The Virginia Attorney General voiced some concerns, but on Dec. 2 told the Virginia State Corporation Commission that he supports Appalachian Power’s plan to convert the coal-fired Clinch River Units 1 and 2 to burning natural gas.
The Attorney General’s Division of Consumer Counsel supported a Nov. 14 hearing examiner’s report that advised approval of the conversion project. “Consumer Counsel has no objection to the recommendations contained in the Hearing Examiner’s Report,” it said. “We are pleased that Appalachian intends to further diversify its generating fleet by adding additional natural gas capacity. Moreover, the capital costs of the proposed conversions appear reasonable.”
The Consumer Counsel noted that a commission staff witness had mentioned the possible “dedication of the Mitchell capacity to the Wheeling load” as a potential means to reconcile the commission’s separate rejection earlier this year of Appalachian’s proposed acquisition of 50% of the capacity from the coal-fired Mitchell plant in West Virginia.
The Virginia commission approved Appalachian to acquire part of the coal-fired John Amos plant in West Virginia that it did not already own, but rejected the 50% buy of Mitchell as being too much coal capacity at a time when coal is not a preferred fuel option. The same request is still pending at the West Virginia Public Service Commission, with the possibility that the West Virginia commission could approve both plant buys. Dedicating the Mitchell capacity to the load of Wheeling Power, like APCo a subsidiary of American Electric Power (NYSE: AEP), would work around the Virginia commission’s decision.
The Virginia Consumer Counsel asked the commission staff to clarify that the staff testimony could not be interpreted as a suggestion that Appalachian could or should take such an approach. As the staff witness said, the issue of whether Appalachian may be able to obtain “backdoor” approval of the Mitchell capacity by assigning that capacity to Wheeling Power has become a subject of speculation in West Virginia. The Virginia commission staffer clarified that he was not advocating that backdoor approach.
Consumer Counsel also noted during opening statements its disappointment that Appalachian chose not to update any of the cost-benefit analyses supporting the proposed conversions in light of: the commission’s decision rejecting the acquisition of the Mitchell capacity; and uncertainty regarding whether the West Virginia Public Service Commission will approve APCo’s long-stalled but still-viable merger with Wheeling Power.
Consumer Counsel also stated that the company had an opportunity to address why it still planned to retire the coal-fired Clinch River Unit 3 as opposed to converting that unit to gas. Finally, Consumer Counsel noted that the commission has suspended APCo’s Integrated Resource Plan proceeding pending the outcome of the transfer and merger decision in West Virginia and also directed the company to file an updated plan that incorporates the effects of the decision of the West Virginia commission.
APCo’s Clinch River plant is located in Russell County, Va., and began commercial operation in 1958 with the completion of Units 1 and 2. Unit 3 was added in 1961. The plant has a total nominal net capacity of 705 MW. The units are not equipped with needed emissions controls, so APCo plans to convert Units 1 and 2 to use natural gas by 2015 and to retire Unit 3. Upon conversion, Units 1 and 2 are expected to each have a nominal capacity of 242 MW, for a total capacity of 484 MW.