Mon Power seeks renewable tax credits for Morgantown plant

Monongahela Power asked the Public Service Commission of West Virginia to find that the coal-fired Morgantown Energy Associates (MEA) power plant located in Morgantown qualifies for certification as an alternative energy resource facility and a renewable energy resource facility.

This qualification would be under the Alternative and Renewable Energy Portfolio Act and the commission rules adopted under that act. “Mon Power believes that the MEA Facility should be certified based on qualified generation from waste coal, an alternative energy resource identified by W. Va. Code 24-2F-3 (3) and Rule 2.4g,” said the Oct. 31 application. “Additionally, Mon Power represents that the MEA Facility is a renewable energy resource under W. Va. Code 24-2F-3 (13) (I) and Rule 2.22.i. as recycled energy.”

Mon Power, a unit of FirstEnergy (NYSE: FE), is making this request based on its contractual ownership of all of the electrical output of the MEA facility under its Electric Energy Purchase Agreement dated March 1989 (EEPA), which will remain in effect until 2027. The EEPA was approved by commission in 1989. Mon Power also makes this request in accordance with the commission’s November 2011 order that authorized Mon Power to seek certification of the MEA facility for the production of alternative or renewable energy resource credits should the owner of the facility, MEA, refuse to do so on its own accord.

The MEA facility is a 50-MW coal and coal waste-fired cogeneration facility that uses circulating fluidized-bed boiler technology for the combustion for at least 65% bituminous waste coal products from former and active mining sites for the production of electricity. It began commercial operation in April 1992 and has been certified under Pennsylvania law that includes waste coal as an eligible alternative energy resource. Waste coal is an alternative energy resource under the West Virginia commission’s Portfolio Standard Rules, and the commission confirmed in a prior order that the MEA facility likely meets the requirements as an alternative energy resource facility to qualify for certification under the Portfolio Standards Rules.

It also believed that the MEA facility would probably qualify as a renewable energy resource defined under West Virginia cose as “electricity or equivalent mechanical energy extracted from a pressure drop in any gas, excluding any pressure drop to a condenser that subsequently vents the resulting heat.”

In a previous case, however, the commission was unable to make the determination that the MEA facility qualifies for certification under the rules as either an alternative energy resource facility or a renewable energy resource facility because the evidence presented in that case by Mon Power and its Potomac Edison affiliate in the joint petition and related filings did not contain sufficient information about the attributes of the fuel type(s) used at the facility or the energy output from the MEA facility to show that it meets the requirements for certification under the rules. So, the commission declined, at that time, to grant the relief sought by Mon Power and PE that the facility certified or to order MEA to certify the facility.

In the meantime, the FirstEnergy companies were instructed to take reasonable steps to secure the credits from the MEA facility that are currently in the MEA GATS account, including but not limited to advising PJM-EIS of the ruling in this case. Also, the commission stated MEA had refused to seek certification of its facility to generate credits under West Virginia law, the application said.

“MEA had made it clear that it did not intend to certify the MEA Facility to generate credits under the Commission Portfolio Standard Rules based on its assertion that it owns the credits and because MEA elected to certify to generate credits under Pennsylvania law,” the filing added. “The Commission found in its Order that the position taken by MEA was untenable and inconsistent with its position in another MEA case, in which MEA asserted that the Commission has jurisdiction to require modification to the EEPA and require Mon Power to consent to debt refinancing in order to avoid the claimed financial ruin for the MEA Facility by MEA, The Commission determined that the MEA’S refusal to certify the facility is contrary to the public interest and thwarts the purposes of the Portfolio Act. The Commission also found that allowing qualifying credits that are owned by the Companies to not be certified would create a hardship on ratepayers. It is obvious that there is unusual difficulty involved if the Companies would seek or expect cooperation from MEA in obtaining certification of the MEA. Under these unusual circumstances, it would be reasonable, the Commission found, to allow the Companies to seek certification of the credits that we have determined they own as a result of the Morgantown EEPA. Accordingly, the Companies are filing this Petition.”

FirstEnergy companies lost FERC case related to this issue

Mon Power and Potomac Edison lost a Sept. 20 FERC decision related to a protracted fight over whether they could claim renewable energy credits from this plant. FERC on Sept. 20 denied the request by the utilities for reconsideration of an April 24 commission order that declined to initiate an enforcement action pursuant to section 210(h) of the Public Utility Regulatory Policies Act (PURPA).

On April 24, the commission issued an order responding to petitions for enforcement under section 210(h) of PURPA filed by Morgantown Energy Associates and the city of New Martinsville, W.Va. In the April 24 order, the commission gave notice that it declined to initiate an enforcement action.

In response to Morgantown Energy’s and New Martinsville’s petitions, the commission also declared that certain statements contained in a Nov. 22, 2011, decision by the West Virginia PSC—which held that under an electric agreement with a qualifying facility (QF) formed in accordance with PURPA, the utility rather than the owner of the QF owns the renewable energy credits (RECs) associated with that purchase—are inconsistent with the requirements of PURPA and FERC regulations implementing PURPA.

On May 6, the utilities filed a pleading with FERC styled as a motion for clarification or, in the alternative, a request for rehearing of the April 24 order. The utilities claimed that the April 24 order failed to identify which particular statements in the West Virginia order are inconsistent with PURPA, and that FERC erred by determining that the West Virginia order contained findings stating that the avoided cost rate contracts between QFs and electric utilities compensate the QF for not only the electric energy and capacity associated with a QF, but also the RECs produced by a QF.

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.