An American Electric Power (AEP) subsidiary plans to develop two natural gas-fired power plants near the prolific Haynesville shale play.
Southwestern Electric Power Co. (SWEPCO), a subsidiary of publicly traded AEP, proposed several new generation projects that are pending regulatory approval, the company said Dec. 18.
SWEPCO’s plans include a 450-megawatt (MW) natural gas plant—the Hallsville Natural Gas Plant—to be sited at the retired H.W. Pirkey coal plant in Harrison County, Texas.
The project is expected to begin operations in 2027, following approvals from utility regulators in Arkansas, Louisiana and Texas.
The Hallsville plant will feature two General Electric combustion gas turbine generators. The project will use existing water intake systems and other site infrastructure to reduce costs.
SWEPCO also submitted filings for a fuel conversion project at the Welsh Power Plant, northwest of Cason, Texas.
The 1,053-MW project will convert existing coal-fired boilers for Units 1 and 3 to burn natural gas. The conversion of Unit 3 is expected in 2027; Unit 1 in 2028.
SWEPCO said it anticipates a need for more capacity in the region due to evolving reserve requirements set by the Southwest Power Pool (SPP).
Natural gas generation makes up 48% of SWEPCO’s existing asset portfolio.
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Gas outlet
Producers in gas-heavy basins are excited about growing demand from power plants and data centers.
With U.S. spot natural gas prices near record lows, E&Ps are searching for nearly any outlet to produce profitably.
Power plants are one outlet. Incremental gas consumption for power burn is up around 1.4 Bcf/d to 1.5 Bcf/d this year compared to 2023 levels, Range Resources CEO Dennis Degner said at Hart Energy’s DUG Appalachia Conference & Expo in November.
Coal plant retirements around the nation are stretching power reserves thin—at a time when domestic power demand is growing for the first time in decades.
Degner pointed to PJM Interconnection’s latest capacity auction this summer, which hit record highs. Capacity prices for the 2025 to 2026 year rose to $270 per megawatt-day (MWd), a more than 800% increase from the roughly $29/MWd for the 2024 to 2025 auction.
In a report, PJM said the significant decrease in overall generation supply from retirements could have impacted the auction’s results.
Experts say it’s still unclear exactly how much ratepayer bills will increase due to the changes. Capacity costs account for only a portion of customer electric bills.
PJM is the grid operator for all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Washington D.C.
High-performance computing data centers are another emerging demand center. U.S. supermajors Exxon Mobil and Chevron are in conversations to build behind-the-meter gas-fired power plants to serve AI computing needs.
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SWEPCO renewables projects
In addition to the two natural gas plant projects, SWEPCO announced three renewable energy projects in various stages of startup and construction.
The 200-MW Diversion Wind Farm in Baylor County, Texas, is scheduled to begin operations this month.
SWEPCO is also building the 598-MW Wagon Wheel Wind Facility, which spans across Garfield, Kingfisher, Logan, Payne and Noble counties, Oklahoma.
Wagon Wheel is “making steady progress” and is estimated to be operational in December 2025, the company said.
The company is also nearing completion on its first utility-scale solar project in Caddo Parish, Louisiana. SWEPCO will not own the 72.5-MW Rocking R solar farm but will purchase the facility’s output through a power purchase agreement (PPA).
SWEPCO estimates the solar project will generate enough electricity to power 12,000 homes annually.