BEFORE THE 

ARKANSAS PUBLIC SERVICE COMMISSION 

IN THE MATTER OF SOUTHWESTERN ) 

ELECTRIC POWER COMPANY’S ) 

PETITION FOR A DECLARATORY ) 

ORDER FINDING THAT INSTALLATION ) DOCKET NO. 12-008-U 

OF ENVIRONMENTAL CONTROLS AT ) 

THE FLINT CREEK POWER PLANT IS ) 

IN THE PUBLIC INTEREST ) 

DIRECT TESTIMONY OF 

CHRISTIAN T. BEAM 

ON BEHALF OF 

SOUTHWESTERN ELECTRIC POWER COMPANY 

FEBRUARY 8, 2012 

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TABLE OF CONTENTS

I. INTRODUCTION AND QUALIFICATIONS............................................................... 3

II. PURPOSE OF TESTIMONY ........................................................................................ 4

III. OVERVIEW OF FLINT CREEK POWER PLANT.................................................... 5

IV. ENVIRONMENTAL PROJECTS PROCESS ............................................................. 6

V. TECHNOLOGY SELECTION.................................................................................... 16

VI. FLINT CREEK PLANT PROJECT COST ESTIMATE ........................................... 25

VII. CONCLUSION ......................................................................................................... 31 

EXHIBITS

EXHIBIT CTB-1 PROJECT SCHEDULE 

EXHIBIT CTB-2 TECHNOLOGY OPTIONS 

 

DIRECT TESTIMONY DOCKET NO. 12-008-U 

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1 I. INTRODUCTION AND QUALIFICATIONS

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Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.

A. My name is Christian T. Beam. My business address is 1 Riverside Plaza, Columbus, 

Ohio 43215. 

Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? 

A. My title is Managing Director – Projects and Construction in the Generation 

Engineering, Projects and Field Services (EP&FS) organization for the American 

Electric Power Service Corporation (AEPSC). AEPSC supplies engineering, 

financing, accounting and similar planning and advisory services to the subsidiaries 

of American Electric Power Company, Inc. (AEP or “the Company”), including 

Southwestern Electric Power Company (SWEPCO). 

Q. PLEASE DESCRIBE YOUR EDUCATIONAL AND PROFESSIONAL 

BACKGROUND. 

A. I earned a Bachelor’s Degree in Applied Science with a focus on project management 

from DeVry University. I am a certified Project Management Professional (PMP) and 

completed the AEP Leadership Program at The Ohio State University in 2007. I have 

held positions of escalating responsibility since I started with Ohio Power Company 

(a subsidiary of AEP) in 1990 in the Utility Operations department at the Kammer 

Plant. In 1997, I moved to AEPSC and was named Outage Project Supervisor for the 

Regional Service Organization (RSO) serving the Kammer/Mitchell and Cardinal 

Plants. In 2000, I assumed a new role as Superintendent for the RSO supporting 

 

DIRECT TESTIMONY DOCKET NO. 12-008-U 

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Southwestern Electric Power Company (another AEP subsidiary) and subsequently 

became Manager - Region Outage Management in 2002. In 2004, I was named 

Manager for the Flue Gas Desulphurization (FGD) retrofit project at APCo’s 

Mountaineer Plant. I became Manager - Construction Technology in 2007 and then 

Director - Construction in 2008. In 2009, I was named the Project Director –

Environmental Retrofit Projects. I assumed my current position in 2010. 

Q. WHAT ARE YOUR PRIMARY RESPONSIBILITIES IN YOUR CURRENT 

POSITION?

A. As Managing Director - Projects and Construction, I am responsible for the 

construction and start-up services associated with all environmental retrofit and new 

generation projects and the project management of AEP’s western fleet. 

Q. HAVE YOU PREVIOUSLY FILED TESTIMONY AS A WITNESS BEFORE 

ANY REGULATORY COMMISSION?

A. Yes, before the Public Service Commission of West Virginia in 11-0274-E-GI, the 

Commonwealth of Virginia State Corporation Commission in PUE-2011-00036, and 

the Public Utility Commission of Texas Docket No. 39708. 

17 II. PURPOSE OF TESTIMONY

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Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? 

A. The purpose of my testimony in this proceeding is to provide a brief overview of the 

Flint Creek Power Plant and to describe the process that is being performed by the 

AEPSC, on the behalf of SWEPCO, to retrofit Flint Creek with environmental 

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equipment including the proposed flue gas desulfurization (FGD) with pulse jet fabric 

filter (FF), also referred to as a baghouse, to reduce the plant’s emissions of sulfur 

dioxide (SO2) and activated carbon injection (ACI) to reduce the plant’s emissions of 

mercury (Hg). I will also describe AEPSC’s efforts to select the best SO2 and

hazardous air pollutants (HAPS) reduction technology for Flint Creek, the expected 

performance of the technology, and the current cost estimate to retrofit the technology 

on the unit. SWEPCO also anticipates a need for low NOX burners and over-fired air 

for environmental compliance. Finally, I will provide information on the current 

status of the project and the project plan, including the critical milestones to meet the 

environmental regulatory compliance deadlines. 

Q. ARE YOU SPONSORING ANY EXHIBITS IN THIS PROCEEDING? 

A. Yes, I am sponsoring Exhibit CTB-1 – Project Schedule and CTB-2-FGD 

Technology Options. 

14 III. OVERVIEW OF FLINT CREEK POWER PLANT

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Q. PLEASE DESCRIBE THE FLINT CREEK POWER PLANT. 

A. The Flint Creek Power Plant is a jointly-owned plant located in Benton County, 

Arkansas near the town of Gentry. Arkansas Electric Cooperative Corporation 

(AECC) is the co-owner of the plant on a 50/50 net output and cost basis. Flint Creek 

is a single-unit, pulverized coal-fired plant with a net capacity of 528 MW and was 

placed in service in 1978. SWEPCO’s ownership portion of this unit is 264 MW net, 

and is responsible for operating and maintaining the plant. 

