AEP Generation Resources, related to a move by Ohio Power to get rid of its mostly coal-fired power plants, asked the Federal Energy Regulatory Commission on July 5 to accept for filing a market-based rate (MBR) tariff to be effective on Jan. 1, 2014.
The tariff will authorize AEP Generation to sell energy, capacity, and ancillary services at market-based rates. AEP Generation also requested that the commission grant such waivers and blanket authorizations as the agency has granted to other similarly-situated entities seeking MBR authorization.
AEP Generation is an indirect, wholly-owned subsidiary of American Electric Power (NYSE: AEP). It was formed to own and operate generation resources that currently are owned by AEP’s Ohio Power subsidiary but will be transferred to AEP Generation on or about Dec. 31, 2013.
That transfer has been approved by the Public Utilities Commission of Ohio , as well as by FERC through its April 29 “Order Conditionally Authorizing Disposition of Jurisdictional Facilities.” AEP Generation will be a generation-only company and, other than limited interconnection facilities, it will not own or operate distribution or transmission facilities. Likewise, AEP Generation will not have a franchised service territory with captive retail customers.
Beginning on Jan. 1, 2014, AEP Generation plans to begin selling capacity and energy to Ohio Power under the Ohio Power Supply Agreement (PSA). The PSA is a short-term partial requirements wholesale power sales agreement that is an integral part of the Ohio Power restructuring plan approved by the Ohio commission. The PSA will enable Ohio Power to obtain from AEP Generation, during a brief transition period, a supply of capacity and energy to meet the needs of Ohio Power’s standard service offer (SSO) load (customers not served by alternative retail suppliers or through a competitive bid process), and to fulfill Ohio Power’s commitments to PJM Interconnection to provide capacity for shopping retail (Non-SSO) customers that are served by alternative retail suppliers.
The PSA runs through May 31, 2015, after which it will terminate, and the energy and capacity needed to serve Ohio Power’s SSO load will be procured through competitive auctions. Beyond supporting the limited sales under the PSA, the generators to be owned by AEP Generation will be used to support other wholesale capacity and energy sales in the region, including sales made under state-approved auctions and bilateral agreements with third parties.
Among the coal-fired capacity currently controlled by Ohio Power are Cardinal Unit 1, Conesville 4-6, General James M. Gavin and Kammer 1-3.