Ambit, Monongahela Power argue for amendment to coal-based power contract

American Bituminous Power Partners LP (AmBit) and electric utility Monongahela Power (MPC) told the West Virginia PUblic Service Commission on June 26 that commission staff is wrong in saying that the commission has no power to approve contract price changes that would rescue Ambit’s 80-MW, coal-fired power plant.

Ambit and Mon Power, which is the customer for this project, told the PSC that this is not the first time that the commission has been faced with the issue of whether it has jurisdiction to consider modifications of the terms of contracts entered into by public utilities and qualifying facilities (QFs) under the provisions of the Public Utilities Regulatory Policy Act of 1978 (PURPA). The commission on June 16 argued that the commission lacks the ability to make those kinds of changes in a power deal it first approved for this facility in 1988. 

“A review of the prior decisions of this Commission and the cases relied upon by the Staff in its Motion to Dismiss, reveals that the Commission has been consistent in its handling of cases where parties to a PURPA contract have mutually agreed to modify the terms of the agreement, and none of the cases relied upon by Staff to argue that the Commission lacks jurisdiction involved instances where the parties to the PURPA contract have mutually agreed to modify the terms of the agreement,” the companies said.

“Based upon direct precedent involving the Joint Petitioners, and previously considered jurisdictional arguments presented by Staff, the Commission has jurisdiction to determine whether it is in the public interest to permit the Grant Town project to continue in operation and to permit Mon Power to pass through to its customers the modest change in rates resulting from the modifications.”

Said the June 16 brief from staff: “Staff believes regardless of previous Commission decisions that may appear contrary, it is clear that once the Commission sets the avoided cost rate for a PURPA project, the Commission no longer retains the jurisdiction to engage in rate regulation or financial and organizational regulation or any other ‘utility type regulation’ of PURPA projects. The Joint petitioners are asking the Commission to do just that, engage in rate regulation by changing the avoided capacity rate. The Commission’s decision in the 1996 AmBit Order citing the Freehold decision is clear: the Commission is preempted from that action. The fact the parties to the Electric Energy Purchase Agreement (EEPA) in this matter have mutually agreed to change the avoided cost rate does not allow the Commission to overcome this preemption. Staff therefore recommends the Commission deny this petition to reopen for lack of jurisdiction.”

On June 5, AmBit and Monongahela Power filed a joint petition to reopen a longstanding proceeding for this project for approval of and amendment to the EEPA and associated ratemaking treatment. AmBit states it is in financial difficulty, and without a change in the contract price paid by Mon Power, AmBit will have to cease operations. Mon Power pays an avoided energy cost rate plus an agreed upon capacity cost rate for up to 80 MW of energy.

The petitioners said that the ratepayers of Mon Power are not expected to see an increase in cost due to planned change of the rate before October of 2017. At that time, costs are expected to increase by approximately $4.6 million per year over the current costs.

This amended EEPA is the latest in a long line of attempts to make this project work by amending aspects of the EEPA, staff noted. The first time AmBit was back before this commission due to financial difficulties was in 1989, just a year after the commission first approved the EEPA and before construction of the project had been completed. In 1989, the commission, among other things, authorized an increase in senior debt of $20 million to pay for increased costs due to unforeseen delays in project construction.

In May 1993, the project, called the Grant Town Power Plant, commenced commercial operations. It is fired by about 565,000 tons per year of waste coal, which is pulled from old mine sites in the region around the plant, which is located in Marion County in northern West Virginia.

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.