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The Flint Creek unit is fueled with low sulfur Powder River Basin (PRB) coal 

received via unit coal trains. Fuel oil is used for ignition and flame stabilization on 

this base-load unit. The unit is currently equipped with electrostatic precipitators for 

fly ash control. Fly ash collected from the electrostatic precipitators is sold for byproduct re-use as part of the company’s sustainability program. Ash not sold for reuse is currently transported via truck to an on-site permit-approved landfill. 

7 IV. ENVIRONMENTAL PROJECTS PROCESS

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Q. PLEASE DESCRIBE THE PLANNING ACTIVITIES CONDUCTED BY THE 

COMPANY FOR THE RETROFIT OF ENVIRONMENTAL CONTROLS AT 

FLINT CREEK. 

A. As addressed by Company witness Weaver, the Company has acted to identify the 

most economical SO2, mercury and other HAPS reduction technology, and has also 

developed an associated cost estimate in order to perform analyses to determine if the 

project is economically beneficial for SWEPCO customers. 

Q. PLEASE PROVIDE AN OVERVIEW OF THE CURRENT PROJECT PLAN 

FOR THE FLINT CREEK FGD. 

A. The Flint Creek Plant’s FGD retrofit project will be executed using the same phased 

approach that has been successfully employed by AEP on many past projects. The 

phased approach begins with Phase I, which consists primarily of a feasibility study. 

Phase IIa is the preliminary engineering and design stage, while Phase IIb provides 

for detailed engineering, design, and initial site construction activities. Full-scale 

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construction, startup, and commissioning are undertaken in Phase III. A detailed 

evaluation, followed by financial authorization, is required before the project can 

proceed from one phase to the next. A graphical timeline showing the phased 

approach as well as major project milestones is provided in Exhibit CTB-1. 

 Since 2004, AEP has implemented this phased approach in the installation of 

FGD systems on nearly 10,800 MW of coal-fired generation and selective catalytic 

reduction (SCR) systems on more than 8,200 MW. At the height of construction 

activity in 2007, Engineering News-Record identified AEP’s overall construction 

program as the largest in the utility industry and the second largest in the nation, 

based on capital invested. The Flint Creek Plant FGD retrofit will positively benefit 

from years of valuable lessons learned and best practices. AEP’s Quality Assurance 

Program for Projects is based on industry standard methodology established by the 

Project Management Institute (PMI). In addition, AEP’s Project Management 

leadership team for the Flint Creek Plant FGD Project is PMI Project Management 

Professional (PMP) certified. 

Q. IN WHAT PHASE IS THE FLINT CREEK PLANT’S FGD PROJECT 

CURRENTLY? 

A. The project is currently in Phase I. The project has been initiated and the project 

planning and conceptual engineering required to support this filing have been 

completed. A Project Plan will be developed which will include a detailed execution 

strategy for the engineering, design, procurement, permitting, construction, startup 

and commissioning of the FGD and ACI systems. 

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Q. PLEASE DESCRIBE THE ACTIVITIES THAT OCCUR DURING PHASE I. 

A. The formal process begins with the preparation and approval of a Capital 

Improvement Requisition (CI) after which an architect/engineer is engaged to 

perform the engineering, design, and feasibility studies for Phase I and the ensuing 

phases of the project. The intent of the Phase I feasibility studies is to investigate the 

technical options and factors driving the project cost and schedule. During Phase I, 

the architect/engineer, with input from a team of AEPSC engineers and managers, 

defines the scope of the project, prepares work plans, and develops a budgetary cost 

estimate and schedule for implementation. In addition, preliminary environmental 

permitting activities begin and the FGD and ACI supplier is released to begin 

conceptual engineering. The results of the Phase I conceptual engineering and 

feasibility studies are presented to senior management and authorization is sought to 

proceed to Phase IIa. Approval to proceed to the next project phase is accomplished 

by either a formal AEPSC and SWEPCO Management meeting or the CI revision 

approval by the key stakeholders. 

Q. PLEASE DESCRIBE THE ACTIVITIES THAT TAKE PLACE IN PHASE 

IIA. 

A. Phase IIa consists of preliminary engineering, design, permitting and procurement 

work. During this phase, we finalize the project scope, refine the cost estimate and 

schedule, award the Original Equipment Manufacturer (OEM) contract, procure long 

lead time equipment, and develop drawings to the point that detailed design work can 

begin. During Phase IIa, modifications to existing air, water and waste environmental 

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permits are submitted to the Arkansas Department of Environmental Quality to begin 

the evaluation and approval process, and we assemble the construction and site 

management teams to begin design evaluations to ensure that the proposed scope of 

work is optimized for constructability. We also define site preparation plans, 

determine which, if any, facilities will need to be relocated, select a site preparation 

contractor, and complete studies to support the various permitting activities that will 

be required. Upon completion of Phase IIa, the project is again evaluated by key 

stakeholders to proceed to the next project phase. In this case, a Phase IIb CI revision 

will be prepared for approval by AEPSC and SWEPCO Management. 

Q. PLEASE DESCRIBE PHASE IIB OF THE PROJECT PROCESS. 

A. Phase IIb consists of detailed engineering, design, contracting and initial site 

construction work that can be performed prior to the final approval of the air permit. 

During this phase, as detailed design progresses, construction bid packages are 

prepared and major equipment is specified, bid, and purchased. The construction and 

site management teams are mobilized and begin site construction work, and we 

proceed through the process of selecting and awarding the major construction 

contracts. Upon completion of Phase IIb, the project is evaluated once again, and a 

Phase III CI revision will be prepared for approval by AEPSC and SWEPCO 

Management. 

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Q. WHAT TAKES PLACE DURING PHASE III? 

