Tell PSC: Don't let AEP transfer Mitchell plant to WV!

Ohio-based American Electric Power (AEP), one of the largest utilities in the U.S., is proposing a deal to shift assets around between subsidiaries in ways that will hurt West Virginians. AEP wants to sell 50% of the Mitchell plant in the Northern Panhandle from its Ohio subsidiary to its Wheeling Power subsidiary.  Wheeling Power currently gets its electricity from a contract with AEP’s Ohio-based subsidiary.

This isn’t the first time that AEP has tried to force West Virginians to pay for this plant. In 2013, AEP attempted to sell Mitchell to its other West Virginia subsidiary, Appalachian Power. Thankfully for consumers, Appalachian Power sales have to be approved by both Virginia and West Virginia, and Virginia rejected the proposal. AEP then turned around to sell the plant to Wheeling Power, which is not subject to Virginia’s jurisdiction.

If the sale goes through, the cost of owning and operating this power plant will be paid for by Appalachian and Wheeling Power customers for the next 26 years.

The price is too high.

The price that AEP wants West Virginia customers to pay for Mitchell is unreasonably high, and AEP has refused to look at other assets on the market that would likely be less expensive for its customers.  This transaction comes at a time when coal-fired power plants are facing serious economic challenges. Low natural gas prices, stagnating electricity demand, and increasing renewable energy have driven down the price of electricity in competitive markets around the country. (FirstEnergy’s CEO Tony Alexander admitted last fall that these market forces drove FirstEnergy’s decision to dump the Harrison coal plant on West Virginia ratepayers).

·         The price that AEP wants Wheeling’s customers to pay for this plant is much higher than the plant is actually worth.  Fitch Ratings estimated in fall 2013 that, because of the market forces described above, AEP’s coal plants are worth 59% less today than they were in 2008.  This decline is not reflected in the price that AEP is asking West Virginia customers to pay for Mitchell.

·         AEP’s proposed price is $743/kW.   In the past two years, in transactions NOT between affiliated companies, coal plants have sold for $100-$200/kW, reflecting the sharp declines in their values. 

·         AEP has not looked at other options for meeting Wheeling Power’s load – even though such options are readily available as other utilities attempt to divest themselves of coal-fired plants in a weak market. 

o   Duke Energy is selling off 6600 MW of coal and natural gas plants in Ohio, Illinois and Pennsylvania.  Duke has stated that it expects to sell these plants at a 30-55% loss – suggesting that Wheeling Power may be able to get one of these plants at a lower cost than the Mitchell plant.

o   AES Corporation has announced that it is considering selling off an additional 4000 MW of coal and natural gas plants in Ohio.

West Virginians are getting stuck with AEP Ohio’s environmental mess.

AEP wants Appalachian and Wheeling customers to inherit the unknown and potentially very costly liabilities that come with owning the retired wet coal ash storage pond at Mitchell.  This 71-acre lake, held back by a 400-foot dam, has stored the fly ash from the Mitchell plant since it started operating in 1971. AEP is currently in the process of converting Mitchell’s fly ash handling from wet processing to dry processing, which will make the west ash storage pond obsolete this summer – before Wheeling would even take ownership of the plant.  Yet, AEP is seeking to transfer this potentially serious environmental liability to Appalachian and Wheeling Power ratepayers. The coal ash pond liability was one of the specific reasons given by Virginia for rejecting the sale of Mitchell to Appalachian Power.

What you can do: Contact the WV Public Service Commission!

This transaction among AEP affiliates is inherently suspect, and the price that AEP wants West Virginia businesses and families to pay for the Mitchell plant is too high.  AEP should be ordered to conduct a real analysis of all options for serving Wheeling’s demand – including ramping up energy efficiency programs to reduce Wheeling’s future energy needs.

Submit a letter of comment to the Public Service Commission: online here, or mail to:  

   

Ingrid Ferrell, Executive Secretary

Public Service Commission of WV

201 Brooks St                                                                            

Charleston, WV 25301

 

Be sure to reference Case No. 14-0546 in your comments for them to be included in the Wheeling Power coal plant transfer case. A sample letter is available here.  Comments must be submitted before August 20, 2014.