Reaffirming a decision it had already made in August, the West Virginia Public Service Commission on Tuesday issued an order granting approval for environmental upgrades federally required to keep three in-state coal-fired plants operating past 2028.
This time, though, West Virginia ratepayers will pay more to cover the cost.
The commission granted the request from American Electric Power subsidiaries Appalachian Power and Wheeling Power to make the upgrades at the John Amos, Mountaineer and Mitchell coal-fired generating plants in Putnam, Mason and Marshall counties.
Tuesday’s order was the result of Kentucky and Virginia utility regulators, which share jurisdiction of the plants, blocking the companies’ requests to stay compliant with federal wastewater rules on the grounds their plans were uneconomic.
The commission’s order approves West Virginia ratepayers picking up a burden of nearly $22 million per year from Virginia and Kentucky customers to pay for the wastewater treatment upgrades.
Federal rules require the companies to shutter the plants in 2028 if they don’t make the upgrades.
The commission’s original order in the case resulted in a rate increase that would add roughly $2.64 per month to the current bill of a residential customer who uses 1,000 kilowatt-hours per month.
Any additional amount that results from Tuesday’s order will require the companies to request a further proceeding to recover the costs of implementing the upgrades, according to the commission.
“Determining the path forward for these plants is a complex process, and we appreciate the Commission’s recognition of this, and its timely review of updated information in this case,” Appalachian Power spokesman Phil Moye said in an email. “We are evaluating the order and working to determine what other actions need to be taken to move forward.”
The companies initially presented a $383.5 million cost estimate for environmental upgrades at all three plants. They later revised that estimate to $448.3 million and said it was subject to change.
Kentucky and Virginia ratepayers will still pay for their share of covering the cost of upgrades to comply with federal guidelines for coal combustion residuals, which their states’ utility regulators approved.
Public Service Commission Charlotte Lane had said the commission would issue an order on the AEP subsidiaries’ request by Wednesday, which was set by the EPA for companies to inform a permitting authority whether they intend to make wastewater upgrades.
In this case, that permitting authority is the West Virginia Department of Environmental Protection.
The commission contended that its decision was the most affordable option for state ratepayers, citing American Electric Power testimony indicating that Appalachian Power would have to pay from $3.1 to $3.5 billion for replacement capacity at the Amos and Mountaineer plants, of which $1.3 billion to $1.4 billion would be allocated to West Virginia customers.
Wheeling Power would have to pay from $600 million to $900 million for replacement of just its half of the capacity of the Mitchell plant, of which 100% would be allocated to West Virginia ratepayers. Wheeling Power and Kentucky Power jointly own the plant.
The total replacement costs for West Virginia customers if the plants were retired would be between $1.9 and $2.3 billion, the commission noted.
West Virginia Coal Association President Chris Hamilton applauded the commission’s order.
“I believe the decision is very well-reasoned and thought out,” Hamilton said.
Hamilton’s predecessor as West Virginia Coal Association president, Bill Raney, was appointed to the commission by Gov. Jim Justice in August.
Groups who opposed the AEP subsidiaries’ request bemoaned the order’s impact on ratepayers.
“This is outrageous,” Emmett Pepper, policy director of Energy Efficient West Virginia, said in an email. “The Public Service Commission is, by law, required to balance the interests of ratepayers and utilities, with an eye to what’s good for the overall economy in the state. What we got with this decision is what is overwhelmingly good for utilities at the expense of ratepayers, and benefiting one slice of our economy to the detriment of everyone else.”
West Virginia Consumer Advocate Division Director Robert Williams said the division, an independent arm of the commission that represents the interests of utility customers, was still reviewing the order Tuesday evening.
The three plants had a combined 585 employees at the end of 2020, according to the companies.