A. Phase III consists of the full-scale construction and startup and commissioning of the 

project. The principal construction contractors mobilize and begin the major 

construction effort. Engineering and design continues in support of the project 

throughout the construction and testing activities, including the validation of the 

design, the preparation of as-built drawings, and the evaluation and approval of 

necessary design changes. Phase III is complete when the project is complete and the 

equipment is commissioned and placed in service. 

Q. WHAT ARE THE MAJOR BENEFITS DERIVED FROM THIS PHASED 

APPROACH TO CONSTRUCTION PROJECTS? 

A. The phased approach provides structured control of the project scope and costs. It 

provides a minimum of three specific decision points (the end of Phases I, IIa, and 

IIb) where engineering and design, cost, and schedule are evaluated to ensure they are 

meeting the intent and expectations of the project. Starting major construction 

activities when the detailed discipline design is substantially complete allows 

construction to proceed, in many cases, on a fixed or target price basis, since many of 

the design changes that might otherwise result in additional work and cost will have 

been identified and remedied. Participation by experienced construction team 

members during the design phases assures that the equipment layout and 

modularization results in optimized constructability and a smooth transition into the 

major construction phase of the project. 

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Q. PLEASE GENERALLY DESCRIBE THE PROCESS FOR SELECTING A 

SPECIFIC TECHNOLOGY AND OEM VENDOR FOR THE 

ENVIRONMENTAL CONTROLS TO BE INSTALLED AT ANY UNIT. 

A. AEP maintains an updated list of technologies that have been proven effective in 

removing emissions from power plant effluent streams. When a generic control 

technology (e.g., wet or dry scrubber) has been identified as a potential environmental 

compliance solution for a specific unit burning an identified range of fuel, an 

Evaluation Team determines, on a unit-specific basis, which OEMs provide control 

technologies that can be used on that unit. The Evaluation Team then determines the 

Total Evaluated Cost (TEC) over the life of the project for each technology. If there 

is no significant difference between or among the TECs or analyzed business risk, the 

OEM technology that presents the lowest Total Installed Cost (TIC) is preferred. 

Q. PLEASE GENERALLY DESCRIBE THE PROCESS USED TO SELECT A 

CONSTRUCTION CONTRACTOR FOR THE ENVIRONMENTAL 

CONTROLS AT ANY UNIT. 

A. AEP has processes for evaluating and qualifying construction contractors to ensure 

they have the capability to perform work of the type and scope envisioned with a 

demonstrated record of safety focus and performance. Proposals are requested from 

two or more of the contractors on that list. The final award is based on the TEC and 

safety performance of those bidders, along with ancillary considerations such as a 

financial risk assessment, any pricing discounts offered for multiple-unit awards, 

negotiated shared risk/reward programs, and similar factors. 

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Q. WHAT STEPS DOES AEP TAKE TO ENSURE THAT PROJECT COSTS 

ARE REASONABLE AND NECESSARY? 

A. The three-phase process enables periodic and structured technical and cost 

evaluations throughout each phase. The Phase I feasibility study assesses technical 

options and costs. Phase IIa and IIb engineering produces preliminary, then detailed 

designs to refine the associated costs. 

 As previously discussed, contracting for construction activities when the 

detailed discipline design is substantially complete allows construction to proceed, in 

many cases, on a fixed or target price basis. This serves to mitigate SWEPCO’s and 

our customers’ exposure to upside cost risks. As Phase III construction and startup 

and commissioning proceeds, we use prudent construction management practices and 

cost and schedule controls to ensure that the projects are accomplished in a safe, as 

well as professional, and cost-effective manner. To that end, AEP has developed a 

robust Quality Assurance/Quality Control manual that includes Standard Operating 

Procedures for such activities as Project Integration and Planning, Work 

Management, Preparation of Estimates, Procurement, Project Schedule Control, 

Project Cost Control, Corrective and Preventive Actions, and, above all, Safety. 

Q. PLEASE DESCRIBE AEP’S PROJECT MANAGEMENT PROCESS. 

A. AEP uses several formalized management and control processes developed during 

our years of project execution experience to ensure projects meet cost, schedule, 

quality, and safety requirements. 

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Project Cost Management involves the planning, estimating, forecasting, and 

controlling processes used during each phase of project execution. Estimates and 

budgets are revised as the project progresses through its phases, and metrics are used 

to report and manage against those budgets. The cost projections are refined as more 

engineering is completed, detailed scope is finalized, and estimates are updated with 

quotes for supply. A detailed risk assessment is completed and revised to determine 

the level of contingency required by the risks identified as the project progresses. 

Project Schedule Management ensures that the overall project is executed in 

accordance with the needs of the interfacing groups so that work is completed in 

support of the initial operation date. This is accomplished through the use of 

scheduling tools, the establishment and monitoring of critical project milestones, and 

the monitoring of specific performance and production metrics. The development of 

an integrated schedule involves the application of sequencing and durations for the 

activities required to complete the project. AEPSC acts as the project integrator and 

the architecture/engineer (A/E), contractors, and vendors provide comprehensive 

monthly status reports on the project schedule as well as weekly comprehensive 

schedule updates that include information on activity progress, 30-day look-ahead 

reports, the status of major activities, and cost/schedule integration information. 

Project Quality Management ensures that the installed project meets all 

AEPSC requirements for form, fit, function, and performance. AEPSC Engineering 

develops a detailed scope of work (SOW) which includes design criteria and 

specifications for the FGD equipment. A Quality Oversight Plan (QOP) will be 

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developed to determine what inspections will be conducted, their frequency and the 

responsible person(s). As part of this plan, an engineering evaluation plan is 

developed and executed to ensure the quality of the A/E’s engineering deliverables. 

The AEPSC construction site manager will assure field inspections are performed 

both independently and concurrently with any contractor’s inspections. All 

assessments will be documented to ensure compliance with the QOP. 

