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Dollars vs. Delays: The Trend Toward Intervener Settlements

Issue 11 and Volume 111.

By Robynn Andracsek, P.E. and Mary Hauner-Davis, Burns & McDonnell

The Sierra Club recently adopted a national policy to challenge any new power plants until stricter rules for air pollution and global warming are implemented.1 Therefore it is inevitable that a new coal-fired boiler air permit will be opposed and delayed by interveners. Or is it?

More and more utilities are negotiating with interveners regarding their construction permit in an attempt to avoid or resolve lawsuits. Recent deals have included the following utilities:

  • Public Service Company of Colorado-Xcel Energy, (Comanche 3) – December 3, 20042
  • City Water, Light & Power, Illinois (Dallman Unit 4) – November 16, 20063
  • Seminole Electric Cooperative, Florida (Seminole Generating Station Unit 3) – March 9, 20074
  • Kansas City Power & Light, Missouri (Iatan Unit 2) – March 19, 20075
  • Calhoun County Navigation District – NuCoastal, Texas (ES Joslin) – August 9, 20076

These deals settling contested issues include specifying requirements for control devices and emissions limits, promoting renewable energy such as wind power and imposing emissions limits that pull under a single umbrella units on several existing facilities, among other requirements. As shown in Table 1, the trend is towards a “presumptive” best available control technology (BACT) level. In some instances, the units would have successfully netted out of New Source Review permitting. However, the final agreements include “presumptive” BACT limits that are much lower than the permit applications proposed for those pollutants. This presumptive BACT is then often applied not only to the proposed new unit, but also to other units at the same facility and even to units at other commonly owned facilities.

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However, these pre-settlements go beyond limiting emissions at new units. Requirements include such steps as purchasing wind power, offsetting carbon dioxide and adopting demand-side reduction incentives, as shown in Table 2 (on page 20). Creative environmental projects are often included such as promoting home weatherization, reducing emissions from diesel-fueled school buses, supporting drinking water infrastructure upgrades and allocating money for air pollution monitoring. For example, besides requiring emission limits on its new and existing units, the KCP&L agreement extends to set requirements for two other KCP&L facilities.

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Crucial to these agreements is the stipulation that the environmental groups will not block the issuance of construction permits. KCP&L’s press release on its settlement states that the agreement “resolves four appeals pending” among the Sierra Club, local environmental groups and KCP&L. Xcel’s agreement likewise states that if the utility meets its requirements, the interveners will make no adverse formal comments, bring a lawsuit or “initiate, fund or participate in any such comments or lawsuits by any other entity.”

Settlements may be cost-effective and in the best interests of ratepayers. A July 13, 2006 article in the State Journal-Register (Springfield, Ill.) offered this analysis of costs related to the CWLP settlement:

Cost for new 200 MW plant: $500 million
Cost of settlement requirements: $ 37 million
Cost of alternative to settlement $137 million

To which we might add, “Having air conditioning during the heat of summer: priceless.”

Are intervener settlements the new trend in power plant permitting? KCP&L seemed motivated by the outcome of CWLP’s agreement. KCP&L’s press release states that their “agreement builds on the success” of the 2006 agreement between the Sierra Club and the utility. Confidentiality seems to be another important aspect. CWLP was bound by a confidentially agreement during negotiations. NuCoastal’s final agreement remains confidential.

However, an agreement between interveners and utilities does not guarantee smooth sailing. After brokering a settlement with the Sierra Club, Seminole’s permit was denied by the state.7 The head of the state’s Department of Environmental Protection stated in the final order that he “cannot conclude that a ‘bare bones’ stipulation, which might be binding on the parties to the litigation, controls ultimate questions of law and policy involving reasonable assurance and the public interest…”

Whether or not a settlement to avoid lawsuits is in the best interest of a utility is best left to each individual owner and its lawyers. However, these “agreements” represent a new option in the schedule-sensitive quest for air emissions construction permits.

References:

1. http://www.sierraclub.org/policy/conservation/energy.pdf.

2. http://www.secinfo.com/d11MXs.115rp.b.htm.

3. Wetterich, Chris, “Sierra Club deal OK’d by council/City may start work on power plant in just a few days,” State Journal Register, Nov. 17, 2006, sec. A, 1.

4. In Re: Seminole Electric Cooperative Seminole Generating Station Unit 3 Power Plant Siting Application No. PA 78-10A2, OGC Case No. 06-0780, DOAH Case No. 06-0929EPP (Fla. Dept. of Env. Prot. 2007).

5. http://www.greatplainsenergy.com/investor/NR_Mar20_07.pdf.

6. http://www.citizen.org/pressroom/release.cfm?ID=2496.

7. http://www.thereisaway.us/FINALAGREEMENT.pdf