AEP energy mix draws scrutiny during final day of evidentiary hearing on environmental compliance proposal | Energy and Environment

A day after American Electric Power representatives testified before West Virginia utility regulators in a case that will help shape the state’s energy future, regulator staff, industrial and environmental group witnesses made their own cases for what the utility should do next — and how ratepayers should pay for it.

Randall Short, director of regulatory services for American Electric Power, testified before the Public Service Commission at a commission hearing in Charleston Wednesday that if company subsidiaries Appalachian Power and Wheeling Power could only rely on base rate cases to recover costs of making federal environmental upgrades to three coal-fired generating facilities, it would have to file such cases almost every year.

A base rate accounts for all utility service expenses, including operating and maintenance costs, taxes and depreciation.

Appalachian Power and Wheeling Power are requesting that the Public Service Commission approve federal environmental upgrades to Marshall County’s Mitchell, Putnam County’s John Amos and Mason County’s Mountaineer coal-fired plants required to keep them operating through the end of their lifespans.

They’re also asking the commission to approve an environmental compliance surcharge to recover compliance costs.

Testifying on behalf of the West Virginia Energy Users Group composed of large industrial users, Stephen Baron, president of Atlanta utility rate consulting firm Kennedy and Associates, said that the subsidiaries should file a base rate case instead, contending it would allow the commission and ratepayers a better opportunity to vet proposed rates.

Appalachian Power and Wheeling Power are seeking permission to make all required federal environmental upgrades at all three plants, which they estimate would cost $317 million. The utilities listed potential project-related residential, commercial and industrial rate increases of 1.59%, 1.52% and 1.72%, respectively. The proposed increased project-related rates and charges would produce $23.5 million in additional annual revenue, according to the companies.

But witnesses pushed back against American Electric Power’s dismissal of alternative energy sources in past filings in the case.

Commission engineer James Weimer recommended the commission approve all requested environmental upgrades but added that a reduction in carbon dioxide emissions and lower fuel cost should compel Appalachian Power and Wheeling Power to consider converting the three coal-fired plants — especially the Mitchell site — to liquefied natural gas combined-cycle plants after 2030.

Weimer testified that the companies should consider adding significant rooftop solar, large photovoltaic solar, solar concentration, wind and small modular nuclear generation, adding that coal fields should be the initial preferred location for the renewables so coal communities can benefit from tax revenue and jobs created by them.

“I know those communities well,” Weimer said. “I know they need it.”

The companies have said in written testimony in the case that they’d given many of the generation sources serious consideration but could not make firm commitments.

Testifying for the Public Service Commission’s Consumer Advocate Division, an independent arm of the commission that represents the interests of utility customers, utility fuel procurement and coal contract dispute expert Emily S. Medine suggested that Appalachian Power and Wheeling Power embrace carbon capture, use and storage technology as a viable choice for future operations in West Virginia.

Carbon capture, use and storage technologies capture carbon dioxide emissions from sources such as coal-fired power plants and reuse the carbon dioxide to create products or store it permanently underground in geologic formations so it will not enter the atmosphere.

But Appalachian Power president and chief operating officer Christian Beam had rejected that technology in the first day of the evidentiary hearing on the Appalachian Power and Wheeling Power request before the commission Tuesday, deeming it uneconomic.

Carbon capture and storage technology has been viewed as a way to keep coal in the energy mix amid the country’s shift away from coal, but it remains costly and unproven at large scale.

Appalachian Power and Wheeling Power said in a Dec. 23 filing with the commission that operations at Mitchell would cease in 2028 if the companies choose to retire the plant rather than make an additional investment to ensure the facility complies with federal wastewater guidelines.

The utilities did not identify which option they prefer, although they said it would benefit customers to ensure compliance with the wastewater rule and a federal rule regulating coal combustion residuals at the John Amos and Mountaineer plants.

Beam acknowledged in testimony Tuesday that shutting down the 50-year-old Mitchell facility in 2028 could save ratepayers $27 million annually from 2029 through 2040. He also acknowledged that American Electric Power doesn’t have a plan to replace the jobs that would be lost if the plant were to close.

The Mitchell plant also is regulated by the Kentucky Public Service Commission since Kentucky Power also owns the facility. The Kentucky Public Service Commission will rule by Aug. 6 on a companion case filed by Kentucky Power seeking approval for environmental upgrades at the Mitchell facility. The John Amos and Mountaineer plants also are regulated by the Virginia State Corporation Commission, which will render a decision by Aug. 23 on Appalachian Power’s request for environmental upgrade approval at those two sites.

The two-day evidentiary hearing concluded early Wednesday evening.

Initial briefs are due June 18 and reply briefs are due June 25.

“We will get a decision out as quickly as we can,” commission Chairman Charlotte Lane said at the end of the hearing.

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