Project Safety Management processes are used by AEPSC to ensure that the 

project is completed in the safest manner possible. AEPSC has a corporate goal of 

“Target Zero”, which means zero harm to all employees and contractors. The 

Company has an established culture of providing the safest possible workplace. 

Every person in an AEPSC facility or on an AEPSC project needs to be proactive in 

working towards the Company’s “Target Zero” goal. A cornerstone in achieving this 

goal is planning safety into the work. A safe project involves “planning the work and 

then working the plan.” 

Q. PLEASE DESCRIBE OTHER FORMALIZED MANAGEMENT AND 

CONTROL PROCESSES USED BY AEP. 

A. The Company also formally manages and controls procurement, contracts, and risk 

activities. 

Project Procurement/Contract Management utilizes competitive bid and 

program purchase processes to ensure low costs from contractors and vendors that 

meet AEPSC performance and technical specifications. 

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Project Risk Management involves the formal process of identifying, 

quantifying, and mitigating risks associated with the project. This is done through the 

development of a detailed risk register so that risk can be prioritized and resources 

efficiently focused on mitigating the most critical risks. The risk register is updated 

periodically throughout the project duration to ensure risk mitigation priorities are 

valid. 

Q. WILL THE PHASE I FEASIBILITY STUDIES COVER THE ENTIRE SCOPE 

OF THE FLINT CREEK FGD PROJECT? 

A. Yes. AEP will establish a Division of Work (DOW) clearly defining the 

responsibilities of the assigned parties not only for the FGD technology, but also site 

development, reagent and material unloading and handling systems, any required 

switchyard modifications and the identification of all permitting requirements. AEP 

design criteria will be clearly communicated to the A/E and the OEM to ensure the 

benefits of our knowledge and experience in owning, maintaining and operating 

similar systems is carried forward on the Flint Creek Plant project. 

Q. CAN YOU PROVIDE A GRAPHICAL SUMMARY OF THE PHASED 

APPROACH TO CONSTRUCTION? 

A. Yes. Exhibit CTB-1 shows a preliminary project schedule for the various activities 

that will take place during this phased approach to construction. 

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Q. WHEN IS EACH PHASE ESTIMATED TO BEGIN? 

A. Each phase and subsequent activities are displayed in Exhibit CTB-1. Phase I has 

already commenced and activities are expected to be completed in the third quarter of 

2012 with Phase IIa to start in the same time frame. Phase IIb is estimated to begin in 

the first quarter of 2013 and be completed by the end of the fourth quarter of the same 

year. We are currently planning on commencing Phase III site construction activities 

on approximately January 1, 2014, predicated upon the receipt of the Permit-to-Install 

(PTI), often referred to as the air permit, from the Arkansas Department of 

Environmental Quality (ADEQ). Any delays to the issuance of the air permit may 

result in schedule delays and cost impacts to the overall execution of the project. 

11 V. TECHNOLOGY SELECTION

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Q. WHAT FGD SYSTEMS WERE CONSIDERED AND HOW DO THEY WORK 

TO REDUCE SO2 EMISSIONS? 

A. A variety of SO2 control processes and technologies are in use within the industry, 

but two commercialized processes emerged for comparative study on Flint Creek: 

Limestone Forced Oxidation (LSFO) Spray Tower Wet FGD and Lime Dry FGD 

with Recycle. These processes are typically referred to in the industry as wet FGD 

(WFGD) and dry FGD (DFGD) systems, respectively. 

 In a WFGD system, alkaline reagent slurry (usually lime or limestone) is 

injected into a vessel, where it reacts with the flue gas to collect the SO2. A WFGD 

absorber utilizes a high volume of liquid slurry continuously circulating in the 

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absorber vessel and collecting in the absorber reaction tank where the scrubbing 

reaction occurs. A DFGD is comprised of the absorber vessel or duct integrated with 

a FF. The DFGD does not utilize a liquid filled reaction tank, but instead relies on 

the scrubbing reactions to take place as the flue gas intermingles with the lime inside 

the vessel or ductwork and also in the highly reactive dust cake on the surface of the 

downstream fabric filter media. 

Q. WHAT ARE THE KEY OPERATIONAL DIFFERENCES BETWEEN A WET 

FGD AND A DRY FGD SYSTEM? 

A. In most WFGD systems, limestone slurry is used as the reagent and a gypsum 

byproduct is formed as a result of the chemical reaction. In DFGD systems, lime is 

used as the reagent and calcium sulfite is formed as a result of the chemical reaction. 

 The WFGD process requires an additional step not required of a DFGD. A 

WFGD requires dewatering of the reaction byproducts for solids handling, landfill 

suitability, and water reuse or disposal; a DFGD collects the reaction byproducts 

directly in a downstream fabric filter. Thus, solids dewatering or wastewater 

treatment is not required for a DFGD system. 

 On a comparable inlet SO2 concentration, water consumption, auxiliary power 

usage, solid waste disposal, and equipment footprint are higher for a WFGD than for 

a DFGD. Co-benefit emissions control for mercury and other Hazardous Air 

Pollutants (HAPs) is better with a DFGD versus a WFGD due to the integral fabric 

filter (FF) baghouse associated with the DFGD technology. This is due to the dual 

functionality of the FF to both remove particulate matter and provide additional 

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contact time between flue gas and reagent to further reduce SO2 emissions. 

 Plants with WFGD operate with a “wet stack” or a visible thick water vapor 

plume exiting the stack under all ambient conditions. The stack plume from a DFGD 

is typically not visible because it operates above the flue gas saturation temperature. 

A slight water vapor plume might become visible under certain ambient conditions of 

temperature and humidity. 

Q. DID THE COMPANY CONDUCT A STUDY TO COMPARE THE USE OF A 

WFGD TO A DFGD FOR FLINT CREEK? 

A. Yes. The Projects and Construction group provided technology performance 

parameters and cost estimates for the initial high level overview of reasonable SO2

compliance options available to SWEPCO customers. Technical and economic 

evaluations were performed to compare and contrast the WFGD and DFGD 

technology options that may be applied while burning 0.8 lb sulfur/mmBTU coal. 

