Court Opinion

ID: 9750275
Source: CourtListenerOpinion
Date Created: 2023-08-28 14:45:31.620536+00
Date Added: 2024-06-11T07:26:06.355715
License: Public Domain

JOSEPHINE LINKER HART, Judge, concurring. | ⅞1 Though I agree with the court and join its opinion, I write separately to address the APSC’s conclusion that SWEP-CO’s need for additional power resources had been decided in an earlier docket and that the only issue before the APSC was SWEPCO’s application for a CECPN to build and operate the Turk Plant. The question of whether SWEPCO may need to acquire additional power resources cannot be separated from the question of whether it may build a coal-fired generating facility. Rather, relevant statutes provide that the need for additional power supply resources and the building of a plant must be considered in the same docket. Further, issues related to transmission lines likewise cannot be separated from these determinations. As the record demonstrates, failure to consider these matters in the same proceeding resulted in inefficiencies. Agencies that were designed to protect the interests of the public were conspicuously absent from the proceedings, and relevant proceedings were farmed out to other governing authorities. Further, interested parties were not notified of relevant proceedings, and as a result, the APSC not only failed to consider alternatives to building the Turk Plant, but also failed to consider issues that may arise regarding transmission lines. On January 26, 2006, SWEPCO filed with the APSC a needs application, and APSC Docket No. 06-024-U was created to address the application. This application was heard by the APSC, without notice being given except on the APSC’s website. The APSC, in Order No. 8, ruled that SWEPCO had demonstrated a need for additional power supply resources 122and granted the needs application. The order also found that “nothing in this order represents a Commission’s finding (1) regarding any specific proposal(s) SWEP-CO may proffer to address its need for additional power supply resources.” In December of 2006, SWEPCO filed its application for a CECPN to build the Turk Plant, which was ultimately granted. The APSC, in Order No. 11 of the CECPN docket, stated: “SWEPCO’S Declaration of Need Application in Docket No. 06-024-U was not appealed, and therefore, represents the Commission’s final ruling on the matter at issue therein. Accordingly, this Commission will not revisit in the instant proceeding its final ruling in Docket No. 06-024-U.” Appellants argue on appeal that the APSC erred in approving this bifurcated process in which SWEPCO proved its need for additional power supply resources in a proceeding separate from the CECPN proceeding. During oral arguments, ap-pellees insisted that, in the needs proceeding, the APSC only found that SWEPCO had a need for additional power supply resources and not the need for a major utility facility. SWEPCO acknowledged that a finding of need was required for additional power supply resources as a predicate to obtaining a CECPN to build and operate the Turk Plant. They treat the separation of these proceedings as a benign and expeditious way of conducting a CECPN proceeding. The legislative intent of the Utility Act, however, requires the APSC to balance the growing need for electric and gas utility services, which may require construction of new major utility facilities, against the protection of the environment, the quality of life of the people of this state, and the development of alternative renewable and nonrenewable energy | ^technologies. Ark. Code Ann. § 23-18-502 (Repl.2002). To facilitate the balancing of these factors, an application for a CECPN must contain “[a] statement of the need and reasons for the construction of the facility.” Ark.Code Ann. § 28-18-511(3) (Supp.2007). The APSC may not grant a CECPN unless it determines the “basis of the need for the facility.” See Ark.Code Ann. § 23-18-519(b)(1) (Supp.2007). Thus, the “need” determination is essential to the CECPN process. Accordingly, the “single proceeding” mandate of the Utility Act required that the APSC determine the basis of SWEPCO’s need as part of the CECPN proceeding. Ark.Code Ann. § 23-18-502(e). SWEPCO sought this determination in a separate docket, even though, in every pri- or CECPN proceeding for a new baseload power plant, need had been determined as part of the CECPN proceeding. The net effect of the separate proceeding prevented the parties to the CECPN proceeding from being able to challenge need and allowed SWEPCO to seek a CECPN for a generating plant without again addressing the need for additional power resources. The APSC staff apparently acquiesced in this separate proceeding, and SWEPCO was allowed to pursue its application for need in a proceeding separate from its CECPN application. In doing so, appel-lees were able to proceed without giving the statutory notice required by the Utility Act. See Ark.Code Ann. § 28-18-513 (Supp.2007). As noted by Special Commissioner David Newbern in his dissent, there was evidence that SWEPCO could satisfy its retail customers’ needs for power without expanding its generating capacity: Venita McCellon-Allen, Chief Operating Officer of SWEPCO testified that ^approximately 21 per cent of SWEP-CO’s overall power generation is sold to wholesale purchasers who then resell the power to their customers.... While some of the contractual arrangements are very complicated, it is clear that these contracts are purely voluntary on the part of SWEPCO and that the return on its equity earned by SWEPCO from those contracts is not shared with the ratepayers, i.e., retail customers.... It becomes apparent that SWEPCO could satisfy its retail customers’ need for power, without expansion of its generating capacity by declining to renew some of its expiring wholesale contracts for a period of time during which the costs of regulation, or the developing technology for the capture and sequestration of, coal plant emissions could be better ascertained.... Obviously, the issue of the need for increased capacity in light of these facts should have been a part of this [CECPN] proceeding in addition to that of the transmission lines. If the need for power to be sold through the retail rates subject to this Commission’s jurisdiction could be satisfied by the nonre-newal of one or more of the wholesale contracts, we would not be faced with the issue of the environmental damage in prospect upon approval of the application before us. (Footnotes omitted.) But more importantly, Newbern also questioned whether the increased need of SWEPCO could be supplied by another generating plant already in place. In his dissent, Newbern observed that one of the tragedies that came to light in the CECPN proceeding was that there is a large, highly efficient combined gas-fired plant known as the Union Power Station at El Dorado, Arkansas, owned by the Entegra Power Group, LLC (Entegra), which could produce far more power than SWEPCO needed. The 2200 MW Union Power Station, which is just over 100 miles by road from the Turk Plant site, is within SWEPCO’s Control Area, but is mostly idle because of its inability to transmit its product out of the Entergy Control Area in which it is sited. Entegra’s resources were known to SWEPCO, but they were not mentioned in SWEPCO’s needs application, and their availability came toj^light when Entegra petitioned to intervene in the CECPN docket. In Order No. 4 entered January 26, 2007, the APSC denied intervention. The APSC based its decision, at least in part, on the determination that Entegra had not shown good cause to support its petition to intervene. The APSC’s denial removed from consideration the possibility that Entegra could supply power in excess of the 600 MW that SWEPCO claimed it needed to meet customer demands and eliminate SWEPCO’s need to build an additional generating facility. Entegra did not appeal the denial of its intervention petition, although it could have done so after petitioning for rehearing. See Ark. Code Ann. § 23-18-524 (Repl.2002). Nor did it join appellants in this appeal. Thus, the APSC failed to consider this alternative source as a potential supplier of power to meet SWEPCO’s increased need even though the APSC was aware of the excess capacity of Entegra’s Union Power Station. While not before us, I nevertheless discuss these matters to emphasize that there were alternatives that should have been considered by the APSC before granting an application to build an additional generating plant in Hempstead County at an initial estimated capital cost of $1,343 billion, and that should be considered as part of a single proceeding should SWEPCO decide to reapply for a CECPN. The cost of the facility will ultimately be borne by the retail customers (rate payers) because the profit or return on equity made from SWEPCO’s contract sales (wholesale markets) is not shared with the rate payers. It defies understanding that the APSC could not find good cause to allow Entegra to intervene in the Turk Plant proceeding to determine the viability of SWEPCO purchasing power from En-tegra and thereby eliminating SWEPCO’s need to |2(ibuild a coal-fired generating facility in Hempstead County, especially in view of the assertion that the purchase of such power would be at a lower cost than the power generated by SWEPCO’s proposed plant. Under the Utility Act, the APSC must consider other options to fill SWEPCO’s resource needs. See Ark.Code Ann. § 23-18-519(b)(4). Consequently, the extraordinary and unprecedented request of obtaining a determination of need prior to filing the CECPN application, without giving notice, prevented other baseload alternatives from coming to light, ultimately eliminate any competition that stood in the coal-fired facility’s way. Without appreciating that a finding of need is a critical part of the proof SWEPCO must present to obtain a CECPN, the APSC denied appellants an opportunity to challenge SWEPCO’s proof by binding them to a decision made in a docket to which they were not parties and were not given notice. The “public notice” that appellees contend was given — all APSC filings are available in real time on its website — is largely illusory. Posting filings on the APSC website does not come close to meeting the requirements of Ark. Code Ann. § 23-18-513.1 This procedure denied appellants that statutory right under the Utility 12?Act, which mandates an “adequate opportunity for individuals, groups interested in energy and resource conservation and the protection of the environment, state and regional agencies, local governments, and other public bodies to participate in timely fashion in decisions regarding the location, financing, construction, and operation of major facilities.” Ark.Code Ann. § 23-18-502(d). The significance of Entegra’s petition to intervene demonstrates that the APSC was aware that evidence was available that could controvert SWEPCO’s need for additional resources, but this evidence was not allowed and, therefore, was not considered by the APSC before it made its finding on SWEPCO’s needs application. Certainly, it could not be developed by' appellants, because they were not notified of the needs proceeding and, therefore, were not parties to it. Although the APSC could have remedied this omission by considering this evidence and SWEPCO’s need for additional power resources in the CECPN proceeding, it refused to do