West Virginia PSC okays deal related to Mitchell coal waste impoundment

The West Virginia Public Service Commission on Jan. 22 approved, with some mandated changes, an agreement that doesn’t hold Wheeling Power liable for any environmental issues related to a coal waste impoundment at the Mitchell power plant in the northern part of the state.

On Dec. 30, the PSC had approved Wheeling, a unit of American Electric Power (NYSE: AEP), to buy half (about 800 MW nominal) of the Mitchell plant from the unregulated AEP Generation Resources. The other half of the plant was sold at the end of 2013 to AEP’s Kentucky Power subsidiary.

One change that had been agreed to by AEP during the West Virginia commission’s review of that buy, after negotiations with parties to the case, is that any liability for past actions at a Mitchell waste impoundment not be acquired by Wheeling. That is the Conner Run Fly Ash Impoundment and Dam. On Jan. 9, AEP Generation Resources and Wheeling filed their proposed Indemnification Agreement to address that issue, which the commission had left open in its Dec. 30 approval.

The commission on Jan. 22 approved that agreement, with some small changes. For one thing, the PSC said the deal appears to exclude indemnity for actions taken by Wheeling Power while using the Conner Run Impoundment roads. This language should be modified to clarify that the exclusionary language is limited to negligence on the part of Wheeling Power (WPCo), the commission said.

The PSC said in the Dec. 30 decision that the Conner Run impoundment is excluded from the interest in the Mitchell Plant to be transferred, and that Wheeling Power will have no responsibility for future Conner Run costs and will have no ownership interest in water discharged into the Conner Run impoundment.

Said the Dec. 30 order about why this deal was needed and requested by parties to the case: “The Commission understands the Stipulating Parties’ resolution of the liability issues: that lack of ownership pre-transfer of Mitchell and lack of ownership of interest in the water discharged into the Conner Run Impoundment, post-transfer, equates to no liability for WPCo. Given, however, the concerns expressed in the record about the Conner Run Impoundment and in the interest of erring on the side of caution, the Commission believes a ‘belt and suspenders’ approach would be better suited to protecting the ratepayers from the impact of any future liability regarding the Conner Run Impoundment. Specifically, the Commission will require that Companies submit appropriate agreements executed by an AEP corporate entity that will survive the transfer of the Mitchell Settlement Interest, that will indemnify WPCo and its ratepayers against any liability, including judgments, fines, penalties or other costs or expenses related to (i) the Mitchell Plant or its operations, including the Conner Run Impoundment, prior to the transfer of the Mitchell Settlement Interest to WPCo and (ii) any aspect of the Conner Run Impoundment subsequent to transfer of the Mitchell Settlement Interest to WPCo. The Commission is aware that indemnity agreements can be complex, contentious and complicated and can take on a life of their own. We will not undertake to dictate the terms of the indemnity agreements.” 

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.