IN THE MATTER OF THE APPLICATION OF 1 SOUTHWESTERN ELECTRIC POWER COMPANY ) FORA CERTIFICATE OF ENVIRONMENTAL 1 COMPATXBILITYAND PUBLIC NEED FORTHE ) DOCKJZT NO. 06-154-U CONSTRUCTION, OWNERSHIP, OPERATION AND ) ORDERNO. 11 MAINTENANCE OF A COAL-FIRED BASELOAD ) GENERATING FACILITY IN HEMPSTEAD 1 COUNTY, ARKANSAS 1 ORDER Pursuant to Ark. Code Ann. 5 23-18-501 et seq., on December 8, 2006, Southwestern Electric Power Company1 (SWBPCO or the Company), a .rvholly-owned subsidiaiy of American Electric Power, Inc. (AEP} filed in the above-styled Docket its Application for a Ceriijicate of Envirunmentd Compatibility and Public Need for the Construction, Ownership, Operation and Maintenance of a Coal-Fired Baseload Generating Facility in Hempstead County, At.knnsas (Application). The proposed facilities to be constructed under this Application constitute a major utiIity facility as defined in Ark. Code. Ann. 5 23-18-503(5)(A). By its Application SWEPCO requests that this Commission issue an order granting it a Certificate of Environmental Compatibility and Public Need (CECPN or Certificate) to construct, maintain, and operate a coal-fired baseIoad electric generation I In the States of Arkansas, Texas, and Louisiana, SWEPCO engages in the general electric utility busincss of gcnerating, transmitting, distributing and selling, at wholesale and retail, electric power and energy to customers in its service areas. SWEPCO is a pubIic utiIity within the meaning of Ark. Code Ann. 8 23-1-101,and is, therefore, subject to the jurisdiction of this Cornmission. SWEPCO is also subject to thc public utiIity regulatory jurisdiction of the Louisiana and Texas public utility commissions. Applications simiIar to that filed in this Docket are also pcnding before the Louisiana and Texas commissions. Docket NO.06-154-U OrderNo. 11 Page 2 of 76 facility in Hempstead County, Arkansas engineered to generate approximately 600 MW of net generating capacity (the Turk Plant or the plant). Pursuant to Ark. Code Ann. 5 23-18-513 and the Commission’s Rules ofPractfce and Procedure (the Rules), Rule 7.08, SWEPCO provided notice of its Application to all Iegally-designated state agencies and governmental bodies. On the same day that SWEPCO filed its Application, the General Staff of the Commission (the Staff), pursuant to Ark. Code Ann. 5 23-18-514, invited comments from all state agencies entitled to notice of the Application. These state agencies are the Attorney General of Arkansas, Arkansas Commissioner of State Lands, Arkansas WateMtays Cornmission, Arkansas Geological Commission, Axlmnsas Natural Resources Commission (ANRC), Arkansas Energy Office, Arkansas Game and Fish Commission (AGFC), Arkansas Forestry Commission, Arkansas Department of Environmental Qua1it-y (APEQ), Department of Arkansas Heritage [DAH), Arkansas Highway and Transportation Deparhnent, Arkansas Department of Health and Human Services, Arkansas Department of Finance and Administration, the Governor of the State of Arkansas, Arkansas Department of Economic Development and Arkansas Department of Aeronautics . Staffs notification to these legally-designated state agencies resuhed in the receipt by the Staff of responsive letters from four divisions of three state agencies stating concerns that the Application was deficient, was incomplete in its scope, or had failed to provide the information that the specific state agency needed to evaluate the Application. However, no governmental agencies intervened as a party in this Docket NO. 06-154-U OrdcrNo. 11 Page 3 of 76 proceeding.' After Staff notification to SWEPCO, by letter dated February 23, 2007, SWEPCO addressed the stated deficiencies and responded directIy to the designated state agencies. On October 5, 2007, after the conclusion of 17 days of evidentiary hearings and before closing arguments, the Commission requested the DAH, ADEQ, AGFC, ANRC, the Department of the Army, and the Vicksburg District Corps of Engineers to provide updates of the status of each agency's review of SWEPCO's Application. On October 17, 2007 the ANRC responded to the request. Responses were received by ADEQ and AGFC on October 18,2007. The DAH,on behalf of the Vicksburg District Corps of Engineers, also responded on October 18,2007.3 The Parties, Witnesses and Pre-Filed Testimonies In addition to SWEPCO,the other parties to this proceeding are the Staff, the Consumer Utilities Rate Advocacy Division of the Office of the Attorney General of the State of Arkansas4 (AG) and certain Intervenors who OM^ property adjacent to or in the general proximity of SWEPCO's proposed Hempstead County plant site. On December 28, 2006, the SchuTtz Family Limited Partnership, and its Genera1 Partner, Schultz Family Management Company, and F. Patrick Schultz, individually and as Vice-president of Schuh Family Management Company (Schultz), petitioned to intervene as a pam in this docket pursuant to Rule 3.04@)(1) of the Commission's ~ ~ 2 Federal, state, and/or local agencies have intervened in previous APSC dockets wherein eIectric utiIities sought CECPNs for generating plants, including Dockc t Nos. 73-048-U,74-015-U, and 77-003-U. 3 All correspondence between the Staff, SWEPCO and these governrnentd agencies was filed in the official record of this Docket. 