OG&E may spend $1 bln on Oklahoma coal plants after ruling

Fri Nov 1, 2013 11:37am EDT

Nov 1 (Reuters) - OGE Energy Corp's Oklahoma Gas and Electric (OG&E) utility said Friday it may have to spend about $1 billion to upgrade emission controls at its two coal-fired power plants after a federal appeals court decision Thursday.

The U.S. 10th Circuit Court of Appeals denied Oklahoma's request for a rehearing to determine if the U.S. Environmental Protection Agency acted appropriately in rejecting the state's haze plan to address visibility at national parks and wildlife areas.

OG&E and Oklahoma Attorney General Scott Pruitt requested the rehearing before the full 10-judge panel. In July, a three-member panel ruled 2-1 that the EPA lawfully exercised its authority to impose a federally mandated plan on Oklahoma.

OG&E said the court's decision will likely lead to higher costs for electric customer if the company has to install new emission control equipment.

The company will weigh its legal options, including an appeal to the Supreme Court, OG&E spokesman Paul Renfrow said in a release on Thursday.

OG&E owns two coal-fired power plants in the state - the 1,510-megawatt Muskogee and the 1,038-MW Sooner plant.

A spokeswoman at OG&E, Kathleen O'Shea, told Reuters on Friday the court decision concerned two of the three units at the Muskogee plant, the older Units 4 and 5, and both units at the Sooner plant, noting the company now has 55 months to comply with the EPA's haze rule.

She said the company is reviewing all options to comply with the ruling and all of the other EPA regulations and proposals expected to affect coal plants over the next several years, including rules on mercury emissions, carbon emissions, water use and coal ash.

O'Shea said the company has estimated it would cost about $1 billion to install scrubbers to meet the court's haze ruling. She could not say if that investment would also prepare the plants to meet other proposed federal environmental regulations.

OKLAHOMA PLAN

Instead of scrubbers, the Oklahoma plan called for use of low-sulfur coal and gave affected utilities the flexibility of burning less coal and more natural gas on a timetable that achieves the goals of the federal regional haze rule while limiting the cost to customers, OG&E said.

U.S. power companies have shut or converted about 16,000 megawatts (MW) of coal-fired power plants since 2009 and have plans to shut or convert more than 38,000 MW over the next 10 years or so as cheap natural gas prices have made it uneconomic for generators to upgrade their older coal plants to meet stricter federal environmental rules.

O'Shea said the company has not decided to retire its coal plants at this time, noting the utility is looking at all options to continue providing reliable electricity to customers at the lowest cost.

OG&E serves more than 800,000 customers in Oklahoma and western Arkansas.

Other companies also own coal power plants in Oklahoma, including AES Corp's 320-MW Shady Point plant, Grand River Dam Authority's 1,010-MW GRDA plant, American Electric Power Co Inc's 920-MW Northeastern plant and Western Farmers Electric Cooperative's 440-MW Hugo plant.

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