Appalachian Power's proposal to purchase expensive coal-fired power plants

Appalachian Power, a subsidiary of American Electric Power (AEP), is proposing to purchase existing coal-fired power plants from AEP's Ohio Power.  The purchase of a portion of the John Amos Power Plant and 50% of the Mitchell Power Plant comes with the staggering price tag of $1.2 billion dollars.

If the Public Service Commission approves Appalachian Power's proposal, Appalachian Power's customers will be locked into paying for the electricity produced by old, expensive coal-fired power plants for the next 20 years.  Currently, Appalachian Power is purchasing the output of these plants without actually owning them, but due to deregulation in Ohio, that system won't be possible to continue past 2014. If Appalachian Power becomes an "owner" rather than a "renter" of the plants then ratepayers face the risks of rising electric rates in order to install pollution control technology, fund the purchase of increasingly expensive coal, and other responsibilities of owners without the option of looking to other electricity generating sources.

Tell the Public Service Commission to reject this proposal!

If Appalachian Power doesn't purchase these plants, the plants will have to sell into the regional deregulated electricity market and compete with other power plants. Because natural gas prices are so low right now, AEP wants to protect the plants from competition. If the plants can be sold into WV's regulated electricity system, their operating costs plus profit will be paid for – by West Virginia ratepayers – for the remainder of their useful lives.

Appalachian Power didn't issue a request for proposals to see if any other options might be available at a lower cost. This is particularly concerning because the price that Appalachian Power is proposing to pay for these coal plants is about 4 times the price that similar coal plants have sold for in the past year in open market transactions.

Appalachian Power also hasn't made energy efficiency part of its solution to meeting its long-term energy needs. Saving electricity through investments in energy efficiency is far cheaper than generating the same amount of electricity (from Amos and Mitchell or any other power plant). Even though energy efficiency can't meet the company's short term generation shortage, the company should start investing in efficiency now to minimize the need for investments like this in the future and to help customers lower their bills.

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In the News: 

State Journal: Is Appalachian Power's plan to buy Amos and Mitchell a good one?