AEP to Seek Reconsideration in Virginia

By Kasey, Pam

Appalachian Power Co. will ask the Virginia State Corporation Commission to reconsider its denial of the Mason County, W.Va., “clean-coal” power plant that was approved in West Virginia just last month.

The utility’s cost estimate for the 629-megawatt integrated gasification combined cycle (IGCC) plant is not credible,” the SCC determined in its April 14 order in the case.

The plant is one of a pair of IGCC facilities parent company American Electric Power has proposed to build in West Virginia and Ohio on either side of the Ohio River.

The Ohio plant is currently held up over a consumer- and industry- group challenge to a plan to charge customers $24 million in research and pre-construction costs.

The West Virginia plant was approved in March by the state Public Service Commission – both the plant itself and the ability to recover costs from customers during construction.

But the West Virginia plant also required approval in Virginia, because APCo serves both states.

The Virginia SCC denied approval over both cost and regulatory uncertainty.

“APCo’s latest cost estimate was made in November 2006, had not been updated since then, and … the company had no plans to provide a detailed and updated cost estimate until after receiving all regulatory approvals,” the SCC media release reads.

IGCC technology, which may easily be modified to capture carbon dioxide, is about 20 percent more expensive to construct than a conventional coal-firedplant, AEP has stated.

The SCC noted in addition that there is not yet another IGCC plant of this scale in operation on which to base cost estimates.

But while APCo asserts that an IGCC plant will cost less over time than conventional technology if carbon emissions are regulated, the SCC was concerned that the details of such regulation are not yet known and that the implied long-term storage of captured carbon emissions is not yet proven.

“We understand and appreciate APCo’s good-faith desire to prepare for what it believes is the likelihood of a federal carbon capture and sequestration mandate for coal-fired plants,” the SCC wrote in its order.

“Yet neither APCo nor anyone else knows how such a future mandate may be structured, how it will affect existing plants, precisely how carbon sequestration technology and storage capacity on a massive scale will ultimately develop for large-scale generation plants, or whether it could be applied cost-effectively through a retrofit to this plant.”

The commission concluded that it could not ask Virginia ratepayers to bear the risks and potential costs of these uncertainties.

“We have a 21-day period where we can petition for a re-hearing or reconsideration,” said AEP spokesman Pat Hemlepp.

“We will attempt to provide whatever additional information or definition we can to the costs around the IGCC plant to see if we can address the concerns they had,” he said. “We believe that Appalachian Power presented a very good case for both the need for the plant and the recovery of the cost from our Virginia customers.”

Although Hemlepp declined to speculate on AEP’s next steps if it is unable to sway the commission, he did say that the utility has “been very clear from the start that it’s important for us to get cost recovery for the plant or we won’t build.”

Copyright State Journal Corporation Apr 18, 2008

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