OKLAHOMA CITY (AP) - The Oklahoma Corporation Commission rejected pleas to postpone hearings on a proposed $1.8 billion, 950-megawatt coal-fired power plant that is being challenged by natural gas producer Chesapeake Energy Corp. and a coalition of consumer groups.
Pre-approval hearings are scheduled to begin Monday before the commission on a plan by Public Service Company of Oklahoma, Oklahoma Gas & Electric Co. and the Oklahoma Municipal Power Authority to build the coal-fired Red Rock generating unit in Noble County about 80 miles north of Oklahoma City.
But the pre-approval process is being challenged in the state Supreme Court by Oklahoma City-based Chesapeake, the third largest independent gas producer in the U.S., and the Quality of Service Coalition, a group of utility customers and cities that purchase power from PSO, a subsidiary of American Electric Power.
Chesapeake has also questioned plans to build coal-fired generating plants in Texas. Natural gas competes with coal as a fuel for power plants.
In the Oklahoma case, Chesapeake and the coalition allege it is unconstitutional to pre-approve projects so utilities can recover construction-work-in-progress expenses. The Legislature authorized the process in 2005, but Chesapeake maintains the state Constitution was not amended to grant the commission that new power.
Spokesmen for Chesapeake and the coalition said denial of their request will have no effect on the Supreme Court case.
'We are committed to pursuing our case,' said Tom Price, a senior vice president at Chesapeake.
Oral arguments are set July 10 before Supreme Court referee Daniel Karim, said Lee Paden, attorney for the coalition.
A spokesman for OG&E, Brian Alford, described the court challenge as a delaying tactic. Alford said the commission has had the ability to pre-approve projects for decades and that the 2005 legislation merely put a new legal framework in place.
'We're disappointed that Chesapeake and the coalition they're a part of chose this avenue.' Alford said.
Alford and Stan Whiteford, spokesman for PSO, said the proposed coal-fired plant -- which would be the largest in the state -- will diversify the mix of fuels utilities use to produce electricity and help keep consumer costs low.
'We have to believe that what we're doing is in out customers' best interest,' Whiteford said.
Alford said coal costs 85 percent less than natural gas, which he said has increased in price by 117 percent over the last five years.
PSO's generating plants are primarily fueled by natural gas but the company also uses wind power and other fuels, Whiteford said. If the company had relied solely on natural gas as a fuel over the last five years, its customers would have paid $1.7 billion more in fuel costs, he said.
'That's the kind of savings we're talking about,' Whiteford said.
Opponents of coal-fired plants say natural gas burns much cleaner than coal and causes fewer environmental problems. Alford said the proposed Red Rock plant will use so-called 'ultra super critical' technology that uses high temperatures to maximize the efficiency of coal, producing more electricity and less emissions.
The technology has been used in Europe and Asia and the Oklahoma plant will be its first use in the U.S., he said.
PSO will own 50 percent of the Red Rock project, OG&E will operate the facility and own 42 percent and the Oklahoma Municipal Power Authority, which provides electric power to about 20 communities in the state, will own 8 percent.
Red Rock would be located next to OG&E's Sooner Power Plant facilities.
OG&E is a subsidiary of OGE Energy Corp.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
© 2007 AFX News
