Southwestern Electric Power Company Rate Case in Arkansas
Synapse provided expert testimony and analysis to support Sierra Club in reviewing the Southwestern Electric Power Company’s (SWEPCO) rate case application before the Arkansas Public Utility Commission for the test year May 2020 – April 2021. Synapse testimony focused on evaluating the forward-looking economics of the Flint Creek and Welsh coal plants. We also assessed the prudence of the company’s decision to retrofit Flint Creek to comply with CCR and ELG regulations, and its proposed decision to convert the Welsh plant to operate on gas.
We found that SWEPCO incurred $158 million and $194 million in net losses relative to the market value of energy and capacity at Flint Creek and Welsh respectively over the time period 2015 – 2020. Further, we found that the company is projected to incur $132 million and $254 million at Flint Creek and Welsh, respectively, over the next decade (2021-2030). The company’s decision to invest in CCR and ELG retrofits at Flint Creek is imprudent, as is its proposed decision to convert Welsh to operate on gas. We also find that the company has not complied with the Commission's request that the company work to address the load pocket in northwest Arkansas near Flint Creek.
We recommended that the Commission disallow from test year base rates all operation and maintenance and capital costs for Flint Creek and Welsh on the basis that the company has not demonstrated that it is prudent to continue investing in and operating those plants. Further, the commission should find that the company’s decision to invest in CCR and ELG retrofits at Flint Creek was imprudent and disallow recovery of costs now and in the future that would be avoided through the retirement of Flint Creek by 2028. Finally, the commission should not allow recovery of Welsh conversion costs without robust analysis justifying the conversion.