AES Beaver Valley coal plant to rely on power market for sales

AES Beaver Valley LLC, which operates a 146-MW, coal-fired plant in Pennsylvania, applied Nov. 21 with the Federal Energy Regulatory Commission to be able to market power from the plant now that its long-time contract to supply West Penn Power will terminate at the end of this year.

The company is seeking approval from FERC for a proposed market-based rate tariff (MBR Tariff), which it asks the commission to accept for filing to be effective Jan. 1, 2013. It also wants blanket authorization to make sales of electric energy, capacity and ancillary services at market-based rates, and the granting of certain waivers of, and authorizations under, the commission’s regulations that are routinely accorded to entities with market-based rate tariffs.

AES Beaver Valley is a wholly-owned, indirect subsidiary of AES Corp. (NYSE: AES). It owns and operates a 146-MW (summer rating) cogeneration facility in Monaca, Pa., northwest of Pittsburgh, within the footprint of PJM. The Beaver Valley plant is a “qualifying cogeneration facility” under PURPA, and the electrical output is currently sold to West Penn Power under a long-term Electrical Energy Purchase Agreement (EEPA).

“West Penn and Beaver Valley have recently entered into a letter of intent for the termination of the EEPA (the ‘Termination LOI’),” said the company’s Nov. 21 application. “The parties intend to embody the terms of the Termination LOI in a definitive agreement. Pursuant to the Termination LOI, Beaver Valley will cease making power sales to West Penn under the EEPA commencing on January 1, 2013 (the ‘Termination Date’). Thereafter, Beaver Valley will begin selling the output of the Beaver Valley Facility into the PJM market. As Beaver Valley will no longer be making power sales pursuant to a contract negotiated under PURPA, Beaver Valley requires Commission approval of its MBR Tariff in order to continue making sales of energy and capacity without interruption.”

In a market power analysis done for AES Beaver Valley, Julie Solomon, Managing Director of Navigant Consulting Inc., noted that AES Beaver Valley and its affiliates own or control approximately 4,200 MW of generation (including the Beaver Valley facility) in PJM, plus 111 MW of affiliated generation from AES subsidiary Dayton Power and Light’s (DP&L) ownership in the Ohio Valley Electric Corp. (OVEC) that is used to serve load in PJM.

Since the commission’s acceptance of the most recent triennial update and change in status on behalf of the AES’s market-based rate affiliates, generating facilities formerly owned by AES Ironwood LLC and AES Red Oak LLC in PJM have been sold, and AES has divested most its generation in the New York ISO, Solomon added. “I believe that these changes, along with the termination of the long-term contract with respect to the Beaver Valley Facility, constitute all the relevant changes with respect to the AES market-based rate affiliates since their last triennial and change in status notification (filed December 23, 2011 and supplemented on May 21, 2012),” Solomon added.

West Penn Power is a unit of FirstEnergy (NYSE: FE).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.