4 On December 15, 2006, pursuant to Ark, Code Ann. 5 23-4-301et seq, On December 15,2006,the AG notified the Commission of its intention to participate as a party in tiis procceding. Docket No. 06-154-U OrderNo. 11 Page 4 of 76 Rules. Schultz stated that it owned property adjacent to the proposed generating faciliv that is used for hunting, fishing and other recreational purposes. Schultz alleged that its propem would be adversely impacted by the construction and operation of the proposed faciliv as a direct result of environmental impacts. On January 4,2007,Emon Mahony, Jr., individualIy, and as a shareholder of the Yellow Creek, Po-Boy, Cypress Bayou and Bee Bayou Hunting Clubs (Mahony) filed a Petition to Intervene in this docket. Likewise, on January 4, 2007, the Hempstead County Hunting CIub, Inc., Po-Boy Land Company, Inc., Cypress Bayou Corporation and Yellow Creek Corporation (Hempstead) filed a separate Petition to Intervene in this docket. In his Petition to Intervene, Mahony stated that the hunting dubs in which he is a member “would be adversely impacted by the environmental impact of mercury discharged into the atmosphere in the vicinity of these lands“ and that “the withdrawal of 6000 gallons of water per minute from the Litde River will adversely impact the availability of water for hunting purposes ....” (Mahony Petition at 4) In its Petition to Intervene Hempstead alleged that “[tJhe potential impact of the water to be withdrawn by the proposed facility is of grave concern ....” Hempstead also alleged that “[t]he release of the toxic metal mercury, which is a by-product of the burning of coal, has the potential of contaminating the watersheds of Yellow Creek and Little River,” Finally, Hempstead expressed concern about “the impact of coal train arrival and departures”. (Hempstead Petition at 2-3) On January 24,2007,the Commission issued Order No. 2 granting the Petitions to Xnteelwene of Schultz, Hempstead and Mahony (collectively, the Inteervenors) on the Docket NO.06-154-U OrderNo. 11 Page 5 of 76 condition that “these entities intervene and participate in this proceeding as a single and united interest represented by common legal counsel.” The Initial Direct Testimony and Exhibits of SWEPCO witnesses Venita McCellon-Allen, Renee V. Hawkins, John C. Hendricks, Timothy A. Hostetler, James A. Kobyra, Mark W. Marano, and Donald R. Moncrief were filed on December 8,2006,in support of SWEPCO’s Application. Supplemental Testimony and Exhibits were filed on March 22, 2007, by SWEPCO witnesses Venita McCellon-Allen, Bruce H. Braine, and Scott C. Weaver. The Direct Testimony and Exhibits of SWEPCO witness Rob R. Reid were filed on April 18, 2007. Additional Supplemental Testimony and Exhibits were filed on April 19, 2007, by SWEPCO witness John C. Hendricks and on June 18-19, 2007,by SWEPCO witnesses Venita McCeTlon-Allen, Scott C. Weaver, James A. Kobyra, and Judah L. Rose. Pursuant to Ark, Code Ann. 523-18-511,SWEPCO’s Application, and supporting witnesses’ testimonies and exhibits, included (I) A general description of the proposed Iocation and type of the major utility facility proposed to be built; (Test. Tr. 191, 19&7,327-8) (2) A general description of any reasonable alternate location or locations considered for the proposed facility; (Test.Tr. 199-202) (3) A statement of the need and reasons for construction of the faciliv; (Test. Tr. 73-4) (4) A statement of the estimated costs of the facility and the proposed method of financing the construction of the facility; (Test. Tr, 223-30,305- 9) (5)(A) A general description of any reasonable alternate methods of financing the cons~ctionof the facility and a description of the comparative merits and detriments of each alternate financing method considered; (Test. Tr. 309-13) Docket NO. 06-154-U OrdcrNo. 11 Page 6 of 76 (6) An analysis of the projected economic or financial impact on the applicant and the local community where the faciIiv is to be located as a result of the const-ruction and the operation of the proposed faciliw; (Test. Tr. 313-21,485-6) (7) An analysis of the estimated effects on energy costs to the consumer as a result of the construction and operation of the proposed facility; (Hr. Tr. 1910-1; Test. Tr. 484-5) (8)(A) An exhibit containing an environmental impact statement (EIS), developing the following four factors listed in subdivision (S)(B>: (Test. Tr. 328-34;EX. Tr* 1723-4246) i. The environmental impact of the proposed action; (Test. Tr. 332-33 ii. Any adverse environmental effects which cannot be avoided; (Test. Tr, 333) iii. A description of the comparative merits and detriments of each alternative energy production process considered, and a statement of the reasons why the proposed location and production process were selected for the facility; and (Test.