so. Furthermore, I note that evidence of alternative sources was not developed in this CECPN proceeding by the APSC staff, the only other party to the earlier needs proceeding besides SWEPCO. Instead of using the resources the Legislature gave it,2 the APSC staff submitted the testimony of only three witnesses in the CECPN proceeding to question | 28SWEPCO’s assertion that the Turk Plant met the requirements of Ark.Code Ann. § 23-18-519. This was an inadequate response. SWEPCO, by effective representation, was able to obtain a CECPN to construct and operate the Turk Plant even though SWEPCO was not complying with the requirements for obtaining a CECPN and in the face of significant environmental concerns. If not for appellants’ intervention and participation in SWEPCO’s CECPN proceeding, SWEP-CO would have obtained its CECPN without challenge. Also, the Office of the Attorney General acquiesced to the CECPN proceeding, thus abdicating its responsibility to protect the interests of the people of this state. The Consumer Utilities Rate Advocacy Division within the Office of the Attorney General; more commonly referred to as CURAD, was created by the General Assembly in 1981 to provide the people of Arkansas with “aggressive and effective representation in utility rate hearings and other utility-related proceedings.” See Ark.Code Ann. § 23-4-302(a)(3) (Repl. 2002). The General Assembly gave CU-RAD the powers and duties (1) to provide aggressive and effective representation for the people of Arkansas in hearings before the APSC and other state and federal courts or agencies concerning utility-related matters; (2) to disseminate information to all classes of rate payers concerning pertinent energy-related concepts; and (3) to advocate the holding of utility rates to the lowest reasonable level. See Ark.Code Ann. § 23-4-305 (Repl.2002). Although it does not appear that the Office of the Attorney General was given notice of SWEPCO’s needs application, CURAD’s participation as a party in the CECPN proceeding was almost non-existent. CU-RADj^r,apparently raised no objection in the CECPN proceeding to the APSC’s pri- or finding of need. In addition, CURAD neither raised the issue of the APSC denying Entegra’s petition to intervene nor addressed the alternative power source available from the Union Power Facility at El Dorado. The burden fell exclusively to appellants, private citizens, to bring the issue of separate proceedings, the need for and availability of additional resources, and the environmental impact to the attention of the APSC. The inefficiencies apparent in this proceeding prove the wisdom of the Legislature in the passage of the Utility Act, and it is to be commended for its foresight. It also magnifies the failure of the mandated agencies to act in accordance with the Act. Sixteen state agencies were notified and invited to participate in SWEPCO’s CECPN proceeding. The failure of these agencies, excepting the Office of the Attorney General, to intervene and abide by the letter and spirit of their mandate after receiving notice as required by Ark.Code Ann. § 23-18-513 is disappointing. Further, I take no comfort in the APSC deferring some of these issues to other agencies for resolution. The Utility Act requires that, before the APSC can issue a CECPN, it must identify the nature of the probable environmental impact of the facility and find that the facility represents an acceptable adverse environmental impact. See Ark.Code Ann. § 23-18-519. By deferring the potential impact of the Turk Plant to other agencies, the APSC failed to determine whether the impact was acceptable and consider the total cost of the impact. The APSC does not deny that it deferred findings on certain environmental impact to other agencies. In fact, APSC staff witness Clark Cotten testified that, to a large extent, it is his position and the staffs position that the APSC doesn’t deal with environmental | ^issues — that’s somebody else’s job — the Arkansas Department of Environmental Quality (ADEQ). Furthermore, after deferring issues to the ADEQ, the APSC in Order No. 11 acknowledged that it was granting SWEPCO a CECPN to build the Turk Plant before the ADEQ had issued its final determination concerning whether the Turk Plant will meet all environmental rules and regulations. As noted in Newbern’s dissent: While the Staff correctly suggests that ADEQ has exclusive jurisdiction of its own permitting authority, there is no conflict between that and the requirement found in Ark.Code Ann. § 23-18-519(b)(4) that the Commission not grant a certificate unless it determines “[t]hat the facility represents an acceptable adverse environmental impact....” The Commission is thus concerned with the broader issue of environmental compatibility of the proposed fuel source and the emissions it will cause. It is also concerned with the likelihood of carbon control mandates from Congress as an element of the potential cost to SWEP-CO customers and the total cost to society of the proposed facility. The draft ADEQ permit is just that, and it is of no consequence to the ultimate issue in this proceeding. It is polite and appropriate to condition the issuance of the certificate upon SWEPCO meeting ADEQ’s emission requirements. However, it is improper, unnecessary, short-sighted, and it leaves the public interest unprotected, for the Commission to abdicate, to any degree, its responsibility to assess the acceptability of the environmental impact of the plant on the ground that the plant may meet current ADEQ requirements. There is nothing in the Utility Act that authorizes the APSC to ignore environmental impact. By deferring impact to ongoing reviews by other agencies, the APSC cannot determine