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SWEPCO to shut La. coal plant by end of 2026, explore retirement of 2 others

Southwestern Electric Power Co. is shutting down the 642.1-MW lignite-burning Dolet Hills power plant in De Soto County, La., as part of a rate case settlement approved by the Arkansas Public Service Commission.

Under a settlement reached with the Sierra Club and other intervenors, the American Electric Power Co. Inc. subsidiary agreed to retire the power plant no later than the end of 2026. SWEPCO will be entitled to recover decommissioning and other associated costs. (Arkansas PSC Docket No. 19-008-U)

In announcing the settlement Jan. 8, the Sierra Club said the Dolet Hills decision was the 300th to retire a coal-fired power plant since the environmental advocacy group began its "Beyond Coal" campaign in 2010.

Other intervenors include the Consumer Utilities Rate Advocacy Division of the Arkansas Attorney General's Office, Walmart Inc., Western Arkansas Large Energy Consumers and the Board of Trustees of the University of Arkansas.

The utility also agreed to conduct analyses of an assumed retirement of the lignite-fired Pirkey facility in Harrison County, Texas, in 2025 and the retirements of the coal-fired Flint Creek and Welsh plants in 2030. SWEPCO owns a 50% interest in Flint Creek in Benton County, Ark., and in 2016 retired one of the three units at Welsh in Titus County, Texas. It may also issue a request for proposals for power generation in case of any foreseeable power shortfalls in the next five years.

The Sierra Club has campaigned against the Dolet Hills plant for years. In an April 2015 filing in a Louisiana Public Service Commission proceeding, the group claimed the plant was not economic to operate, saying its fuel costs were among the highest in the country.

SWEPCO owns a roughly 40% interest in Dolet Hills, which began operating in 1986. Cleco Partners LP utility Cleco Power LLC owns a 50% interest in the plant and is its operator. A company representative noted the low market price of power as well as the cost of the plant's lignite. "As such, Cleco continues to evaluate the future operations of the plant and the mine," the representative said. The Oxbow lignite mine is owned by a subsidiary of AEP.

"With this agreement, we continue to focus on the economic operations of the plant and lignite mine to best serve our customers," SWEPCO spokesman Peter Main said. As part of the agreement, he said, SWEPCO will make necessary regulatory filings at least 12 months before the plant's retirement date. Also, the Sierra Club will withdraw challenges to the Dolet Hills plant filed in Louisiana and Texas.

Northeast Texas Electric Cooperative Inc. and the Oklahoma Municipal Power Authority also own small stakes in the power plant. The output of Dolet Hills is split evenly between the Southwest Power Pool and Midcontinent ISO markets. Monthly forward power prices for 2020 at MISO's Louisiana hub range from about $26/MWh to $34.75/MWh, according to S&P Global Market Intelligence data.

Moving toward wind

SWEPCO and sister company Public Service Co. of Oklahoma outlined a clean energy strategy in July 2019 that calls for a reduction in coal-fired generation capacity, increases in natural gas and wind resources, and the introduction of solar energy supply. As part of this strategy, the companies have asked regulators in Arkansas, Louisiana and Texas for approval of the proposal to acquire the wind farms in Oklahoma.

The three facilities include the 999-MW Traverse Wind Energy Center, the 288-MW Maverick Wind Project and the 199-MW Sundance Wind Project. Public Service Co. of Oklahoma reached a settlement Dec. 10, 2019, with the staff of the Oklahoma Corporation Commission and other stakeholders to recover the costs of acquiring a 45.5% stake in the facilities.

The rate case settlement approved by the Arkansas PSC also entails a net annual increase of $23.9 million in nonfuel base rates for SWEPCO, effective Dec. 31, 2019.