Under the deal, AEP’s Southwestern Electric Power Co. subsidiary will be allowed to place the $2.1 billion John W. Turk Jr. plant near Hope in Hempstead County in commercial operation in late 2012 without having to continue fighting a host of legal and administrative challenges aimed at killing the project. In return, the Sierra Club and National Audubon Society won a commitment from Columbus, Ohio-based AEP to retire 528-megawatt unit 2 at the Welsh coal plant in Texas no later than 2016 and to not construct any additional generating units at the Turk site. Moreover, as long as Turk operates, which should be at least 30 years, AEP also will not build any new coal-burning generating units at any location in Arkansas within 30 miles of the plant.

The agreement also calls for Turk, which is about 80% completed, to burn only low-sulfur coal from the Powder River Basin or subbituminous coal with similar characteristics.

AEP said the accord eliminates any uncertainty that Turk might not go into operation. “We have long believed the Turk plant is the right generation solution for our customers in three states, our electric system and the economy in southwest Arkansas,” said Nicholas Akins, president and CEO, AEP. “The provisions of the agreement are consistent with our commitment to renewable energy, energy efficiency and overall environmental stewardship. Now that all of the legal challenges are resolved, we can focus on completing the advanced ultra-critical technology of our Turk plant to provide reliable and affordable power for SWEPCO, the Arkansas electric cooperatives and our other partners in the project.”

The settlement requires SWEPCO to install 400 megawatts of “clean energy,” most likely wind power; contribute $8 million to The Nature Conservancy for land conservation in Arkansas; and give $2 million to the Arkansas Community Foundation for grants to support policy initiatives promoting clean energy resources and energy efficiency measures.

Glen Hooks, an Arkansas Sierra Club member, said that while the group preferred that Turk not be built, the settlement “brings some very good news for Arkansas, which would not have been possible without years of citizen opposition to dirty coal plants.”

SWEPCO owns 73% of Turk. Co-owners are Arkansas Electric Cooperative Corp., 12%; East Texas Electric Cooperative, 8%; and Oklahoma Municipal Power Authority, 7%.