AEP argues against detailed proceeding in West Virginia over coal plant closures

The Appalachian Power Co. (APCo) unit of American Electric Power (NYSE: AEP) told the West Virginia Public Service Commission on May 13 that commission staff has no basis to demand that the utility more fully justify plans to shut units at four coal-fired power plants.

Commission staff on May 8 had asked the commission for an order mandating that APCo file more information on those shutdown plans.

APCo noted that on Feb. 17, it filed with the commission information about plant retirements within a closed docket. In that proceeding, the commission had granted it a certificate of public convenience and necessity for a project to convert Units 1 and 2 of its Clinch River Plant in Virginia to use natural gas rather than coal as fuel (“Clinch River Conversion”). APCo stated that the Clinch River Conversion was driven in part by the federal Mercury and Air Toxics Standards (MATS) and other environmental regulations, which necessitate the retirement of certain older subcritical coal-fired generating facilities not currently equipped with sufficient environmental control facilities.

In addition, APCo identified all of its coal-fired generating units that would be retired (collectively called the “Disposition Units”), observed that the commission had devoted attention to the retirement of the Disposition Units in other proceedings, and summarized the efforts of APCo and its affiliates in the American Electric Power system, particularly Wheeling Power Co. (WPCo) and AEP West Virginia Transmission Co. Inc. (WV Transco), to ensure that APCo’s customers continue to receive reliable, high quality electric service following the effective date of MATS (which had an initial compliance deadline on April 16 of this year) and the retirement of the Disposition Units.

In its May 8 request, PSC staff asserted that, apart from making various declaratory statements, “APCo has not provided the Commission any information to buttress its declarations” that the closing of the Disposition Units “is the best course of action.” On the basis of this assertion, the staff requested that the commission “initiate a new proceeding and direct APCo to file information sufficient for the Commission to evaluate the factors APCo believes justify a planned deactivation, or retirement of the plants, the options considered and the impact to customers.” The staff also requested that the commission “direct APCo to not take any action with regards to the plants that are scheduled to be closed that would render them permanently inoperable.”

“APCo moves that the Commission dismiss the Staff’s Petition,” said the May 13 response. “The matters raised therein have already been adequately considered and addressed by the Commission. There is no justification for opening a new proceeding to reopen these matters. Contrary to the Staff‘s assertions, APCo has already supplied considerable information about the Disposition Units and the need to cease their operation to comply with federal requirements. It does not appear to APCo that additional information would be necessary or helpful.”

The Disposition Units are Units 5 and 6 of the Glyn Lyn Plant, Units 1 and 2 of the Kanawha River Plant, Units 1 and 3 of the Sporn Plant, and Unit 3 of the Clinch River Plant (this is the unit that would be shut while the other two are switched to natural gas).

APCo added: “Since 2012, in many cases, the Commission has granted regulatory approvals based on the understanding that the Disposition Units would be retired by June 1, 2015 and in order to ensure that West Virginia citizens continue to receive high quality, reliable electric service after those retirements. In all of those cases, the Commission and the Staff have recognized that the retirement of the Disposition Units and other subcritical coal-fired capacity in the PJM region is necessary and cannot be avoided.”

Appalachian Power: many cases in recent years have touched on shutdown plans

In a prior case, APCo witness John F. Torpey stated in his direct testimony that APCo, with the retirement of 1,245 MW of coal-fired capacity, could meet its PJM Interconnection capacity obligation through 2024-2025 by converting two of the three Clinch River units to use gas rather than coal as fuel. Torpey further presented evidence that alternatives to the Clinch River Conversion (such as converting other units or constructing additional environmental control facilities) were more costly than APCo’s proposal. 

In other cases, the commission approved the transfer of generating assets to APCo or Wheeling Power to meet APCo’s and Wheeling Power’s power supply needs. The power supply studies on which APCo and WPCo based their requests for those transfers were predicated on, among other factors, the retirement of the Disposition Units.

Further, the retirement of the Disposition Units (and other sub-critical coal-fired capacity in the PJM region) created a need for significant modifications to the regional transmission system to address, among other things, power flow issues. As a result of this need, PJM mandated significant improvements to transmission infrastructure throughout the region. Because of these PJM mandates, since early 2013, WV Transco has applied for, and has been granted by the commission, certificates to construct hundreds of millions of dollars of transmission infrastructure. The PSC staff was a party to each of these cases, the utility noted.

In addition, in a 2014 case, the commission granted a Siting Certificate to Moundsville Power LLC, a totally separate company, to construct and operate a natural-gas fired wholesale generating facility of approximately 549 MW in part because of the MATS-driven retirement of coal-fired generating capacity in the PJM region, APCo pointed out.

The May 8 staff request noted that in a Feb. 27 “informational filing,” AEP put in a footnote stating: “APCo notes that the other units of the Sporn Plant and the entirety of the Kammer Plant, which are all owned by AEP Generation Resources, Inc. and located in West Virginia, are also affected by the MATS Rule and will be retired. The plants are scheduled to be retired no later than June 1, 2015.”

Said the staff request: “APCo does not state whether the plants will merely be closed or torn down. Staff notes that the last plant closure, the Cabin Creek Plant, by APCo were preceded by a filing at the Commission requesting authority to close the Cabin Creek Plant.” That was a 1977 case, by the way.

“Apart from declaratory statements by APCo that retirement of the plants is the best course of action, APCo has not provided the Commission any information to buttress its declarations,” staff write. “APCo seems to ask the Commission to trust it that closing the plants is the best course of action. To determine if closing the plants is indeed the best course of action, the Commission needs considerably more information. Staff thus requests the Commission initiate a new proceeding and direct APCo to file information sufficient for the Commission to evaluate the factors APCo believes justify a planned deactivation, or retirement of the plants, the options considered and the impact to customers.

“Staff also requests the Commission direct APCo to submit the information as soon as possible, but in any event no later than 30 days, so that Staff can review the information and make a recommendation to the Commission and so that the Commission has sufficient time to review Staff’s recommendation and the information submitted by APCo. The Commission made a similar request to Monongahela Power Company in the 2011 Monongahela Power Company [Expanded Net Energy Cost] case. In that case, the Commission posed a series of questions to Monongahela Power that it wanted answered so that an informed decision could be made by the Commission regarding the closing of the electric plants.

“Staff further requests that the Commission direct APCo to not take any action with regards to the plants that are scheduled to be closed that would render them permanently inoperable.”

Monongahela Power, incidentally, is a subsidiary of FirstEnergy (NYSE: FE). The case it had to make to the West Virginia commission in 2012 had to do with the since-completed shutdowns of the Albright, Willow Island and Rivesville coal plants.

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.