Chesapeake Energy Corp. and a group of utility customers vowed to continue their legal battle to prevent pre-approval hearings for a proposed $1.8 billion 950 MW coal-fired power plant after the Oklahoma Corporation Commission (OCC) Thursday said it will begin pre-approval hearings on Monday.

OG&E Electric Services (OG&E), the Public Service Company of Oklahoma (PSO) and the Oklahoma Municipal Power Authority (OMPA) jointly signed an agreement with Red Rock Power Partners (RRPP) in February to begin the first phase of a project to build a $1.8 billion, 950 MW electric generating unit near Red Rock, OK (see Power Market Today, Feb. 16). It would be the largest coal-fired plant in the state, located near OG&E’s Sooner Power Plant facilities.

Chesapeake, which is based in Oklahoma City, and the Quality of Service coalition requested a delay in the OCC pre-approval process, but they also have challenged the process in the Oklahoma Supreme Court. The coalition is made up of a group of utility customers and cities that purchase power from PSO, a subsidiary of American Electric Power.

Chesapeake and the coalition allege that it is unconstitutional for the OCC to pre-approve projects so that utilities may recover construction-work-in-progress expenses. The Oklahoma Legislature approved the process in 2005, but the lawsuit charges that the state’s Constitution was never amended to give the OCC its pre-approval power.

“An unconstitutional attempt to give the commission the powers to approve contracts seems to be under way,” Chesapeake said in court documents.

Oklahoma’s high court is scheduled to hear oral arguments on the lawsuit beginning July 10 before a court referee.

“We are committed to pursuing our case,” said Chesapeake Senior Vice President Tom Price.

Chesapeake CEO Aubrey McClendon and his company were part of a coalition that purchased more than $1 million in national advertising for “Coal is Filthy” anti-coal ads, which were run by Clean Sky Coalition, a group started by McClendon (see Daily GPI, April 30). The advertising targeted Texas markets, where TXU Corp. had proposed building coal plants. McClendon and his company also are funding the American Clean Skies Foundation to promote increased use of natural gas as an antidote to climate change. Ironically, former OCC Commissioner Denise Bode was tapped to run the foundation.

Price said it would have been “the height of hypocrisy” if Chesapeake had not challenged the proposed Oklahoma coal plant.

Quality of Service attorney Lee Paden said the coalition questions whether a coal-fired plant is needed when 10 gas-fired facilities that could generate up to 7,000 MW of power have been built in Oklahoma since 1999. “Does this really make sense?” Paden asked. He charged that many of the generators are privately owned and operate below capacity. “The more we analyzed what was being presented, the more concerns we had,” he said.

However, OG&E spokesman Brian Alford said the court challenge is only a delaying tactic. He noted that the OCC has had the ability to pre-approve projects for many years, and the 2005 enabling legislation ensured that a legal framework was in place.

“We are disappointed that Chesapeake and the coalition they are a part of chose this avenue,” Alford said of the court challenge. He noted that the proposed plant would use “ultra super critical” technology that uses high temperatures to maximize coal’s efficiency. He said the Red Rock plant would be the first use of the process in the United States; it is now used in Europe and Asia.

PSO spokesman Stan Whiteford added, “We have to believe that what we are doing is in our customers’ best interests.”

PSO, which serves 520,000 customers in eastern and southwestern Oklahoma, would own 50% of the new plant; OG&E, which serves 755,000 customers in Oklahoma and western Arkansas, would be operator with a 42% stake, and OMPA, which provides electric power to about three dozen communities in the state, would own 8%.

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