Big News from East Virginia – SCC Says No to APCo Mitchell “Purchase”

Big news from the East Virginia SCC – here’s the press release:

SCC APPROVES APCO ACQUISITION OF ONE POWER PLANT, DENIES ANOTHER; APPROVES WHEELING MERGER

RICHMOND — The State Corporation Commission (SCC) has approved the acquisition by Appalachian Power Company (APCO) of the remaining portion of the Amos electric generating plant that it did not already own.

APCO already owns units 1 and 2 and one-third of unit 3 of the coal-fired, 2,900-megawatt John Amos generating plant complex located in Winfield, W. Va. The SCC allowed APCO to acquire the remaining interest in the Amos 3 plant from an affiliate company at a price of $565 million, which is $53.4 million lower than the price APCO proposed to pay. The SCC said the lower price reflects the use of traditional regulatory accounting principles to determine the plant’s book value.

While approving the Amos 3 acquisition, the SCC rejected APCO’s request to purchase half of the Mitchell coal-fired generating plant in Moundsville, W. Va. at a price of $536 million, also from an affiliate. The SCC wrote that the risks associated with the Mitchell plant were greater than those associated with Amos 3. The Commission noted that APCO currently owns none of the Mitchell plant and has no track record of operating and maintaining the Mitchell plant or knowledge of all potential environmental and contractual risks associated with Mitchell and further, that APCO ratepayers have no prior investments in the Mitchell plant. In distinguishing Mitchell from the Amos 3 acquisition, the SCC wrote, “We consider it relevant and important that APCO already owns [most of the Amos plant] … Virginia ratepayers already have made substantial investments in the Amos units.”

In denying the Mitchell acquisition, the SCC also cited the risks associated from a lack of diversity in APCO’s generating fleet. Approving both acquisitions would raise the percentage of coal-fired electricity produced by APCO’s generation fleet to a projected 87 percent by 2017.

The SCC also approved APCO’s request to merge with Wheeling Power, a distribution utility located in northern W. Va. The SCC found that APCO’s representations that the rate impact on Virginia ratepayers would be neutral and potentially positive were reasonable. However, the SCC directed that APCO provide a $3.3 million rate credit to Virginia ratepayers to resolve timing concerns and the SCC will review evidence in APCO’s next biennial review and fuel proceedings as to the effect of the merger on Virginia ratepayers.

Wow!

In the WV PSC hearing, there was some speculation that the East VA SCC would not approve the Wheeling Power/APCo merger.  The SCC approved the merger but denied the Mitchell plant transfer, primarily because APCo has no experience running Mitchell.  AEP subsidiary Ohio Power is the current and sole operator of Mitchell.  The SCC has no problem with APCo acquiring the rest of Unit 3 at the Amos plant, because APCo already operates most of that plant.

The SCC also thinks APCo is too dependent on coal-fired generation.  They sure got that one right.

So East Virginia says APCo can’t acquire Mitchell.  This is an interesting development, because if East Virginia’s SCC doesn’t approve the deal, it can’t happen, regardless what the WV PSC decides.  Pam Kasey over at Grounded has some very informative responses from WV Consumer Advocate and others about what the East Virginia decision means for the WV case.

This was an East Virginia decision, but it will also hugely benefit AEP’s WV rate payers.

 

One thought on “Big News from East Virginia – SCC Says No to APCo Mitchell “Purchase”

  1. But of course the WV PSC can still approve it, and then tie it up in Virginia appeals forever. When has AEP ever accepted “no” as a final answer?

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