Mo. air commission upholds air permit for coal-fired unit

Washington (Platts)--12Dec2005

City Utilities of Springfield, Mo.'s, efforts to build another coal-fired
power plant got a boost Thursday from the Missouri Air Conservation
Commission. City Utilities is Springfield's municipal utility.

The five-member commission unanimously upheld an air permit for the 300-MW
Southwest 2 power plant that had been challenged by the Ozark Chapter of the
Sierra Club. 

Without comment or discussion, the commission accepted the recommendation of a
consultant it had hired to review the Sierra Club's challenge. The consultant
concluded the Missouri Dept. of Natural Resources "properly conducted its
reviews and analysis" in granting the air permit to CU. 

Scott Miller, CU's director of generation and supply, told Platts Coal Trader
Friday the plant would be designed to burn Powder River Basin coal. The
utility's other coal plants also burn PRB from various sources. Because it is
government owned, Miller said CU must seek competitive bids for its fuel
sources.

However, Miller said the utility may not even build the plant. "We have not
determined the least cost option."

Previously, CU had asked voters to approve a $578 million bond referendum to
pay for the new plant, but it was rejected. So now the utility is looking at a
self-build option as well as part ownership or co-ownership of another plant
or buying power. He said officials hope to make a recommendation to the board
in February. "We now have a good permit with options to build locally."

Carla Klein, director of the Ozark Sierra Club, said the group would file a
lawsuit in state court to block the air permit. 

The air permit expires in June, although it likely could be extended an extra
18 months. A Sierra Club lawsuit could complicate possible plans by CU to put
a power plant ballot issue before voters next summer.

General Manager John Twitty said the CU board would have to weigh the risk of
seeking a bond issue vote for a power plant while a lawsuit remained
unresolved. "And balanced against all of this is that the longer you wait, the
more expensive the plant gets." 

DNR initially granted the permit, which sets out the air pollution control
requirements the plant must meet before it can be built. The Sierra Club
alleged that DNR didn't consider rapidly advancing coal gasification
technology as a "best available control technology" before it issued the air
permit in 2004. 

-- Mark E. Heckathorn, mark_heckathorn@platts.com

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