Kentucky PSC will process AEP rate case while Mitchell still a question

On Sept. 16, the Kentucky Public Service Commission issued a decision to not put a hold on a general rate case of Kentucky Power while the commission considers the transfer of a 50% interest in the coal-fired Mitchell plant to Kentucky Power.

The commission for the past few months has been reviewing a request by Kentucky Power, a unit of American Electric Power (NYSE: AEP), to transfer 50% of Mitchell that has been held by Ohio Power, another AEP subsidiary. This asset transfer is to make up for the planned shutdown in 2015 due to clean-air needs of the 800-MW Unit 2 at Kentucky Power’s Big Sandy power plant. Big Sandy Unit 1 (268 MW) is to be either shut or converted to natural gas, ending all coal use at that facility.

On Aug. 27, the state Attorney General asked the commission to hold off any action on a Kentucky Power general rate case until the Mitchell request is decided. The Attorney General said the rate case is moot unless the commission issues a final order approving Kentucky Power’s proposal to acquire an ownership interest in Mitchell.

As an alternative request, the Attorney General stated that he will not seek duplicative information in his initial information request in the rate case, and that Kentucky Power may respond to the information request up to and including Sept. 18, and the existing procedural schedule in the rate case would not be otherwise modified.

Kentucky Power said that the Attorney General failed to state good cause for holding the case in abeyance in consideration of the statutory deadlines governing the timing of the commission’s ultimate decision in the rate case. It also noted that the Attorney General did not submit his motion until after the initial data requests were required to be filed under the existing procedural schedule. However, Kentucky Power did not object to the Attorney General’s alternative request for an extension of time to file his initial request for information and Kentucky Power’s response.

“Having considered the motion and being otherwise sufficiently advised, the Commission finds that a decision in the Mitchell transfer case would have a significant impact on the rate increase proposed in this case but would not render this case moot because non-Mitchell-related rate adjustments are being proposed,” said the Sept. 16 ruling. “In the interest of administrative efficiency and economy, the Commission will grant the Attorney General’s alternative request for an extension of time to file his initial request for information and will amend the existing procedural schedule to reflect the revised dates….”

The Mitchell plant, located near Moundsville, W.Va., has a total output of 1,560 MW. Kentucky Power would get 50% of the output of Mitchell’s 770-MW Unit 1 and 790-MW Unit 2, for a total transfer of 780 MW. Both Mitchell units are equipped with advanced environmental controls, including SO2 scrubbers, and meet all current EPA requirements.

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.