AEP unit revises depreciation rates due to coal retirements

The Appalachian Power unit of American Electric Power (NYSE: AEP) is pursuing at the West Virginia Public Service Commission revised depreciation rates due primarily to the planned early retirement of a number of sub-critical pulverized coal units.

Providing details in Aug. 19 testimony was Jeffery LaFleur, Vice President of Generating Assets for Appalachian Power (APCo) and Kentucky Power (KPCo). APCo and KPCo are wholly-owned subsidiaries of AEP.

In the good news for coal-fired power, for planning purposes, the retirement dates of Amos Units 1 and 2 have been changed from 2032 to 2040 while the retirement date of Amos Unit 3 has been changed from 2033 to 2040. The three units, fully equipped with emissions controls, have a combined 2,900 MW of capacity held by APCo.

“The expected life of a power plant depends on many factors, including the original design, the current condition of the unit, and the potential cost in the future to replace the generation with another source,” LaFleur noted. “Given what we know today about Amos Units 1-3, and with continued prudent economic investments and maintenance, it is a reasonable engineering judgment to conclude that those units can continue to operate until 2040.”

APCo, on the other hand, will be retiring its older, less efficient coal-fired cycling units as a result of the federal Mercury and Air Toxics Standards, which have an initial compliance deadline in April 2015. These are units that cannot be economically retrofitted with environmental controls to comply with the stringent requirements of MATS. The units that are scheduled for retirement are: Glen Lyn Units 5 and 6, Clinch River Unit 3, Sporn Units 1 and 3, and Kanawha River Units 1 and 2. They are planned for retirement no later than June 1, 2015.

The coal-fired Clinch River Units 1 and 2 will be converted to natural gas-fired units during the fourth quarter of 2015 and the first quarter of 2016, respectively. For planning purposes, the converted Clinch River Units 1 and 2 are expected to retire around 2025.

A request is pending before the West Virginia commission for the transfer half of the Mitchell coal plant to Wheeling Power, another AEP subsidiary that is expected to eventually merge with APCo. Mitchell is located along the Ohio River approximately 12 miles south of Moundsville, West Virginia. The plant has twin, pulverized supercritical coal-fired baseload units with a nominal 800 MW capacity per unit, for a total nominal capacity of 1,600 MW. Both units were placed in-service in 1971 and are of the same series and vintage as Amos Units 1 and 2.

Each Mitchell unit has been retrofitted with flue gas desulfurization (FGD) and selective catalytic reduction (SCR) systems. In addition to emissions control retrofits, complementary capital investments were also undertaken at the Mitchell Plant to ensure the reliable operation of the generating units. Mitchell Units 1 and 2 are both planned for retirement in 2040.

David Hummel, employed by American Electric Power Service Corp. as Senior Staff Accountant-Accounting Policy and Research, said in companion testimony: “The revised APCo depreciation rates are required primarily due to an increase in the plant in service balances from the 2005 plant in service balances upon which APCo’s current depreciation rates are based; changes in the expected life of some of its super-critical coal-fired steam generating units (Amos Units 1-3); the planned 2015 retirement of many of its sub-critical coal-fired steam generating units (Clinch River Unit 3, Glen Lyn, Kanawha River and Sporn); and the planned conversion of Clinch River Units 1&2 to use natural gas.”

The commission on Aug. 27 set out the schedule for this case. That includes public comment hearings in November in four locations around the APCo service territory, and an evidentiary hearing scheduled for Jan. 13-16, 2015, at the commission offices in Charleston.

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.