Review of the Southwestern Electric Power Company's Rate Case Expenses at Coal and Lignite-Fired Power Plants

Sierra Club
Project Complete 2021

Synapse provided expert testimony and analysis to support the Sierra Club in reviewing the Southwestern Electric Power Company’s (SWEPCO) rate case application before the Texas Public Utility Commission for the test year April 2019 – March 2020. Synapse testimony focused on evaluating the forward-looking economics of the Flint Creek and Welsh coal plants. Synapse also evaluated the prudence of the SWEPCO's decision to retrofit Flint Creek to comply with coal combustion residuals (CCR) and effluent limitation guidelines (ELG), and its proposed decision to convert the Welsh plant to operate on gas.

We found that SWEPCO incurred $153 million and $144 million in net losses relative to the market value of energy and capacity at Flint Creek and Welsh respectively over the time period 2015 – 2020. Further, we found that the Company is projected to incur $161 million and $266 million at Flint Creek and Welsh, respectively, over the next decade (2021-2030). The Company’s decision to invest in CCR and ELG retrofits at Flint Creek is imprudent, as is its proposed decision to convert Welsh to operate on gas.

We recommended that the Commission disallow all operation, maintenance, and capital costs from test year base rates for Flint Creek and Welsh on the basis that SWEPCO has not demonstrated that it is prudent to continue investing in and operating these plants. Further, the commission should find that the Company’s decision to invest in CCR and ELG retrofits at Flint Creek was imprudent and disallow recovery of costs now and in the future that would be avoided through the retirement of Flint Creek by 2028. Finally, SWEPCO should not allow recovery of Welsh conversion costs without robust analysis justifying the conversion.