West Memphis utility lays plans to replace coal generation with a gas plant; rate study and bond planning to follow

At its June 12 meeting the West Memphis Utility Commission discussed the impending closures of two coal-fired plants in which the city holds ownership interests and outlined steps to replace that generation.

A utility director said the commission signed settlement documents that will halt coal burning at both White Bluff and Independence, and that the city exchanged its interest in White Bluff for an increased stake in Independence to secure roughly two additional years of operation at that plant. The director said, as stated at the meeting, White Bluff is scheduled to close on '1231 of 28' and Independence on '1231 of 30'.

Why it matters: the city receives about half its generation from those two plants; retaining ownership in the replacement resource is a key part of the utility's plan to continue supplying low-cost power to customers.

"Both of those agreements have been signed. So we are moving forward with that plan," the Director said, describing a letter of intent to build a combined-cycle natural gas plant on the Independence site to replace the retiring coal capacity. The director added that the utility's pro rata share of the new plant was described in the meeting as "just under $50 million."

The commission heard that replacing two retiring plants and building a new combined-cycle unit will require financing and planning steps: the utility plans to commission a rate study and to issue an RFP for a consultant (the presenter said an RFP would go out within about a month and the study would likely begin in the early third quarter). The director said a bond issue will likely be required and stressed that the point of the study is to align electric rates with projected expenses and debt-service requirements.

The presenter also called out additional local infrastructure needs tied to growth in the northeast part of town: a substation and a new water tower were described as roughly $30 million in capital work that will factor into future planning. The director told the commission the utility does not want to collect more from ratepayers than necessary but has a fiduciary duty to ensure rates cover obligations.

The director referenced peer municipalities that own generation capacity, saying ownership has helped keep prices low in Jonesboro, Conway and West Memphis. The commission did not take a formal vote on the plant construction or financing at the meeting; the next steps described were the consultant RFP, the rate study and subsequent bond/financing decisions.

Provenance: Commission discussion and figures summarized from remarks in the meeting transcript (topic span: SEG 209–SEG 399).