The evaluation of the FGD technology options considered environmental and 

technical performance, retrofit constraints, and collateral environmental and technical 

impacts associated with the evaluated technologies. An economic analysis was 

performed, as outlined in Company witness Scott C. Weaver’s testimony. 

 An OEM proprietary DFGD system was compared to a Spray Dryer Absorber 

(SDA) technology, Circulating Dry Fluidized Bed Scrubber (CDS) technology, and 

the Limestone Forced Oxidized (LSFO) Spray Tower WFGD technology. 

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Q. WHAT ARE THE COST COMPARISONS BETWEEN A DFGD AND A 

WFGD? 

A. A detailed cost estimate for a DFGD has not been completed for Flint Creek since 

engineering and design is only in the very early phases. However, our initial Flint 

Creek Plant cost comparison supports the industry expectation that DFGD is less 

capital intensive than WFGD. DFGD uses less exotic materials of construction than a 

WFGD, which not only reduces the initial capital costs, but also future maintenance 

and equipment replacement costs. In addition, fixed and variable O&M costs are 

very different, primarily driven by the costs of the reagent used (lime versus 

limestone). The fuel sulfur content will influence the reagent consumption and thus 

the variable cost of either technology. 

Q. PLEASE OFFER AN OVERVIEW OF THE FGD RETROFIT 

ALTERNATIVES CONSIDERED FOR FLINT CREEK? 

A. The Company, as well as an AEP EP&FS and AEP Fuel, Emissions & Logistics 

(FEL) cross-functional team, initially identified and economically-screened a 

combination of five (5) FGD technology options that were acceptable emission 

removal solutions for Flint Creek. Exhibit CTB-2 lists those options; however, they 

can generally be broken down into: 1) two variations of a “wet” FGD; 2) three forms 

of “dry” FGD technology; 3) a traditional sorbent-injection (SDA) dry FGD; 4) a 

circulating dry scrubber (CDS) technology; and 5) an OEM proprietary modular 

DFGD technology (“NIDTM” design). For all options, this technology screening 

assumed the utilization of a 0.8 lb. per MMBtu sulfur-content, Power River Basin 

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(PRB) coal source. Finally, the cross-functional team also offered two additional 

“time-sensitive” cost views pertaining to the NIDTM DFGD option. In addition to the 

“base” 30-month construction period, this technology screening team assessed costs 

applicable to both a 24-month and a 27-month accelerated construction window. 

 Based on the alternative economic screening performed, as summarized in 

Exhibit CTB-2, it was recommended by the team that the optimum FGD “retrofit” 

alternative to be utilized for further modeling purposes was the modular NIDTM 

DFGD technology solution. The model utilized a 0.8 lb. per MMBtu sulfur-content 

coal, and employed a 30-month construction period. 

Q. IS ONE OF THE FGD TECHNOLOGIES A CLEAR FRONT RUNNER TO BE 

SELECTED FOR INSTALLATION AT FLINT CREEK PLANT? 

A. Yes. Considering equivalent SO2 removal efficiencies among the evaluated FGD 

technology options for the aforementioned design basis, the proprietary DFGD 

technology is the favored FGD technology based on the following: 

 Lowest total evaluated cost on 30-year (2011-2040) cumulative present worth 

basis (capital and O&M). 

 Lowest water consumption - Total water consumption for the DFGD is 

significantly less than for the WFGD. This is a major consideration given that 

Flint Creek is considered to be water limited, as the plant is projected to have 

difficulty maintaining lake level during a repeat of the historical worst three 

years of runoff even without the addition of a FGD system. Lowest auxiliary 

power usage - Auxiliary power requirements are significantly less for a DFGD 

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than for a WFGD. 

 Lowest reagent usage - Reagent usage is significantly less for a DFGD than 

for a WFGD. 

 Smallest equipment footprint 

 Best supports ACI for mercury removal and other hazardous air pollutants 

(HAPS) removal – Based upon MATS HAPS limits, in particular for mercury, 

a DFGD is better suited to an ACI system retrofit because the DFGD already 

includes a fabric filter. A WFGD installation would require the addition of 

spray towers and an upstream fabric filter or a wet electrostatic precipitator, 

along with the installation of an ACI system for mercury control to achieve 

the levels of mercury reductions possible with a DFGD and ACI. 

 Best supports SO3 removal - A DFGD does not create a visible moisture 

plume leaving the stack under most conditions, while a WFGD does. 

 Best supports future National Pollutant Discharge Elimination System 

(NPDES) permit compliance 

Q. WAS A SPECIFIC DFGD TECHNOLOGY SELECTED FOR THE 

INSTALLATION AT FLINT CREEK? 

A. Yes. As shown in Exhibit CTB-2, the technical and economic evaluation of the FGD 

technologies shows that the proprietary NIDTM DFGD technology is the preferred 

technology for Flint Creek. While the NIDTM technology has all of the benefits of the 

typical DFGD technologies discussed previously, it also has significant benefits over 

other DFGD technologies, including the previous SDA technology that was proposed 

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for the Flint Creek Plant prior to the suspension of the project. 

 The total installed capital costs for NIDTM are lower than that for other DFGD 

technologies. O&M costs are also lower for NIDTM, as the total amount of lime 

consumption required for similar SO2 removal is less than the amount for other 

DFGD technologies. Unlike other DFGD systems, the NIDTM technology process 

does not require the use of lime slurry and its associated equipment. This results in a 

less complex system that is easier to install and maintain. 

 NIDTM technology can attain higher levels of SO2 reduction, with vendor 

guarantee removal rates of 98% compared to maximum removal rates of 95% for 

SDA and other DFGD technologies. The higher removal rate for NIDTM allows for 

greater fuel flexibility for the Flint Creek site to meet environmental compliance 

limits. 

