
758,063
2,353
2,563
2,670
2,770
•'
2r ^,.1:w ..Y ^T i,y^'^ C..^'
^.,- tf,4
' r ;:2$'09^'
2,964
3,077
3,266
3,463
3,662
3,820
4,0D7
4,193
4,363
4,567
•
4,755
Feb
2010
26,606
March
AprB
May
786,837
2010
2010
2010
5,355
24,747
21,026
19,340
816,971
843,569
886,703
5,593
5,775
6,947
Juno
July
2010
2010
19,857
15,908
894,607
916.640
August
September
2010
2010
6,124
0275
16,477
18,818
941,301
968,648
6,444
6,617
October
2010
15,668
908,952
6,770
November
2010
Dacemhaf .• :u .
January
2011
February
2011
March
2011
April
2011
May
2011
2011
June
July
2011
August
2011
September
2011
October
2011
November
2011
Qs,odnltier...ii:."F•_,20671 .,r.'
January
2012
February
2012
March
2012
1
10.75%
6.14%
Jan
Feb
Match
April
May
Juno
July
August
October
November
p,a' [CthibBr- ,
Jan
Feb
March
April
Weighted
Rate
14.2D7
1,009, 929
'7,A ,
12,722
1,057,983
12J398
1,077,923
9.576
1, 094,878
9,212
1,111•585
8,744
1,127,938
II A41
1,147,501
7.096
1,162,452
7.095
1,177,504
11.007
1,196,572
5,847
1,210,611),
_ 5.395
1,224,293
"Ci.'. `^4.45,.'.+24¢XZS . .;i'.
5,212
1,260,471
13,837
t,282,737
6,485
1,298,003
^„
5,15b '
8,913
7,242
7,379
7,495
7,809
7.721
7,855
7,957
8,081
6,191
8,267
8,361
B,fi3q'
8,628
8,761
8,805
April
2012
4,409
May
June
July
1,311,297
2012
2012
2D12
6,976
4.559
17,905
9,829
1.324.833
1,351,807
1,370,890
9,069
9,254
August
2012
10,517
1.381,407
September
October
November
DoCimbeF
-
2D12
2012
2012
5,689
3,356
3,386
^'2308^
1,387,096
1,390,482
1,393,868
TOTAL CONSTRUCTION
1,111.218
^^
1, »;
N,. ,
7.A, a19
. F ,... 'i . tr:9
.
305,735
1,416,963
Plant In Service
305,736
Taft[ AFUDC
1) Cost of Debi based on year end 12/31107 and ROE based upon last allowed return In Arkansas.
26
58
PUC Docket No. 40443
Exhibit G
Page 1 of 2
PUC DOCKET NO. 33891
PUBLIC UTILITY COMMISSION OF TEXAS
APPLICATION OF
SOUTHWESTERN ELECTRIC POWER COMPANY
FOR CERTIFICATE OF CONVENIENCE AND NECESSITY
AUTHORIZATION FOR A COAL-FIRED POWER PLANT IN ARKANSAS
SUPPLEMENTAL DIRECT TESTIMONY ON COMMISSIONERS' ISSUES OF
VENITA MCCELLON-ALLEN
FOR
SOUTHWESTERN ELECTRIC POWER COMPANY
APRIL 22, 2008
SECTION
FILENAME
Supplemental Direct Testimony
Exhibit VMA-1-Supp
McCellon Final.doc
No Electronic File
No Electronic File
No Electronic File
Exhibit VMA-2-Supp
Exhibit VMA-3-Supp
PAGE
1-30
31-158
159-161
162
PUC Docket No. 33891
SWEPCO Exhibit No. 53
PUC DOCKET NO. 33891
1
SUPPLEMENTAL DIRECT TESTIMONY
VENITA MCCELLON-ALLEN
-3 i° j
59
PUC Docket No. 40443
Exhibit G
Page 2 of 2
1
Q.
2
3
WHAT IS THE UPDATED ESTIMATED COST AND SCHEDULE FOR THE
TURK PLANT?
A.
As James Kobyra explains in his supplemental direct testimony, the updated Turk
4
Plant capital cost estimate is $1.522 billion. This is for 100 percent of the plant. The
5
cost for SWEPCO's 73 percent share is $1.111 billion.
6
estimate was $1.347 billion. The updated estimate excludes the Allowance for Funds
7
Used During Construction (AFUDC). The estimated AFUDC for SWEPCO is $306
8
million, as Renee Hawkins explains in her supplemental direct testimony. Thus the
9
total updated cost for SWEPCO is estimated to be $1.417 billion. (The main driver of
10
the increase in costs is the delay in receiving the air permit from the Arkansas
11
Department of Environmental Quality (ADEQ). The air permit is required to start
12
construction, and the delay in receiving that permit discussed previously in this case
13
has persisted.
