West Virginia PSC Approves Continued Operation of Three AEP Coal Power Plants Through 2040

The Public Service Commission of West Virginia (PSC) approved Appalachian Power Co. (APCo) and Wheeling Power Co.'s (WPCo's) request to keep the 2,930-MW Amos, 1,320-MW Mountaineer, and 780-MW Mitchell coal-fired power plants operational until at least 2040.

APCo and WPCo are electric power subsidiaries of American Electric Power Co. (AEP), which is one of the largest generators of electricity in the U.S., owning or operating about 30 GW of generating capacity. AEP is headquartered in Columbus, Ohio, while the principal offices for APCo and WPCo are in Charleston, West Virginia. The three plants are all located in West Virginia. The Amos plant is on the Kanawha River in Putnam County about 15 miles northwest of Charleston; the Mountaineer plant is on the Ohio River in Mason County about 12 miles northeast of Point Pleasant; and the Mitchell plant is on the Ohio River in Marshall County about 12 miles south of Moundsville.

The PSC order stems from a filing the companies made in December 2020. APCo requested to obtain the regulatory approvals necessary to implement coal combustion residuals (CCR) and effluent limitation guidelines (ELG) compliance plans, and seek recovery of the estimated $240 million investment for the Amos and Mountaineer plants. Likewise, WPCo requested to obtain the regulatory approvals necessary to implement CCR and ELG compliance plans, and seek recovery of the estimated $132 million investment for the Mitchell Plant.

Upgrades Required

According to the PSC filing, the bottom ash ponds at each facility are unlined, and would have been required to initiate closure by April 11, 2021, unless an extension was granted by the U.S. Environmental Protection Agency (EPA). In AEP's most recent financial statements, the company reported filing applications for additional time to develop alternative disposal capacity at the Amos, Mountaineer, and Mitchell plants, among others.

The PSC filing also says, the Mountaineer Plant will be required to address groundwater impacts related to the plant's existing bottom ash pond. This is currently addressed in accordance with requirements defined in the CCR Rule, known as corrective measures,' which may entail active treatment of the groundwater." At the time of the filing, the corrective measures evaluation and selection process was underway, but a final solution had not yet been identified.

To continue operating the plants beyond 2028, the companies will be required to close the bottom ash ponds at the Amos, Mountaineer, and Mitchell plants to achieve compliance with the CCR Rule. The schedules for pond closure and developing alternative management options for bottom ash and other wastewaters are site-specific and are subject to approval by the EPA, the filing says.

To operate post-2028, the companies will also be required to convert all steam generating units at the Amos, Mountaineer, and Mitchell plants to dry bottom ash handling systems, as well as to install bioreactors for treatment of flue gas desulfurization (FGD) wastewater streams at the Amos and Mitchell plants to comply with the ELG rule. The Mountaineer plant reportedly has a bioreactor in place, which would require only minor upgrades to meet the requirements of the ELG rule.

The ELG rule requires that discharge limits be achieved as soon as possible before Dec. 31, 2025, pursuant to a schedule that will be included in the National Pollutant Discharge Elimination System (NPDES) permit for each facility. To expedite compliance, the filing says the companies have developed coordinated compliance activities that would be necessary to address the bottom ash transport water requirements of the ELG rule and the CCR rule. New bioreactors would bring Amos to full ELG compliance by the end of 2022, and Mitchell by April 2025. The upgraded bioreactor at Mountaineer would also bring it into ELG compliance by the end of 2022.

Costs and Recovery

The PSC said original estimates suggested the impact to residential customers (using 1,000 kWh per month) once the CCR and ELG revenue requirements are totally phased-in upon completion of construction of all the required upgrades would be approximately $2.64 per month. The PSC issued an order on Aug. 4, 2021, that increased the monthly bill of a residential customer using 1,000 kWh per month by approximately $0.38. That rate increment was the first-year phase-in of the impact of the multi-year construction program.

The Oct. 13 PSC order will not immediately affect the power bills of West Virginia customers. The rate impact of the full phase-in upon completion of construction, including any additional amount that results from yesterday's order will require the companies to file a further proceeding to recover the costs of implementing the upgrades, the PSC said.

In justifying its decision, the PSC said the estimated cost to West Virginia customers of prematurely retiring the three power plants and replacing their collective generation capacity would be between $1.9 billion and $2.3 billion. Whereas, it said, the estimated total cost to bring all three plants into federal environmental compliance is about $448.3 million.

The PSC also said the benefits of the plants' continued operation to the state's economy are considerable," including direct employment at the plants; use of West Virginia coal; state, county, and local taxes related to operating generation plants; and related employment in businesses supporting the plants and the coal industry. The reliability of fuel-secure baseload generation capacity was also considered by the commissioners in making the decision.

Neighboring States Not as Accommodating

On Aug. 23, the Virginia State Corporation Commission (SCC) partly denied cost recovery for expenses requested by APCo to comply with the federal ELG rule at the Amos and Mountaineer plants. In that decision, the SCC approved a $27.44 million Virginia revenue requirement for the first year of an environmental rate adjustment clause, which is a rider that recovers expenses from APCo's Virginia customers associated with federal rules regulating the disposal of coal ash at the two West Virginia plants. However, while the commission moved to approve the recovery of costs related to the CCR rule, it denied about $4.2 million in expenses proposed for projects that would help the plants comply with the ELG rule.

Meanwhile, the Kentucky Public Service Commission, in a July 15 order addressing WPCo and Kentucky Power Co.'s (another AEP electric utility subsidiary and co-owner of the Mitchell plant) cost recovery request in that state for the Mitchell plant, likewise approved construction projects to comply with the CCR rule but denied construction projects to comply with ELG requirements. In a statement issued on Wednesday, the PSC of West Virginia said that if Virginia and Kentucky would not share the cost of the upgrades, the two states would not be permitted to use the capacity and energy produced by the plants.

For additional background, and more detail on the Kentucky and Virginia filings, see Regulators Rattle AEP's Plans to Operate 4.2-GW of Coal Power Through 2040."

-Aaron Larson is POWER's executive editor (@AaronL_Power, @POWERmagazine).

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