Virginia commission rules for CONSOL in dispute with Appalachian Power

The Virginia State Corporation Commission on Aug. 8 ruled for coal and gas producer CONSOL Energy (NYSE: CNX) in its Feb. 9 complaint against Appalachian Power Co. (APCo) after the utility demanded security deposits for electric service to CONSOL operations in Virginia due to an idea that CONSOL’s finances were worsening.

APCo provides retail electric service to CONSOL, which engages in coal mining and in natural gas production and gathering through various facilities in Virginia. In its petition, CONSOL asserted among other things, that in September 2015, APCo began demanding security deposits from CONSOL based on APCo’s own credit analysis of CONSOL and not because of late or missed payments by CONSOL.

This APCo demand came at a time when several major U.S. coal producers were in or about to go into Chapter 11 bankruptcy protection. APCo, a subsidiary of American Electric Power (NYSE: AEP), is a major customer for coal from some of those companies.

At the time the Feb. 9 petition was filed, CONSOL’s coal mining operations included the Buchanan Mine. CONSOL announced April 1 that it had closed on an agreement to sell the Buchanan Mine in southwestern Virginia and certain other metallurgical coal reserves to Coronado IV LLC. 

Said the Aug. 8 commission decision: “Like the Senior Hearing Examiner, we find that APCo’s interpretation, by disregarding related and relevant provisions of the Deposit Tariff, would effectively provide APCo with unlimited authority to demand and retain deposits from customers.”

The decision also said: “APCo’s assertion of such expansive authority regarding security deposits is contrary to the plain language of the Deposit Tariff, which, consistent with our Deposit Requirements, prohibits APCo from holding a deposit after satisfactory credit has been established.”

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.