14
construction by September 28, 2008 (a 13-month delay over the original schedule).
15
The Turk Plant commercial operation date will be the third quarter of 2012 if
16
construction commences by that date.
The previous total plant
As Mr. Kobyra explains, this cost estimate assumes a start of
17
Mr. Kobyra explains in detail how he derived the updated cost and schedule
18
estimates. He also explains the three main contracts for the Turk Plant and what the
19
costs are under those contracts, as well as other information about them.
20
Q.
21
22
23
HAS SWEPCO ESTIMATED WHAT THE PROBABLE RATE IMPACT OF THE
UPDATED COST ESTIMATE WILL BE ON CUSTOMERS?
A.
Yes, it has. Donald Moncrief provides such a calculation in his supplemental direct
testimony.
For a residential customer using 1,000 kWh per month, the estimated
PUC DOCKET NO. 33891
7
SUPPLEMENTAL DIRECT TESTIMONY
VENITA MCCELLON-ALLEN
60
PUC Docket No. 40443
Exhibit H
Page 1 of 2
DOCKET NO. 33891
APPLICATION OF SOUTHWESTERN
ELECTRIC POWER COMPANY FOR
CCN AUTHORIZATION FOR A COAL-
§
§
§
FIRED POWER PLANT IN ARKANSAS
§
BEFORE THE
PUBLIC UTILITY COMMISSION
OF TEXAS
F
i^
!
C
O
m
Cn
MAY 12, 2008
DIRECT TESTIMONY ON COMMISSIONERS' ISSUES
DARRYL TIETJEN
PUBLIC UTILITY COMMISSION OF TEXAS
000001
50 61
PUC Docket No. 40443
Exhibit H
Page 2 of 2
PUC Docket No. 33891
IV.
1
2
3
Q.
Pa4P
1 1 nf 1 S
IMPACT OF THE TURK PLANT ON SWEPCO'S FINANCIAL
CONDITION
As a general matter, is it reasonable to expect that SWEPCO's financial
4
condition will be negatively impacted if the Turk plant is built?
5
Yes. Given the relative scale of the Turk Plant (further discussed below), SWEPCO's
6
involvement in the construction and ownership of the facility would inevitably result
7
in increased strain on SWEPCO's financial condition.
8
9
Q.
Based on SWEPCO's year-end 2006 P.U.C. earnings report, what was the
10
amount of SWEPCO's invested capital at the end of 2006?
11
Schedule III of SWEPCO's 2006 earnings report, included in my testimony as
12
Attachment DT-5, shows a figure of approximately $1.7 billion for SWEPCO's total-
13
company invested capital (i.e., rate base). The report further indicates that the Texas-
14
jurisdictional portion of this amount is $623 million.
15
16
Q.
Including the effects of Allowance for Funds Used During Construction
17
(AFUDC), how much would SWEPCO's rate base increase if the Turk Plant
18
were built?
19
Based on Ms. Hawkins' Exhibit RVH-4-Supplemental, SWEPCO's current estimate
20
of additional Plant in Service related to the Turk Plant is approximately $1.4 billion.
21
This figure reflects capital expenditures of $1.1 billion and AFUDC of approximately
22
$306 million.8
23
24
25
26
8 SWEPCO witness James Kobyra's supplemental testimony provides an updated plant construction cost
of over $1.5 billion, of which $1.1 billion would be SWEPCO's share.
May 12, 2008
Direct Testimony of Darryl Tietjen
62
PUC Docket No. 40443
Exhibit I
Page 1 of 2
PUC Docket No. 33891
APPLICATION OF SOUTHWESTERN
ELECTRIC POWER COMPANY FOR A
CERTIFICATE OF CONVENIENCE AND
NECESSITY AUTHORIZATION FOR A
COAL-FIRED POWER PLANT IN
ARKANSAS
§
§
§
§
§
§
BEFORE THE
PUBLIC UTILITY COMMISSION
OF TEXAS
Supplemental Direct Testimony and Exhibits of
Jeffry Pollock
On behalf of
Texas Industrial Energy Consumers
^.: N
r^^ a
^`
C?`
^•
May 2008
r
co
`s
ti x^^
^
I. POLLOCK
tNCt7 RPCJRATIEO
63
PUC Docket No. 40443
Exhibit I
Page 2 of 2
Jeffry Pollock
Page 15
1
2
3. COST
Q
3
WHAT COST ESTIMATE FOR THE TURK PLANT DID SWEPCO USE AT THE
TIME OF THE OCTOBER HEARING?
