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


By Scott DiSavino

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

The U.S. 10th Circuit Court of Appeals denied Oklahoma'srequest for a rehearing to determine if the U.S. EnvironmentalProtection Agency acted appropriately in rejecting the state'shaze plan to address visibility at national parks and wildlifeareas.

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

OG&E said the court's decision will likely lead to highercosts for electric customer if the company has to install newemission control equipment.

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

OG&E owns two coal-fired power plants in the state - the1,510-megawatt Muskogee and the 1,038-MW Sooner plant.

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

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

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


Instead of scrubbers, the Oklahoma plan called for use oflow-sulfur coal and gave affected utilities the flexibility ofburning less coal and more natural gas on a timetable thatachieves the goals of the federal regional haze rule whilelimiting the cost to customers, OG&E said.

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

O'Shea said the company has not decided to retire its coalplants at this time, noting the utility is looking at alloptions to continue providing reliable electricity to customersat the lowest cost.

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

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

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