New 950-MW Oklahoma coal-fired unit will burn Wyoming PRB coal

New 950-MW Oklahoma coal-fired unit will burn Wyoming PRB coal

Washington (Platts)--19Jul2006

Three Oklahoma utilities are partnering to build a 950-MW coal-fired unit at
Oklahoma Gas and Electric's Sooner plant site near Red Rock.

The new supercritical pulverized-coal unit will burn Wyoming Powder River
Basin coal, the utilities said in a statement Tuesday.

OGE will team up with American Electric Power's Public Service of Oklahoma and
the Oklahoma Municipal Power Authority to build the new $1.8 billion Red Rock
unit.

"We do not have a finalized fuel procurement plan at this point," PSO
spokesman Stan Whiteford told Platts Tuesday. The new unit will burn 3 million
short tons/year of coal from the Southern PRB mines, which are operated by
Arch Coal, Peabody Energy, Foundation Coal and Rio Tinto Energy America.

BNSF Railway serves the Sooner plant and will serve the new unit. "I would
anticipate that we'll make full use of our existing facilities to integrate
this new unit," OGE spokesman Brian Alford told Platts. The two existing
Sooner units take 4 million st/year of Southern PRB coal.

The project is the result of PSO's late-2005 request for proposals, in which
it sought bids for up to 600 MW of new baseload generation to be available by
the summer of 2011 (PCT 10/18/05). By teaming up with the other utilities, PSO
said in the statement, a single larger unit can be built that will serve the
future needs of all three utilities, save Oklahoma utility customers at least
$200 million and reduce the environmental impacts associated with several
individual units.

OGE will operate the facility and own about 42% of Red Rock, PSO will own 50%
and OMPA will own 8%. Construction is expected to being in 2007, with an
in-service date of summer 2011.

The plant partners are hoping to fast-track permitting and Oklahoma
Corporation Commission approval with the help of new state legislation.
Application for construction, air and other permits will begin soon and the
partners hope to have the OCC filings initiated later this year, Alford said.

"We will initiate the regulatory approvals sooner rather than later," Alford
said. "We'll take it to the Oklahoma Corporation Commission for pre-approval
under legislation that the governor signed in 2005. What that legislation did
was create an avenue where the utilities could go to the commission with these
large-scale projects for pre-approval to include them in the rate base."

IGCC not in cards for Red Rock

AEP previously announced it would build a large integrated gasification
combined-cycle coal-fired plant in Ohio or West Virginia (PCT 5/24). AEP's
Southwestern Electric Power also will consider gasified coal for a power
project in Texas or Arkansas, the utility said in June (PCT 6/1). That is not
in the cards for Red Rock, even though AEP is partnering in that unit's
construction and operation.

"IGCC is really, at this size, not proven technology at this point," Alford
said. "Also, IGCC is more suited to eastern coal; it doesn't perform well with
PRB. [Other proposed projects using IGCC with PRB coal] are experimental, and
we need to move forward."

"AEP's position is that they are still strong advocates of IGCC, and that type
of clean-coal technology they are continuing to pursue in [the utility's]
eastern territory. ? We do not have any type of performance guarantees with
PRB coals," Whiteford said.

--Steve Hooks, steve_hooks@platts.com

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