Construction continues on SWEPCO’s 600-MW John W. Turk, Jr., Plant in Hempstead County, Ark. During 2010, the Turk project encountered many legal challenges, including a decision by the Arkansas Supreme Court reversing the certificate issued by the Arkansas Public Service Commission, an appeal of its air permit, and federal court actions challenging the permit issued by the U.S. Army Corps of Engineers for stream crossings and wetland impacts. SWEPCO is proceeding with construction under an exemption to the Arkansas utility certificate law, and it received a decision from the Arkansas Circuit Court affirming the air permit. Opponents have appealed the decision to an Arkansas Court of Appeals.

In addition, a federal district court has issued a preliminary injunction affecting the completion of the water intake and two transmission lines that will serve the plant. We have appealed that decision, and a ruling is expected in the summer of 2011. Currently, more than 1,600 workers are employed in construction at the plant, which is scheduled to be placed in service in late 2012. The plant will also create approximately110 permanent jobs.

The Turk Plant is needed to serve growing demand in that region, providing long-term energy security for customers. If we are unable to complete construction and place the plant in service or if we cannot recover all of our investment in and expenses related to the plant, it would materially reduce future net income and cash flows and impact our financial condition, as well as reliability.