Virginia approves one AEP plant transfer; denies another

American Electric Power (NYSE:AEP) said Aug. 1 that it might rethink the merger of subsidiary Appalachian Power with Wheeling Power following action by the Virginia State Corporation Commission.

AEP received approval from the Virginia SCC on July 31 to transfer the AEP Ohio-owned portion of John E. Amos Plant Unit 3 to Appalachian Power. The Virginia SCC also approved the merger of Wheeling Power with Appalachian Power, but denied transfer of 50% of the 1,600-MW Mitchell Plant to Appalachian Power.

AEP’s corporate realignment of key generating assets has been the focus of much attention by the affected state utility commissions.

“We are pleased that the Virginia Commission approved transfer of the AEP Ohio-owned portion of Amos Plant to Appalachian Power, but the decision to deny the transfer of half of the Mitchell Plant’s generating capacity is disappointing,” said AEP President and CEO Nicholas K. Akins.

“Although the Virginia Commission approved the merger of Wheeling Power with Appalachian Power, denial of the Mitchell Plant ownership transfer is a complicating factor because there will be insufficient generation resources to serve the merged company. AEP intends to bring this matter to the attention of the parties and the Public Service Commission of West Virginia in the asset transfer case and may re-evaluate the merger,” Akins said.

“If the Wheeling Power and Appalachian Power merger does not proceed, our corporate separation order from the Federal Energy Regulatory Commission would allow the transfer of Wheeling Power’s existing power purchase agreement with AEP Ohio to AEP Generation Resources to serve those customers at cost-based rates. This would protect Wheeling Power customers by continuing their existing source of generation supply,” Akins said.

AEP filed in December 2012 for approval from the Virginia SCC and the Public Service Commission of West Virginia to transfer AEP Ohio’s two-thirds ownership (867 MW) of Amos Unit 3 (1,300 MW) and 800 MW of the 1,600-MW generating capacity of Mitchell Plant to Appalachian Power. Approval from the West Virginia PSC still is necessary to complete the transfer of Amos Unit 3 to Appalachian Power.  

AEP also filed to transfer ownership of the remaining 800 MW of the 1,600-MW generating capacity of Mitchell Plant to Kentucky Power. A settlement agreement approving that transfer was reached with several parties in the case. A decision on the settlement agreement is pending before the Kentucky Public Service Commission.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.