Review of the Southwestern Electric Power Company's Fuel Cost Reconciliation Docket

Sierra Club
Project Completed 2021

Synapse provided expert testimony and analysis to support the Sierra Club in reviewing the Southwestern Electric Power Company’s (SWEPCO) fuel cost reconciliation application before the Texas Public Utility Commission for the time period March 2017 through December 2019. Synapse testimony focused on evaluating the Company’s unit commitment practices at its three coal-fired power plants (Flint Creek, Welsh, and Turk) and two lignite-fired power plants (Pirkey and Dolet Hills). We also evaluated the Company’s management of its lignite mining contract at Dolet Hills Mine.

We found that SWEPCO’s lignite units had some of the highest fuel costs among all solid fuel units in the US during this time. We also found that SWEPCO regularly self-committed its coal and lignite plants into the Southwest Power Pool (SPP) market, and as a result incurred substantial net losses. These losses were avoidable through better commitment practices. Finally, we found that SWEPCO imprudently incurred over $170 million at the Oxbow Mine for assets and infrastructure that were not fully used or useful, and now seeks to pass those costs on to its ratepayers.

We recommend that the Commission disallow net operational losses incurred during specific events we identified, as a result of the Company’s uneconomic commitment practices. These losses were avoidable if the units were instead committed into the market with an economic commitment status. We also recommended that the Commission disallow $2.8 million in costs related to the failed expansion of the Oxbow Mine that were incurred and billed to SWEPCO customers during this time period. Finally, we recommend that SWEPCO be required to provide detailed reporting on its daily unit commitment practices.