. The DFGD system that is proposed for installation at Flint Creek will remove 

95% of the SO2 in the flue gas to meet anticipated emission limits for the design basis 

fuel. However, as discussed above, NIDTM technology provides greater flexibility for 

increased SO2 removal rates, if required in the future. 

Q. PLEASE PROVIDE AN OVERVIEW OF THE EQUIPMENT THAT WILL BE 

INSTALLED AS PART OF THE DFGD SYSTEM. 

A. The following equipment would be installed as part of a DFGD system installation at 

Flint Creek. This list is not all-inclusive. 

 Pebble lime rail and truck unloading equipment and storage silos 

 Absorber vessels or ductwork modules 

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 Induced draft fans and motors 

 Tie-in ductwork 

 Pulse jet fabric filter 

 Ash recycle system foundations, equipment, and building 

 Waste storage silo and truck loading equipment 

 Equipment to supply electrical needs of new process equipment 

 Distributed control system (DCS) for new process equipment 

 Balance of plant piping (fire protection, service water, sanitary, etc.) 

Q. WHAT IS THE PROJECTED SERVICE LIFE OF THE DFGD SYSTEM? 

A. The DFGD system has been specified such that the system shall operate safely, 

reliably and without excessive maintenance for a design life of 25 years. 

Q. PLEASE SUMMARISE WHY A DFGD WAS CHOSEN FOR INSTALLATION 

AT FLINT CREEK? 

A. Based on the above, the DFGD is the technology of choice for Flint Creek to meet the 

required emission limits. The DFGD project cost estimate will be refined as 

engineering and design progresses, but DFGD is projected to be the lowest cost 

option especially when considering multi-pollutant reduction performance compared 

to WFGD. While both systems would meet the necessary emission limits imposed by 

the Arkansas Regional Haze Rule (RHR), Cross- State Air Pollution Rule (CSAPR), 

and the Mercury Air and Toxic Standards (MATS Rule), the DFGD system is better 

suited for Flint Creek from both a technical and cost perspective. 

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 Q. HAS AN ACI SYSTEM BEEN INCLUDED AS PART OF THE EVALUATION 

OF THE FGD FOR FLINT CREEK? 

A. Yes. In order to meet the mercury removal requirements of the MATS Rule, an ACI 

system will be required for the Flint Creek Plant. Typically, an ACI system requires 

the installation of a FF to collect the activated carbon/mercury particulate. Since an 

FF is an integral component of the DGFD scope, it has been included in the economic 

and technical evaluation for the Flint Creek Plant environmental projects. 

Q. WHAT OTHER ENVIRONMENTAL PROJECTS WILL BE INCLUDED? 

A. Low NOX burners and over-fire air may need to be installed at Flint Creek. Low NOX

burners are designed to burn coal at the lowest reasonable temperature while also 

starting stable combustion as soon as possible. Over-fire air is commonly used in 

conjunction with low NOX burners to further reduce of the amount of oxygen 

available for combustion in the main burner zone. If low NOX burners and over-fire 

air are installed on Flint Creek, the NOX rate is expected to drop to the 0.18 to 0.22 

lbs/mmbtu range. 

 In addition, a landfill is planned for construction in support of the DFGD 

system installation, and will be used for the disposal of coal combustion byproducts 

that are not suitable for commercial or public use. Other systems and equipment to be 

installed in support of the functionality of the DFGD system for Flint Creek include 

balanced draft conversion; material handling improvements, steam coil modifications; 

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unit controls modernization for new process equipment; and continuous emissions 

monitors (CEMS) upgrades. 

Q. IS AN SCR INCLUDED IN THE FLINT CREEK ENVIRONMENTAL 

PROJECTS FOR MATS RULE, CSAPR AND/OR ARKANSAS RHR 

COMPLIANCE? 

A. No. An SCR is not required for the current compliance strategy for the Flint Creek 

Plant environmental projects. However, as discussed by Company witness 

Hendricks, there is a potential for the addition of an SCR at the Flint Creek Plant in 

the future. As part of the planning for the DFGD system, the potential addition of an 

SCR at a later date will be included. The possible SCR installation will result in the 

need to reserve areas on the DFGD equipment General Arrangement (GA) drawings 

for the installation of an SCR system, and the sizing of new fans to accommodate the 

potential installation of an SCR in the future. 

14 VI. FLINT CREEK PLANT PROJECT COST ESTIMATE

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Q. WHAT IS THE ESTIMATED PROJECT COST FOR THE INSTALLATION 

OF THE DFGD SYSTEM AND OTHER ASSOCIATED ENVIRONMENTAL 

CONTROLS ON THE UNIT AT THE FLINT CREEK PLANT? 

A. SWEPCO’s cost of the DFGD system and associated environmental controls project 

installations, excluding AFUDC and company overheads, is currently estimated at 

$408.7 million, as shown in Table 1 below. 

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Table 1 

Flint Creek Plant Environmental Controls Capital Cost Summary 

Scope of Work Direct Cost ($M)

FGD

DFGD $312.2

ACI $14.3

Associated Projects

Landfill $25.0

Unit Controls 

Modernization $20.0

Low Nox (LNB, OFA)

$16.0

Balanced Draft 

Modifications $15.0

Material Handling 

Improvements $3.5

CEMS Systems $2.2

Steam Coil Mods $0.5

Total $408.7

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 This cost estimate includes the installation of the DFGD system, landfill development 

work that is necessary to dispose of the product from the DFGD, and other associated 

upgrades to existing plant equipment, including unit controls modernization, low 

NOX burners and OFA upgrades, balanced draft modifications, material handling 

improvements, steam coil upgrades, continuous emission monitoring systems 

(CEMS) and ACI. This estimate also includes an allocation for support of the project 

from the AEPSC (Owner’s Cost). 

Q. HOW WAS THE COST ESTIMATE FOR THE FLINT CREEK PROJECT 

DEVELOPED? 

