AEP Resolves All Legal Challenges Against Turk Plant

Plant on track to begin commercial operation in 2012

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Dec 22, 2011, 11:00 ET

COLUMBUS, Ohio, Dec. 22, 2011 /PRNewswire/ -- American Electric Power (NYSE: AEP) and its operating unit Southwestern Electric Power Co. (SWEPCO) announced today that the company has settled all legal actions brought against it by the Sierra Club, the National Audubon Society and Audubon Arkansas related to the John W. Turk Jr. Power Plant near Texarkana, Ark.

The parties anticipate filing a consent decree today in U.S. District Court for the Western District of Arkansas in Texarkana. Upon approval of the consent decree by the court, subsequent filings to dismiss all other challenges will be made at other courts and regulatory bodies. The settlement resolves all issues raised by the groups' combined or individual challenges to the Corps of Engineers Section 404 permit, the air and wastewater permits issued for the plant, as well as a complaint recently filed at the Arkansas Public Service Commission.

The 600-megawatt coal-fueled plant, which is under construction in Hempstead County, is more than 80 percent complete and scheduled to begin commercial operation in late 2012.

"We have long believed that the Turk Plant is the right generation solution for our customers in three states, our electric system and the economy in Southwest Arkansas," said Nicholas K. Akins, AEP president and chief executive officer. "The provisions of the agreement are consistent with our commitment to renewable energy, energy efficiency and overall environmental stewardship. Now that all of the legal challenges are resolved, we can focus on completing the advanced ultra-supercritical coal technology of our Turk Plant to provide reliable and affordable power for SWEPCO, the Arkansas electric cooperatives and our other partners in the project."

Venita McCellon-Allen, SWEPCO president and chief operating officer, said, "We are proud to be building the Turk Plant not only for the service it will provide our customers and the boost it is already giving to the Arkansas economy, but also because it demonstrates our commitment and ability to meet stringent environmental standards set by federal and state regulatory agencies."

Highlights of the settlement include:

All legal challenges to any permits or certificates required to build and operate the Turk Plant will be withdrawn. The preliminary injunction in place in U.S. District Court will be lifted, allowing work to be completed on the plant's water intake structure and transmission river crossings.
AEP agrees not to construct any additional generating units at the Turk site. As long as the Turk Plant operates, AEP also will not build any new coal-fueled generating units at any location in Arkansas within 30 miles of the Turk Plant site.
Once the Turk Plant begins commercial operation, the 528-megawatt Welsh Unit 2 near Pittsburg, Texas, will be limited to no more than 60 percent of its annual capacity. SWEPCO also will seek regulatory approval to retire Welsh Unit 2 no later than Dec. 31, 2014. The retirement date may be extended to no later than Dec. 30, 2016, if needed to complete transmission mitigation work related to the unit's retirement, as identified and approved by the Southwest Power Pool.
SWEPCO and its affiliates will construct or secure 400 megawatts of new renewable energy resources. Any new wind projects developed to satisfy the renewable energy resource commitment must meet U.S. Fish and Wildlife Service guidelines for minimizing impacts from wind development on birds and wildlife, and must be located outside of any Important Bird Areas — including the Mississippi flyway — identified by the National Audubon Society as of the date of this settlement.
The Turk Plant will burn coal only from the Powder River Basin in Wyoming or sub-bituminous coal with similar sulfur characteristics.
No future transmission lines associated with the Turk Plant will cross the Nacatoches Ravines Natural Area; the Little River Bois D'Arc Management area; property currently owned by The Nature Conservancy or the Arkansas Natural Heritage Commission within Hempstead County; property currently owned by the Hempstead County Hunting Club, which includes Grassy Lake area; or along the Kiamichi Railroad in Hempstead County.
SWEPCO will test total annual particulate matter emissions from the plant to evaluate the potential for a lower emission rate; perform an additional analysis of wastewater discharge quality during the first year of operations; perform additional groundwater monitoring at designated intervals; and conduct baseline mercury sampling tests to assess conditions prior to operation of the Turk Plant.
SWEPCO will contribute $8 million to The Nature Conservancy for land conservation in Arkansas.
SWEPCO will contribute $2 million to the Arkansas Community Foundation, which will provide grants to support policy initiatives promoting clean energy resources and energy efficiency measures.
SWEPCO will reimburse Sierra and Audubon for $2 million in attorneys' fees and costs.

As part of the settlement, the parties will make the appropriate filings to withdraw or dismiss all proceedings against the project, including the challenges to the U.S. Army Corps of Engineers Section 404 permit pending in U.S. District Court for the Western District of Arkansas in Texarkana; the appeal of the Arkansas Department of Environmental Quality air permit pending at the Arkansas Court of Appeals; the appeal of the ADEQ wastewater permit pending at the Arkansas Pollution Control and Ecology Commission; and a complaint regarding the lack of a Certificate of Environmental Compatibility and Public Need pending at the Arkansas Public Service Commission.

SWEPCO, which owns 73 percent of the $1.7 billion Turk Plant, serves 520,400 retail customers in three states, including: 113,700 in western Arkansas, 225,700 in northwest and central Louisiana and 181,000 in north and eastern Texas. Co-owners of the Turk Plant are Arkansas Electric Cooperative Corp. (AECC), 12 percent; East Texas Electric Cooperative (ETEC), 8 percent; and Oklahoma Municipal Power Authority (OMPA), 7 percent. The Arkansas Electric Cooperatives serve more than 490,000 members across the state.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a nearly 39,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP's transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP's utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP's headquarters are in Columbus, Ohio.

This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: Electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP's generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; the ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases; new legislation, litigation and government regulation, including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp.); AEP's ability to constrain its operation and maintenance costs; AEP's ability to sell assets at acceptable prices and on other acceptable terms, including rights to share in earnings derived from the assets subsequent to their sale; the economic climate and growth in its service territory and changes in market demand and demographic patterns; inflationary trends; its ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness and number of participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP's ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including membership and integration into regional transmission structures; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP's pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

SOURCE American Electric Power