Arkansas Electric Energy Law : Arkansas Electric Energy Lawyer & Attorney : Eric Hughes Law Firm : Wind & Solar Power, Distributed Generation : Arkadelphia, Little Rock, Pine Bluff

The Wind Coalition, a group devoted to the development of wind energy in the United States, is attempting to intervene in the Arkansas Public Service Commission's White Bluff Docket, wherein Entergy Arkansas and the other owners of the White Bluff generating facility seek approval for environmental upgrades.  According to the Wind Coalition's filings, its

members have begun acquiring land rights to potentially construct wind farms in and near Arkansas, and are willing and able to provide renewable energy in Arkansas to [Entergy Arkansas] or other companies.  A Declaratory Order from the Commission indicating that the Project (which, as structrured, has no renewable generation component) is in the public interest would potentially preclude the Wind Coalition from providing such renewable energy to [Entergy Arkansas] or another entity in the future.

In addition, the Wind Coalition states that permitting it to intervene would:

• ensure that wind energy is considered on the same playing field as other types of generation such as coal, nuclear, and natural gas;
• assist in the evaluation of Entergy's price assumptions for coal supply; the capital costs of wind power; wind capacity factors; the economic impacts of joining the Southwest Power Pool; and whether Entergy considered the improved import capability from the upcoming transmission upgrades approved over the next four years;
• assist the Commission in developing a full, fair and adequate record upon which to base its decision concerning whether the White Bluff upgrades as currently structured is in the public interest.

Entergy asserted in its original petition that it "considered whether renewable generation and efficiency alternatives would be appropriate for comparison" but "concluded that it would be unrealistic to assume that either alternative" would be effective.  If the APSC permits the Wind Coalition and other similar groups to intervene in this docket, submit additional evidence, and independently evaluate Entergy's analysis, would certainly go far "in developing a full, fair and adequate record upon which to base its decision regarding the proposed White Bluff upgrades.

The Arkansas Public Service Commission Staff sought a suspension of the procedural schedule in the Commission's White Bluff docket on December 3.  Entergy Arkansas joined in that effort today.

The requested delay is based upon the response of the U.S. Environmental Protection Agency and U.S. Forest Service to the proposed permit for the facility to be issued by ADEQ.  In a letter to the Arkansas Department of Environmental Quality regarding the permit application for the White Bluff upgrades, the EPA noted that:

we do not feel an SO2 emission limit of 0.15 lbs/MMBtu has been shown by the Arkansas Department of Environmental Quality (ADEQ) to be BART [Best Available Retrofit Technology]. . . [W]e do not believe ADEQ has properly conducted its BART analyses . . . including the Entergy White Bluff facility, as required by 40 CFR 51.308.  Had this analysis been performed, we feel that a more stringent control level would have been likely shown to be BART.

The U.S. Forest Service echoed those concerns.

The upshot is that action by the EPA and other federal agencies could delay the implementation of the upgrades beyond the 2013 target date.  Therefore, the Commission Staff and Entergy have requested a suspension of the procedural schedule until the federal concerns are addressed by the ADEQ.

More important than the procedural delay, however, is the effect of the federal action on whether the project, as proposed, can move forward.  If there is a change in the allowable emissions rate, that may effect whether the technology proposed to be used is sufficient to meet the new allowable emission rate.

The more fundamental issue the Commission will have to address is whether, in light of other existing generating resources, the facility upgrade should be approved at all.

A November 19 ruling by the Federal Energy Regulatory Commission will allow Entergy Arkansas to withdraw from a System Agreement with the other Entergy companies.  In December 2005 Entergy Arkansas notified the System Agreement participants that it intended to withdraw from the agreement as of December 2013.

Entergy Arkansas's withdrawal was prompted by the action of Louisiana regulators, which had caused some of the cost of Entergy Louisiana's more expensive natural gas fueled generating plants to be shifted to Arkansas rate payers.  Entergy Arkansas generates electric power primarily through nuclear and coal fired plants.

According to the Arkansas Democrat Gazette, FERC's ruling will save Entergy's Arkansas customers about $218 per year.

Other Important Points:

• If FERC does not permit a rehearing, the Louisiana regulators can appeal to the United States Circuit Court of Appeals for the District of Columbia
• As FERC Chairman John Wellinghof points out, the ruling "will allow Entergy and any interested party to engage in meaningful negotiations for a successor arrangement to the System Agreement to be in effect prior to the withdrawal of Entergy Arkansas. . . ."

Last March Entergy Arkansas sought a Declaratory Order from the Arkansas Public Service Commisson approving the installation of various environmental controls at its White Bluff facility made necessary by the Arkansas Department of Environmental Quality's implementation of the EPA's Regional Haze Rule.  Without the environmental controls, the facility will have to close in 2013.

Entergy and the co-owner's of the White Bluff facility contend that implementation of the environmental controls is the lowest cost reasonable alternative to meet their customers' long-term power supply needs.

However, a number of groups, including Entegra Power Group, LLC, GDF SUEZ, The Wind Coalition, Audobon Arkansas and the Sierra Club, dispute that Entergy properly considered a broad range of alternatives.

Why is this Important?  This PSC docket, unlike the docket approving construction of the Turk Plant, will focus attention on existing generating facilities and force the Commission to decide whether to allow utilities to build new generating capacity, expand their owned existing capacity, or make them utilize capacity already in existence, even if owned by a third party.