A. The estimate was developed from technology evaluations and estimates associated 

 

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with FGD studies for AEP’s Big Sandy and Rockport Plants and AEP’s years of 

experience with environmental system construction and startup execution. 

Competitive bids were solicited for various removal technologies as part of these 

studies; however, the pricing was based on highly indicative supplier estimates with 

little to no site specific detail. The selected bid proposal estimates were converted to 

$/kw indicative pricing to allow for scaling of pricing associated with Flint Creek’s 

528 MW unit size. The estimates were based on an assumed in-service date occurring 

during the second quarter of 2016. 

Q. WHAT IS THE LEVEL OF ACCURACY CONTAINED IN THE COST 

ESTIMATE PRESENTED IN THIS TESTIMONY? 

A. The cost estimate presented in my direct testimony is based on recognized standards 

by the Association for the Advancement of Cost Engineering (AACE). Based upon 

our experience in executing projects such as this and our utilization of actual cost data 

from recent projects, as outlined above, we believe our range of accuracy to be in 

 -15% to +20% range. We would be somewhat remiss to presume that all site-specific 

anomalies have been both recognized and accounted for in our estimate methodology 

and thus have chosen to apply a 10% contingency to our estimate. 

Q. WHAT OTHER ACTIVITIES MUST BE COMPLETED PRIOR TO THE 

DEVELOPMENT OF A MORE DETAILED COST ESTIMATE? 

A. As outlined above, the project is currently in Phase I engineering and design. Further 

project planning and conceptual engineering will be performed and the cost estimate 

will be refined before proceeding to Phase IIa in the fourth quarter of 2012. During 

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Phase IIa, the cost estimate will be further refined. This work is currently scheduled 

to be completed in the first quarter of 2013 before the project can enter Phase IIb. 

Phase IIb will continue through the fourth quarter of 2013 and will result in a highly 

detailed cost estimate. 

Q. PLEASE DESCRIBE HOW SWEPCO HAS ACCOUNTED FOR THE 

ESCALATION OF LABOR AND MATERIALS IN THE COST ESTIMATE. 

A. SWEPCO has included the escalation of labor and materials in the cost estimate. The 

estimate takes into consideration AEP’s past experience in procuring labor and 

materials, and the actual annual escalation/de-escalation rates to date. 

Q. DOES SWEPCO EMPLOY ANY METHODS TO MITIGATE THE RISK OF 

ESCALATION OF COSTS THAT MAY AFFECT THE CONSTRUCTION OF 

THE FLINT CREEK PLANT DFGD? 

A. Yes. SWEPCO and its customers will be benefitted by having access to AEPSC’s 

Business Intelligence group. One of the key functions of this group is to analyze past, 

current and projected future market conditions and recommend alternatives to 

minimize the risks of volatility present in labor, equipment and material markets. 

AEPSC’s strategy of being first to market, locking in queues in production facilities, 

entering into procurement arrangements such as Discount Cooperative Agreements 

with major equipment vendors and procuring materials and commodities in bulk at 

competitive prices serves to mitigate the risk of market price spikes. This strategy 

will benefit SWEPCO’S customers as many others in the industry will be undertaking 

similar large-scale construction projects to comply with the environmental 

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regulations. 

Q. IS IT YOUR PROFESSIONAL OPINION THAT SWEPCO/AEPSC HAS 

DEVELOPED A REASONABLE COST ESTIMATE FOR CONSTRUCTION 

OF THE PROJECT? 

A. Yes. The cost estimate for the Flint Creek Plant project is reasonable considering the 

development basis and the degree of site-specific engineering and design work 

completed to date. 

Q. HAVE SIMILAR DFGD PROJECTS BEEN SUCCESSFULLY INSTALLED 

AT OTHER AEP UNITS COMPARABLE TO THE FLINT CREEK PLANT? 

A. AEP is currently installing a DFGD system at the John W. Turk plant in Fulton, 

Arkansas. The Company has also applied for the grant of a Certificate of Public 

Convenience and Necessity (CPCN) from the Indiana Utility Regulatory Commission 

(IURC) and the Kentucky Public Service Commission (KPSC) for the installation of 

DFGD technology at both the Rockport and Big Sandy Plants. DFGD is a proven and 

viable technology for SO2 reduction for coal-fired power plants. AEP has a proven 

track record of successfully managing the design and construction of many major 

environmental projects and it is expected that the DFGD installation at Flint Creek 

will be another success. 

Q. HAS AEPSC, ON BEHALF OF SWEPCO, CONDUCTED PAST WORK 

ASSOCIATED WITH A FGD RETROFIT FOR THE FLINT CREEK PLANT? 

A. Yes. As a part of the Clean Air Interstate Rule (CAIR) compliance strategy, AEPSC 

began preliminary Phase I feasibility analyses on the Flint Creek Plant in the first 

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quarter of 2009. Our Engineering, Procurement, and Construction (EPC) Contractor, 

Western Clean Coal Partners (WCCP), a joint venture of The Industrial Company 

(TIC) and Sargent & Lundy (S&L), completed a 90% confidence level, order of 

magnitude cost estimate for DFGD. AEPSC also completed an order of magnitude 

cost estimate for a WFGD system based on its installation of WFGD technology in 

prior years on its eastern fleet of coal-fired power plants. 

Q. WHAT FACTORS SUPPORTED THE DECISION TO END PHASE I WORK 

ASSOCIATED WITH THE FLINT CREEK PLANT DFGD? 

A. As discussed by Company witness Hendricks, a decision was made by the Arkansas 

Pollution Control and Ecology Commission to stay Arkansas State Implementation 

Plan (SIP) requirements. As a result, SWEPCO decided to suspend activities 

surrounding the installation of the DFGD until better clarity was available in regards 

to the SIP requirements. 

Q. WHAT WAS THE COST OF THE FLINT CREEK PLANT WORK PRIOR TO 

THE SUSPENSION? 

