New arguments filed over fate of AmBit coal plant in northern West Virginia

Briefs were filed Nov. 13 at the West Virginia Public Service Commission in a case that began in June where Monongahela Power and American Bituminous Power Partners LP (AmBit) want approval for a power contract revision that would help save AmBit’s coal-fired power plant in northern West Virginia from being shut.

In its Nov. 5 brief, AmBit said: “AmBit respectfully requests that the Commission grant approval of an amendment agreement (‘Amendment Agreement’) to the Electric Energy Purchase Agreement (‘EEPA’) between AmBit and Mon Power and to permit any incremental purchased power costs associated with the EEPA as amended to be recovered as purchased power expenses in Mon Power’s annual Expanded Net Energy Cost (‘ENEC’) filings.

“The Joint Petition was filed on June 5, 2015 due to the fact that AmBit, the owner of an 80 MW (net) waste-coal fired electric generating facility in Grant Town, Marion County, West Virginia, (the ‘Project’) that sells its electricity to Mon Power in accordance with the EEPA is in financial difficulty as a direct result of increased operating costs resulting from unforeseen environmental and other regulatory compliance requirements. It has defaulted on principal payments and subsequent loans of nearly $14 million that support the Revenue Bonds used to construct the Project, and it has been unable to pay lease rent on the property it occupies in Marion County since January 2013. Unless the EEPA is amended to increase AmBit’s annual operating revenues, AmBit will be forced to discontinue operations.

“AmBit and Mon Power conducted a series of negotiations to identi EEPA amendments that would stabilize AmBit’s financial condition through the term of the EEPA, preserve the employment, environmental and tax benefits its operations provide to Marion County and the State, safeguard the Project’s contribution to Mon Power’s capacity portfolio, and accomplish these goals with a manageable rate impact on utility customers. With the assistance of the Utilities Division of the Commission’s Staff, AmBit developed a set of EEPA amendments that AmBit and Mon Power believe will achieve these objectives. This proceeding is for the purpose of obtaining approval by the Commission of the Amendment Agreement and the pass through of any related costs under the EEPA to the customers of Mon Power.”

Said Mon Power in its own Nov. 13 brief: “The Commission’s consideration of the Amendment Agreement is appropriate under the circumstances, and Joint Petitioners have offered persuasive policy justifications, supported by Staff, for its approval. Mon Power’s support for this outcome is predicated on Commission approval of the inclusion of any incremental purchase power expenses associated with the Amendment Agreement, including deferred accounting treatment as well as full and timely recovery of those incremental amounts through the ENEC.”

Mon Power, a subsidiary of FirstEnergy (NYSE: FE), said it is primarily requesting retail rate recovery in this proceeding. “Clearly the Commission has rate recovery jurisdiction over Mon Power’s rates pursuant to Chapter 24 and authority over what to allow in, or exclude from, retail rates,” it added. “No party argues to the contrary.”

Without the Amendment Agreement, Mon Power said it believes that the project will discontinue operations for good and require Mon Power to replace the 80 MW of capacity and energy it currently provides. The project not only provides capacity and energy to Mon Power, but also macroeconomic and environmental benefits the commission may reasonably take into account.

West Virginia PSC staff was less enthusiastic in its Nov. 13 brief, saying: “On October 23, 2015, the US EPA published its Clean Power Plan Final Rule in the Federal Register. Under this rule the AmBit plant will have to cut its emissions either by rate or mass. Also updates from PJM projections indicate as a result of gas supply availability, energy market prices are forecasted to continue to be low and in particular, below the Joint Petitioners requested new energy rate of $34.25/MWh, which Mon Power seeks approval to pass along in its entirety to ratepayers until 2036. Neither the impact of the Clean Power Plan on the operation of the AmBit Grant Town plant or this change in forecasted energy rates have been considered in any analysis presented to the Commission in this proceeding. Staff recommends the Commission approve the amendments to the EEPA only if it first determines that it has the jurisdiction to change the rate and second if it also determines the contract rate change is in the interests of current and hture Mon Power ratepayers.”

The West Virginia Consumer Advocate Division (CAD) had even more negative comments to make in its Nov. 13 brief, saying: “As CAD has stated on several occasions during the course of this case, the Commission must resolve, as a matter of law, the issue of whether it has jurisdiction, pursuant to the Public Utilities Regulatory Policy Act of 1978 (PURPA) to permit the Joint Petitioners – American Bituminous Power Partners, L.P. (AmBit) and Monongahela Power Company (Mon Power), to modify the Electric Energy Purchase Agreement (EEPA) that the Joint Petitioners entered into pursuant to PURPA. Inasmuch as the CAD believes this question of law must be answered in the negative, the CAD is not filing a brief on the substantive matters presented to the Commission at hearing. Rather, the CAD will reiterate herein why the Commission should determine that it lacks jurisdiction to enter an Order permitting the Joint Petitioners to modify the EEPA. To permit the modification of rates under the EEPA, is to engage in rate regulation, despite the fact that the Commission lacks the jurisdiction to regulate AmBit, a non-utility.”

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.