Southwestern Electric Power Co. (SWEPCO) officials, nearing the halfway point of nearly two weeks of Arkansas Public Service Commission hearings on their proposed 600 MW coal-fired baseload power plant near Texarkana, AR, said Thursday that an alternative presented by attorneys opposing the use of coal — and pushing instead for 100% natural gas generation — would drive them into bankruptcy.

Shreveport, LA-based SWEPCO is seeking regulators’ approval to build the plant on 2,800 acres in Hempstead County, about 15 miles northeast of Texarkana. SWEPCO hopes to have the $1.3 billion plant in operation by summer 2011.

SWEPCO’s parent company, American Electric Power, said the plant will use an advanced clean coal combustion technology called “ultra-super critical,” making it one of the first plants of its type to go into operation in the U.S. Ultra-super critical generation is a pulverized coal technology requiring less coal and creating fewer emissions to produce the same amount of power as existing plants using Powder River Basin (Wyoming) coal, according to the utility.

During Thursday’s commission hearing in Little Rock, an outside consultant hired by SWEPCO said the company would face bankruptcy if it replaced its coal-fired plants with natural gas plants. Later in the day SWEPCO spokesman Scott McCloud, who attended Thursday’s hearing, said the consultant was responding to a scenario devised by an attorney.

“What the lawyers are doing is pushing the conversation away from coal and towards gas,” McCloud told Power Market Today. “He pretty much said you could go bankrupt if you had to depend 100% on natural gas.” While the scenario was hypothetical, the consultant’s prediction was probably accurate, due to natural gas prices, McCloud said.

“If you took the coal generation away from SWEPCO — which is about 80% of our generation — then you are left potentially trying to sign long-term contracts for natural gas supply, and no one would be willing to offer you that without letters of credit because you have pricing that’s going out two, three or four years. It would just be too large a burden on the company to have all gas generation.

“Pretty much you could, I guess, go into bankruptcy.”

PSC chairman Paul Suskie said Thursday the commission hearings, which began Monday, will continue through Aug. 31. The commission is expected to make a decision 30-60 days after the hearings end.

SWEPCO serves 454,000 customers in western Arkansas, northwest Louisiana and East Texas.

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