whether the impact is acceptable and consider the total cost to the environment, nor can the APSC weigh the impact against the need of SWEPCO for additional resources as required by Ark.Code Ann. § 23-18-519. Moreover, consideration of electric transmission lines must be a part of the single proceeding. Ark.Code Ann. § 23-18-502(e). The impact of the electric transmission lines on the quality of life of the people of this state and the environment must be considered. See |31 Ark.Code Ann. § 23-18-502. Electric transmission lines no doubt affect the people and environment as much as the building of the facility, and decisions relating to the transmission lines must be considered by the APSC under the guides established by the Legislature. Instead, the APSC deferred to the Southwest Power Pool (SPP) as justification for its separation of the CECPN proceeding for the generating plant from the transmission lines. The SPP is the area’s Regional Transmission Organization, and it governs transmission of electric utilities in Arkansas. According to APSC Order No. 11, the SPP will not support SWEP-CO’s application for transmission service until it conducts a study, posts results, and SWEPCO agrees to remedy any deficiencies found in the study. The APSC determined that the final decision concerning the transmission facilities and upgrades required to deliver power and energy from the Turk Plant will be performed by the SPP. Citing difficulties that SWEPCO has had determining what specific facilities will be required for the SPP study process, it stated that SWEPCO did not feel it was prudent to include potential transmission facilities in its application for the CECPN for the Turk Plant. The APSC supported separating the dockets based upon the lack of any plan to transport the power generated and by concluding that it would consider the transmission lines at a later docket. It further justified separating the CECPN proceedings from the transmission lines by citing past practices and by noting that the SPP must grant SWEPCO authority before SWEPCO is able to provide transmission from the Turk Plant. The Commission, however, should not grant the CECPN before the SPP approves | ^transmission lines. The duties imposed and the authority granted by the Legislature cannot be delegated to third parties outside of the oversight of our Legislature. Moreover, the questions concerning transmission lines must be addressed, in the same single proceeding, before authority to construct a facility is finally granted by the Commission.3 The provisional approval from the SPP of the applicant’s plan for transmission should be part of the application for the CECPN. As Newbern further explained in his dissent: The most and the least intrusive locations for the corridors can be shown and decisions made, just as is being done here through conditioning of the approval of this application upon prohibiting the location of transmission lines locations in one instance. This case is thus left open with respect to the difficult issues of transmission line locations. A subsequent proceeding will thus deal with those issues at a depth which might well have had a bearing upon whether the certificate sought here should be granted. If, for example, there were simply no way to site transmission lines from the proposed plant without unduly intruding upon important natural areas or private properties, that undoubtedly would be a basis for denying the certificate. Surely, the need to reopen in a subsequent proceeding the evidence produced in this proceeding about the areas to be protected from power line construction and presence should be obviated if possible. If a later SPP ruling requires additional action, it should be brought before the Commission as part of this “docket,” without having to recreate any part of the record. The inefficiencies discussed herein can only be remedied by placing these matters before the APSC in a single proceeding. Accordingly, for these reasons, I concur.  . Arkansas Code Ann. section 23-18-513 is a very detail statute that requires, among other things, proof of service of the CECPN application on certain county and municipal officials and members of the General Assembly, the director or administrative head of specified Arkansas agencies, the offices of the Governor and the Attorney General, the head of any governmental agency charged with the duty of protecting the environment or of planning land use, and each owner of real property on the proposed route selected by the utility on which a major utility facility is to be located or constructed. It also requires that the CECPN application be made available for public inspection in the public libraries in each county where the facility is to be located. Public notice must also be given by publication in a newspaper having substantial circulation in the municipalities and counties where the facility is to be located.   . The APSC has the power to employ "such officers, examiners, experts, engineers, statisticians, accountants, attorneys, inspectors, clerks and employees as it may deem necessary to carry out its proper function or to perform the duties and exercise the powers conferred by law” upon it. Ark.Code Ann. § 23-2-105 (Repl.2002). Moreover, the APSC staff may, through its own experts or employees, or otherwise, secure and introduce such evidence, as it may consider necessary or desirable in any proceeding in addition to the evidence presented by the parties. Rule 3.12 of the Arkansas Public Service Commission Rules of Practice and Procedure.   . The Legislature has given the APSC the authority to open appropriate corridors for transmitting power. Ark.Code Ann. § 23-18-502(e). That authority cannot be delegated.