4
A
SWEPCO's estimate at the time of the October hearing was $1.347 billion.8
5
Q
HAVE THERE BEEN SIGNIFICANT CHANGES TO THE ESTIMATED COST OF
6
7
THE TURK PLANT SINCE THE OCTOBER HEARING?
A
Yes.
Although SWEPCO did not acknowledge that there would be any delays
8
whatsoever until an RFI response just before the October hearing, it now admits
9
that there will be a delay of at least one year. SWEPCO has now provided an
10
estimate for the Turk plant of at least $1.552 billion.9 This increase of over $200
11
million does not include:
12
13
14
15
•
Up to $429 million in additional environmental costs that
SWEPCO proposed on March 20, 2008 to address EPA and
Federal Land Manager (FLM) concerns about the Turk plant's
impact.
16
17
•
Any costs resulting from any additional conditions imposed by
the Arkansas Department of Environmental Quality (ADEQ).
18
19
20
21
•
Any costs resulting from the inability to begin construction on
September 28, 2008 because of further delays in the Arkansas
permitting process or appeals, which SWEPCO has now
acknowledged are inevitable.
22
23
•
The increase in financing costs on AFUDC as a result of the cost
increases and delay.
° It has been a source of some confusion that the total plant cost estimate was $1.347 billion while
the cost estImate for SWEPCO's share of the plant cost plus AFUDC and Turk-related transmission
investment was $1.374 billion.
9 Supplemental Direct Testimony of James A. Kobyra at 21 (includes capital spares).
3. Cost
l
J.POLLOCK
INCORPORATED
15
64
PUC Docket No. 40443
Exhibit J
Page 1 of 2
PUC DOCKET NO. 33891
APPLICATION OF SOUTHWESTERN
ELECTRIC POWER COMPANY FOR
CERTIFICATE OF CONVENIENCE
§
§
§
AND NECESSITY AUTHORIZATION
§
FOR A COAL FIRED POWER PLANT
§
IN ARKANSAS
§
BEFORE THE
PUBLIC UTILITY COMMISSION
OF TEXAS
TEXAS INDUSTRIAL ENERGY CONSUMERS'
MOTION FOR REHEARING
September 2, 2008
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Rex D. VanMiddlesworth
State Bar No. 20449400
Caren Pinzur
State Bar No. 24053709
ANDREWS KURTH LLP
111 Congress Avenue, Suite 1700
Austin, Texas 78701
(512) 320-9200
(512) 320-9292 FAX
ATTORNEYS FOR TEXAS INDUSTRIAL
ENERGY CONSUMERS
65
PUC Docket No. 40443
Exhibit J
Page 2 of 2
Capacity vs. Load - 200 MW New Purchased Power
(includes voluntary executed wholesale contracts)
2013
2014 .:.
'2015 -,. 2016
5,899
5,899
5,517
5,517
L` ds.w/o:lViinden:andlPrescott"or;
optional"ETEC- load; ;.
wt March demand projection'.
5,124
5,134
4,677
4,717
Canacit^ Aliove Pe'ak I)emand.;: .
775
765
840
^
800
5,821
5,832
5,313
5,359
78
67
204
158
Ca a '
w / & J n r l r , o r P S0
tra^asfersVw! 200 MV^^purc}iased°
povwer . °
'
^R£t^. 41
'#Y
.^'+-'1,`
Zroac^,Y'Iu's SPF ReQuired Reserve •. .
^K.^,.
.
V,4
^, ^.v,;^, .,,, .; , .,
^.. ; ^,^.^;Y
Adc^i^ibriaal Cauacitt^Atiove SPP^:Reserve Requirement
As discussed above, there are much more economical ways to meet whatever limited need
SWEPCO might have five years from now than building a new coal plant that would, by
SWEPCO's own admission, double its rate base-especially given SWEPCO's long-standing
experience purchasing capacity economically in the wholesale market.
III.
COST.
The Commission's order wisely caps the amount that Texas ratepayers will be required to
pay to compensate SWEPCO if the Turk Plant is built as part of rate base 69 The capital cost cap
is set at Texas's pro rata share of the current $1.522 billion cost estimate to build the Turk Plant,
and the carbon cost cap is set at $28 dollars per ton through the year 2030.70 While these caps
are a good start, they do not adequately protect Texas retail ratepayers from the dramatically
higher rates they would see for a plant that is not necessary to serve them. Further, they do not
protect Texas ratepayers from the cost of environmental mitigation efforts that SWEPCO will be
required to undertake at a separate plant in order to receive the air permit for the Turk Plant.
Pursuant to PURA § 37.056, the Commission may only grant a CCN if it is "necessary"
for the service, accommodation, convenience, or safety of the public. Even if the Turk Plant met
some hypothetical need for generation, SWEPCO has not shown that it is "necessary" because
0 Order at 7.
70 Id at 7-8.
19
2 66