The Register-Herald, Beckley, West Virginia

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June 24, 2013

Citizens group files opposition to purchase of coal plants

BECKLEY — The West Virginia Citizen Action Group (WVCAG) filed testimony Tuesday at the Public Service Commission (PSC) opposing Appalachian Power’s proposal to purchase existing coal plants from Ohio Power. The group believes this purchase will lock ratepayers into paying off these plants for more than 20 years.

Appalachian Power is seeking PSC approval to purchase Ohio Power’s share of the John Amos power plant and 50 percent of the Mitchell power plant.  

“While Appalachian Power claims that purchasing the Amos and Mitchell plant is a less expensive option than relying on the regional power markets for power, WVCAG argues that this claim is based on unreasonably high expectations of market prices and in fact, purchasing the power plants is likely to be more expensive for ratepayers,” according to a release from WVCAG.

The group said Ohio Power is in the process of deregulating, so if the plants remain under its ownership, they will have to compete on the regional power market to sell their power. Low natural gas prices have driven down wholesale market prices and made it more difficult for coal-fired power plants to compete.

By selling these plants to Appalachian Power, which is still regulated, WVCAG said American Electric Power will be able to protect itself from the risk that these coal-fired power plants will not be as competitive on the regional power market.

“We are very concerned that Appalachian Power did not issue a request for proposals to see whether any lower cost alternatives were available before choosing to purchase these plants from its sister company,” WVCAG Executive Director Gary Zuckett said. “As noted in WVCAG’s testimony, in other recent coal plant sales in other states, coal-fired power plants have been sold at much less than the price that AEP is proposing in this deal.”

WVCAG, the founding organization of the Energy Efficient West Virginia coalition, also argues that energy efficiency needs to be a greater part of the Appalachian Power's plan.

“Energy efficiency is the lowest cost and lowest risk resource,” said Stacy Gloss, project manager for Energy Efficient West Virginia (EEWV).

“It’s just common sense for Appalachian Power to consider expanding its investments in efficiency before they consider adding more generation capacity of any kind. Energy efficiency investments would provide customers with more tools to lower their bills.”

Although Appalachian Power currently offers some energy efficiency programs, there is significant room for expansion, according to EEWV. Even though energy efficiency cannot make up a major fraction of the utility's immediate capacity shortage, WVCAG argues that ramping up these programs over time would lead to cost savings for the company's customers.

Utilities in many states around the country have shown that investments in rebates and incentives to help customers become more efficient add up over time and are less expensive than investing in new power plants, WVCAG added.

WVCAG recommends in its testimony that the utility be required to issue a request for proposals to see what other alternatives may be available at a lower cost than the Amos and Mitchell plants. WVCAG also recommends that the utility be required to expand its energy efficiency programs by offering additional rebates and incentive programs to its customers.

Both Appalachian Power and Ohio Power are subsidiaries of Ohio-based American Electric Power.

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