Coal-Fired Steam Electric Generating Plants

April, 1967, Conway entered into a contract with Arkansas Power and Light allowing the city to purchase the bulk of its power supply requirements from the utility. As agreed, power was delivered to the city at its South and West substations.

At the time, Conway, also, was operating its own 11,020 kW, seven-unit diesel generating plant. However, a 1976 Arkansas Public Service Commission order curtailing the Corporation's gas supply plus the increasing cost of fuel oil, had resulted in the three largest units, with a capability of 8,000 kW of power, being operated during summer peak periods only. The remaining four units were in operable condition, but because of age and operating efficiency, were being used only as a reserve.

By 1973, for the first time in the state's history, the cost of producing electricity in Arkansas had, due to instable gas prices among other factors, begun to go up. AP&L had, in fact, announced an upcoming increase in its wholesale rates.

The city's twenty-year contract was scheduled to expire May 21, 1987, and Conway Corporation, realizing that if other supply options were to be adequately explored, a time span of at least ten years would be needed, had, in 1976, begun conducting an in-house study to consider the options available to it in regard to future power alternatives.

The following year, R.W. Beck & Associates, a Denver-based engineering firm, was retained to study Conway's power needs for the next two decades and to provide the Corporation with an account of the capital investment that would be required and the rates that would be needed to fund such an investment. When completed, the study established the growth rate for Conway's demand requirements at 7% per year with a 43% annual load factor.
Although the Beck study provided 26 power supply alternatives that would have allowed Conway to meet its growing power needs, the city had, basically, only three main alternatives. It could:build its own generating units at a capacity large enough to provide the city's entire power requirements; or continue to buy wholesale power; or
purchase a percentage of a generating plant already in existence or under construction.

Study figures indicated the cost of Conway constructing its own generating plants would be considerably more than buying a portion of a unit. Cost comparisons of purchasing a percentage of a coal-fired unit (like those then under construction near Redfield (White Bluff) and those being planned in Independence County by AP&L) to that of continuing to purchase electricity indicated the coal-fired purchase would require revenue increases of 121% for the next 18 years, while the option of continued wholesale power purchases would amount to revenue increases of 222%.

The Beck study concluded that the purchase of an undivided interest in a generating plant(s), would be the most economical.

A two percent interest was considered adequate, providing Conway with enough electricity to meet its anticipated base power needs for several years. Peak power needs would continue to be purchased from AP&L with the exception of the small amount produced by Conway's generating plants on Prairie Street.
The Conway City Council passed a resolution pledging its full cooperation in the Corporation's plan to purchase a 2% undivided interest in the White Bluff (and later the Independence) power plant, and the Corporation set about initiating the proper legal procedures.

State Senator Stanley Russ and State Representative Bill Stephens introduced a bill into the 1979 legislative session which, when passed (Act 5 of 1979), allowed municipally-owned power companies to buy into privately-owned generating plants.

Conway then passed a resolution amending the Lease and Franchise Agreement between Conway and Conway Corporation to include joint ownership in a generating plant(s) and entered into a Purchase Agreement with AP&L allowing the city to purchase a 2% ownership interest in the two plants.

The White Bluff agreement was signed June 29, 1979, with an initial payment of $6.5 million.
The Independence agreement was signed July 31, 1979. Conway's two percent participation in both plants amounted to $14,277,758 and $12,203,946 respectively.

In addition, a White Bluff Plant Ownership Agreement, an Independence Plant Ownership Agreement, a White Bluff Plant Operating Agreement, an Independence Plant Operating Agreement and a Power Coordination, Interchange and Transmission Service Agreement were finalized. Arkansas Power and Light was given sole responsibility for the planning, licensing, design, construction, operation, and maintenance of both plants.
On August 1, $36,000,000 worth of 1979 Series A Electric Revenue Bonds were issued to finance the cost of Conway's ownership interest in both plants. Approximately $26,500,000 was needed to cover the cost of Conway's ownership interest; $3.5 million was earmarked to fund reserve requirements; the remainder was used to fund interest during the construction period and for other bond related expenses.

First National Bank of Chicago was named Trustee and Registrar and, along with Union National Bank of Little Rock, co-paying agent.

The Little Rock firms of Stephens, Inc. and T.J. Raney & Sons, Inc., and the New York firm of Merrill Lynch White Weld Capital Markets Groups (Merrill Lynch, Pierce, Fenner & Smith Incorporated) were named as underwriters for the bond issue.

Friday, Eldredge & Clark of Little Rock acted as bond counsel on behalf of Conway in connection with the issuance and sale of the bonds. The first week $33,000,000 worth of bonds, with an average annual rate of 6.73%, were sold.

Both the White Bluff and Independence plants were to consist of two 700-megawatt coal-fired steam electric generating units, each designed to have an aggregate net capability of 1,400 MW.

The White Bluff plant was to be located in South Central Arkansas near Redfield, approximately 24 miles southeast of Little Rock on the west bank of the Arkansas River and would contain approximately 3,400 acres of which 1,100 acres would house the station and its facilities.

The Independence plant was to be approximately three miles southeast of Newark in Independence County and would contain 2,000 acres of land.

Charles T. Main Engineers of Boston, Massachusetts, was contracted to design both plants to operate on low-sulphur, high-volatile sub-bituminous coal with an average heating value of 8,650 Btu's per pound. Approximately 5,000,000 tons of coal per year were to be delivered by unit train to each plant.

Each plant was to be equipped with space for future oil storage tanks so that oil could be used should it eventually become an economically competitive source of boiler fuel.

To protect the environment, the steam generating units at both plants were equipped with hot electrostatic precipitators with a guaranteed collection efficiency of 99.5%. Flue gas was to be discharged through a 1,000 foot stack. Waste heat from the plant was to be discharged to the atmosphere by recirculating water through natural draft cooling towers.

In August, 1982, Conway consumers began to reap benefits from their investment in the form of lower monthly costs, when Unit 1 of the White Bluff plant went into commercial operation.

On December 6, 1984, the final unit, Unit 2 of the Independence Plant, went into commercial operation marking the completion of an 11-year intensive fuel diversification program.