A. Prior to the suspension of Phase I and some Phase II activities, approximately $7.1 M 

of cost associated the DFGD project was incurred as of December 31, 2009. 

Q. IN VIEW OF THE SUSPENSION OF THE FLINT CREEK PLANT 

ACTIVITIES, DO YOU CONSIDER THESE COSTS TO HAVE BEEN 

PRUDENTLY INCURRED? 

A. Yes. The costs incurred represent the best efforts at that time to address the necessary 

part of the development of the Flint Creek DFGD that is required to meet the federal 

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and state emission standards described in the testimony of Mr. Hendricks. Also, the 

performance of this work generated the necessary information that the project would 

be more complex and expensive than originally anticipated and led to the conclusion 

that suspending the project was what provided the most benefit to SWEPCO and our 

customers until a period that would be economically feasible, and provide better 

clarity of regulatory requirements. Since the suspension of the original project, an 

additional commercially proven removal technology has become available for use at 

the Flint Creek Plant. This new technology is the NID DFGD process and, as 

previously discussed in my testimony, represents a more cost effective and suitable 

means to comply with final and proposed EPA regulations which create additional 

benefit for SWEPCO’s customers. 

12 VII. CONCLUSION

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Q. PLEASE SUMMARIZE THE NEED FOR THE FLINT CREEK 

ENVIRONMENTAL RETROFIT PROJECT. 

A. The installation of environmental controls at the Flint Creek will help meet 

compliance requirements for the final and proposed environmental regulations to 

insure continued operation of this unit as a reliable, cost-effective source of 

generation for SWEPCO’s customers. AEP’s phased strategy for the design, 

engineering, procurement, construction, and startup/commissioning of its 

environmental compliance projects contributes to a more reliable, safe, timely, and 

cost effective project at completion. AEP continues to use and improve prudent 

project management practices and quality control procedures. These practices and 

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procedures, combined with our talented staff and focus on safety, quality, cost and 

schedule performance, ensure that the Flint Creek DFGD project will be successful. 

Q. DOES THIS CONCLUDE YOUR TESTIMONY? 

A. Yes. 

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OND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FM

 Project Planning, Conceptual Engineering and Feasibility Studies

FGD Technology Evaluation and Recommendation

Declaratory Order - 9 Months

Air Permit Review and Approval - 18 Months

 Receive Air Permit

Phase IIa Engineering, Design, Permitting and Procurement

 Detailed Design, Permitting, Contracting and Site Prep

BOP Civil General Works - Design Package

 Construction Permit Granted

2011

BOP Structural and Mechanical Gen.Works - Design Package

 BOP Electrical and Controls General Works - Design Package

Phase IIb Construction

2012 2013

BOP Procurement

2014

Phase I

Phase IIb

Ph

FGD Structural and Me

Civil Foundations Contractor

 Re

 Co

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Exhibit CTB-2 - FGD Technology Options 

(Using Project-Specific Free Cash Flow Modeling Tool)

Rank # CASE # DESCRIPTION

Relative 10yr NPV 

($000s)

Relative 10yr 

IRR

Relative 20yr NPV 

($000s)

Relative 20yr 

IRR

Relative 

Payback (Yrs.)

1 Case 3 DFGD NID + FF [27 mos] - 0.8 lb/Mmbtu - - - --

2 Case 7 DFGD NID + FF [30 mos] - 0.8 lb/Mmbtu ($2,379) -1.9% ($3,210) -0.2% 0.2

3 Case 5 DFGD SDA+FF - 0.8 lb/Mmbtu ($2,871) 0.5% ($1,867) 0.0% (0.0)

4 Case 6 DFGD NID+FF [24 mos] - 0.8 lb/Mmbtu ($7,032) 0.2% ($6,463) -0.1% 0.1

5 Case 4 DFGD CDS+FF - 0.8 lb/Mmbtu ($40,551) -1.9% ($36,968) -1.0% 0.8

6 Case 1 WFGD + WESP - 0.8 lb/Mmbtu ($126,149) -5.7% ($120,272) -2.9% 2.7

7 Case 2 WFGD + Spray Tower&FF - 0.8 lb/Mmbtu ($159,678) -6.9% ($151,512) -3.5% 5.9

Summary: Flint Creek Unit 1 FGD Technology (& Timing) Screening 

Relative Free Cash 

Ranked in order of "Relative 10-Yr NPV" (as well as other objective risk factors)

(<COST> / SAVINGS) vs. Lowest Cost Case

SWEPCO SWEPCO

As-Spent 2011-2040

Retrofit CPW Cost over Cost over Cost over

Retrofit or Capital Revenue NID(Case 7) NID(Case 3) NID(Case 6)

Replacement In-Service Cost Requirements 7/2016 In-Svc 4/2016 In-Svc 1/2016 In-Svc

Rank Option Date ($000) ($000) ($000) ($000) ($000)

1 NID 30-mo. (Case 7) 7/1/2016 193,360 19,436,651 - (15,878) (32,031)

2 NID 27-mo. (Case 3) 4/1/2016 199,230 19,452,529 15,878 - (16,153)

3 DFGD SDA (Case 5) 1/1/2016 203,500 19,464,455 27,804 11,927 (4,226)

4 DFGD NID 24-mo. (Case 6) 1/1/2016 205,635 19,468,681 32,031 16,153 -

5 DFGD CDS (Case 4) 4/1/2016 223,247 19,483,568 46,917 31,039 14,886

6 Wet FGD (Case 1) 4/1/2016 271,653 19,556,872 120,221 104,344 88,191

Summary: Flint Creek Unit 1 FGD Technology (& Timing) Screening 

Relative REVENUE REQUIREMENT (COST / <SAVINGS>) vs. Lowest Cost Case

(Using System-Holistic Strategist® Resource Optimization Modeling Tool)

Timing Sensitivities

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