The Appalachian Power and Wheeling Power units of American Electric Power (NYSE: AEP) on July 26 applied for West Virginia Public Service Commission approval for Appalachian Power to enter into a Renewable Energy Purchase Agreement with NextEra Energy Bluff Point LLC for the purchase of power produced by renewable wind energy.
They noted that wind resources were selected in an integrated resource plan (IRP) filed by Appalachian Power in April at the Virginia State Corporation Commission, principally because the value of energy from these resources was economic to APCo’s customers over the life of the assets. The quantity of wind resources selected in the Virginia IRP represents an increase from APCo’s West Virginia IRP, which was filed in December 2015.
Since the preparation of the West Virginia IRP, extensions to federal tax credits were announced. The extended tax credits made additional amounts of wind resources economic to customers, as reflected in the Virginia IRP.
On Jan. 28, the West Virginia commission authorized APCo to issue a request for proposals (RFP) to provide 150 MW of new renewable wind generation to be in service by Dec. 31, 2017, to fulfill a portion of APCo’s energy and capacity requirements. On Feb. 12, APCo issued the competitive Wind Energy Resources RFP to pre-qualified bidders. Proposal types requested in the RFP included: asset purchase agreement proposals for the purchase of wind energy resource assets at the completion of a facility’s construction and commissioning; and renewable energy purchase agreement (REPA) proposals for the purchase of Energy (MWh), Capacity (MW), and Beneficial Environmental Interests generated by the facility.
On April 1, APCo received proposals from fifteen wind farms, which proposals included numerous variations in offers. Each proposal was initially reviewed to determine if all of the required information was provided; clarifications were requested if needed. APCo has identified the Bluff Point REPA proposal as the “least cost” proposal. APCo is also pursuing other proposals submitted in response to the RFP. APCo is currently in the due diligence and contract negotiation phase related to these additional wind projects, and should any agreement(s) be reached, will seek commission approval of them.
On May 30, APCo entered into the Bluff Point REPA with NextEra to provide APCo with additional renewable wind energy. Under the Bluff Point REPA, APCo will purchase 100% of the Renewable Energy Products produced from the 119.9 MW Bluff Point Wind Energy Center. This project is expected to be constructed in Jay and Randolph counties, Indiana. Although the Bluff Point REPA has been executed, by its terms, the agreement is conditioned upon provisions dealing with West Virginia commission approval of the Bluff Point REPA.
APCo and WPCo, although separate companies, have operated with common rates, as mandated by the commission, for some years. Recovery of the costs associated with the Bluff Point REPA will therefore be sought through the rates of the customers of both of the companies.
Under the terms of the Bluff Point REPA, approvals and regulatory assurances must be received by no later than April 30, 2017, so that NextEra can achieve the commitments necessary to complete the project by the commercial operation milestone of Dec. 31, 2017. It is estimated that the project will begin providing energy to APCo during the first quarter of 2018.