The Virginia State Corporation Commission on Feb. 1 approved the latest Integrated Resource Plan (IRP) from Appalachian Power Co. (APCo), and in that order said the utility needs to lay out in its next IRP more specific details on compliance with the U.S. Environmental Protection Agency’s CO2-reducing Clean Power Plan.
In July 2015, this American Electric Power (NYSE: AEP) subsidiary filed the IRP with the Virginia commission, which was before the Clean Power Plan was issued in final form in August of that year, and then officially published in October.
APCo’s IRP encompasses the 15-year planning period from 2015 to 2029. “According to the Company, the resource planning process is becoming increasingly complex in light of technology advancement, changing energy supply pricing fundamentals, uncertainty of demand, end-use efficiency improvements and pending regulatory restrictions, including proposals to control greenhouse gases, particularly regulation by the United States Environmental Protection Agency (‘EPA’) to control carbon dioxide emissions from existing electric generation units under Section 111(d) of the Clean Air Act (‘Clean Power Plan’ or ‘CPP’),” the commission noted.
APCo’s next IRP, which is due on or before May 1, 2016, will likely continue to be subject to significant uncertainty regarding which of several possible approaches will ultimately be chosen for complying with the Clean Power Plan, the commission added. “Virginia may not have decided before May 1, 2016, whether it will adopt a state implementation plan that includes a mass-based approach, a state implementation plan that includes an intensity-based approach, or a federal implementation plan,” it said. “Despite these uncertainties, however, the Company’s next filing should be able to provide information that is useful in assessing potential approaches for compliance and the costs and rate impacts attendant thereto.”
Therefore, in its upcoming filing due May 1, APCo, at a minimum needs to:
- model and provide an optimal (least-cost, base case) plan for meeting the electricity needs of its service territory over the planning time frame;
- model and provide multiple plans that are each compliant with the Clean Power Plan under both a mass-based approach and an intensity-based approach (including a least-cost-compliant plan where a computer model is allowed to choose the least-cost path given the emission constraints imposed by the Clean Power Plan);
- provide a detailed analysis of the impact of each plan in terms of all costs, including, but not limited to, capital, programmatic and financing;
- identify whether any aspect of any plan would require changes to existing Virginia law;
- analyze the final federal implementation plan, should the final federal implementation plan be published before May 1, 2016, or, if no final federal implementation plan has been published by this time, analyze the proposed federal implementation plan;
- provide a detailed analysis of the impact of the proposed or final plan in terms of all costs, including, but not limited to, capital, programmatic and financing;
- examine the potential for early action emission rate credits and allowances that may be available for qualified renewable energy or demand-side energy efficiency measures;
- examine the cost benefits of trading emissions allowances or emissions reductions credits, or acquiring renewable resources from inside and outside of Virginia;
- provide a detailed discussion of the development of state implementation plans in Indiana, Ohio and West Virginia (which are other states where AEP operates), the potential for differing implementation approaches in its operating states, and how differing implementation approaches may impact APCo’s ability to comply with the Clean Power Plan; and
- identify a long-term plan recommendation that reflects the EPA’s final version of the Clean Power Plan.
The key components of the resource plan that APCo filed with the Virginia commission last July include:
- Finish the conversion of Clinch River Units 1 and 2 from coal to natural gas.
- Diversify its mix of supply-side resources through the addition of cost-effective wind, utility-scale solar, and natural gas-fired generation resources, as necessary;
- Implement demand-side resources in the form of additional energy efficiency programs and Volt-VAR Optimization (WO) installations; and
- Recognize that residential and commercial customers will add distributed resources, primarily in the form of residential and commercial rooftop solar.