American Electric Power’s subsidiaries serving West Virginia have proposed making its customers pay millions of dollars more for federally required upgrades at three in-state coal-fired power plants after utility regulators in two other states denied those upgrades following findings that they were uneconomic.
Appalachian Power and Wheeling Power on Wednesday petitioned the West Virginia Public Service Commission to approve making West Virginia customers responsible for $48 million annually to cover wastewater compliance work to keep the John Amos, Mountaineer and Mitchell coal-fired generating plants in Putnam, Mason and Marshall counties federally compliant with federal effluent limitation guidelines.
The companies are asking West Virginia customers to shoulder all of the cost burden for these planned upgrades because Kentucky and Virginia state utility regulators denied the companies’ requests to approve the upgrades required to keep the plants compliant with wastewater discharge guidelines.
Not making the wastewater treatment upgrades would require that the plants shutter in 2028, per U.S. Environmental Protection Agency rules.
The Public Service Commission on Thursday agreed to reopen the case and scheduled an evidentiary hearing for 9:30 a.m. on Sept. 24 at the commission building in Charleston in the event that any parties in the case request a hearing.
In an emailed statement Thursday, Public Service Commission Chairperson Charlotte Lane said the commission is evaluating the Appalachian Power and Wheeling Power filing and will issue an order by Oct. 13 as requested by the companies to meet the deadline set by the U.S. Environmental Protection Agency.
Appalachian Power and Wheeling Power have asked the commission for approval to proceed with the wastewater treatment projects at all three plants, including on Kentucky Power’s share of the Mitchell plant.
Kentucky Power spokeswoman Cynthia Wiseman said Thursday the company has no objection to revisiting the operating agreement for the Mitchell plant if West Virginia decides to invest in wastewater treatment improvements at the plant to allow Wheeling Power and West Virginia customers to take full responsibility for all costs that would allow the plant to operate past 2028.
Appalachian Power and Wheeling Power also want acknowledgment from the commission that additional investments and operational and maintenance expenses at the plants will be needed prior to 2028 and be the responsibility of West Virginia customers if the plants are to operate beyond 2028.
The previous estimated revenue requirement for West Virginia customers, if upgrades to comply with both the required effluent limitation guidelines and federal rules regulating coal ash disposal had been approved in all three states, was $23.5 million for West Virginia customers, or a rate hike of about 1.65%.
Revised estimates if all wastewater treatment work is performed and recovered from only West Virginia customers, along with West Virginia customers’ share of cost burden for coal ash disposal, total $48 million annually — a 3.3% increase that would start in Sept. 2022, Appalachian Power spokesman Phil Moye said.
Rates would be adjusted annually every September as construction progresses, according to Moye.
Kentucky and Virginia utility regulators approved the American Electric Power subsidiaries’ requests for construction projects to comply with federal rules regulating the disposal of coal ash.
The utilities say that the total cost of compliance work for all three plants to allow them to stay in compliance with the coal ash and wastewater rules is now $448.3 million.
That’s 17% higher than the $383.5 million that the companies originally estimated that compliance work would cost in its initial Dec. 23 filing with the West Virginia Public Service Commission seeking approval for the upgrades.
“We are further into the process and have more accurate numbers,” Moye said in an email Wednesday.
West Virginia Coal Association President Chris Hamilton voiced support Thursday for the Appalachian Power and Wheeling Power move to shift all responsibility for the wastewater treatment compliance upgrades to state ratepayers, arguing that saving the three coal-fired power generating facilities’ economic output is worth the additional cost burden.
“We believe it’s a good proposition for the state of West Virginia … to keep the economic activity that surrounds these three plants, plus all the downstream coal mining and coal transportation and coal handling jobs and all that commerce,” Hamilton said.
But clean energy and energy efficiency advocates condemned the utilities’ proposal to turn to West Virginia ratepayers to pick up the cost burden to be dropped by Kentucky and Virginia ratepayers.
“I just can’t believe they’re thinking of (saddling) West Virginian ratepayers with hundreds of millions of dollars in upgrades that really need to be slated for retirement now,” said Karan Ireland, central Appalachia senior campaign representative for the Sierra Club.
Emmett Pepper, policy director for Energy Efficient West Virginia, accused American Electric Power of trying to deny intervenors in the case such as his organization adequate opportunity to examine its subsidiaries’ proposals to spend ratepayers’ money.
“Now AEP seems to be asking the Commission to give them a blank check — from ratepayers bank accounts — on projects that have not been vetted,” Pepper said in an email, citing the companies’ total compliance cost estimate increase from $383.5 million to $448.5 million.
Virginia regulators on Aug. 23 rejected Appalachian Power’s proposal for wastewater discharge investment and cost recovery, for which Virginia’s share was projected to be $60 million. The Virginia State Corporation Commission’s jurisdiction applies when Virginia ratepayers are asked to pay their portion of operation, maintenance and electric output costs of facilities to serve Virginia customers.
The Kentucky Public Service Commission in July rejected a request by Kentucky Power to implement and recover costs for wastewater upgrades at the Mitchell plant near Moundsville, which is jointly owned by Wheeling Power and Kentucky Power.
But the West Virginia Public Service Commission on Aug. 4 approved the wastewater compliance upgrades, in addition to a surcharge for the companies to recover construction costs resulting in an increase of about 38 cents on monthly bills for the average residential customer using 1,000 kilowatts a month starting Sept. 1.
The Public Service Commission will have a new member that did not serve on the panel when it issued its previous decision in the case — Bill Raney, Hamilton’s predecessor as West Virginia Coal Association president, who was appointed by Gov. Jim Justice to the commission last month.
Raney is a voting member of the commission effective Aug. 17, the day he took the oath of office, Lane said in a statement.
Any new commissioner appointed by the governor may begin to serve as soon as they are sworn in, with the Senate taking up the confirmation once it is back in session, according to commission spokeswoman Susan Small previously said.
Commissioners are appointed to six-year, staggered terms by the governor, with “advice and consent” of the Senate, per state statute.
The average monthly residential bill (as measured by the residential rate for 1,000 kilowatt-hours) for American Electric Power’s West Virginia utilities escalated from $55.28 in 2006 to $138.57 in 2021 — an increase of 150% over 15 years.
Marshall County government and labor leaders had made the case that the region would be economically devastated by an early closure of the Mitchell plant — something that defenders of coal-fired generation argue would hold true for the entire state if it faces other coal plant closures.