TheTimesTribune.com, Corbin, KY

State News

August 13, 2013

Virginia AEP decision unlikely to affect similar case in Ky.

CORBIN — By Ronnie Ellis / CNHI News Service

A decision by Virginia regulators to deny a request by American Electric Power to transfer half of a Mounsville, W.Va., plant to its Virginia operations isn’t likely to affect a similar request in Kentucky.

AEP, through its subsidiary, Kentucky Power, is asking the state Public Service Commission to allow it to transfer the other half-interest in the Moundsville plant, which is owned by AEP subsidiary Ohio Power, to Kentucky Power while the company shuts down coal-fired units at its Big Sandy plant in Louisa.

The Big Sandy units do not have scrubbers to reduce carbon emissions while the Moundsville plant does. The cost of the transfer would be roughly $536 million, compared with $980 million to install scrubbers at Big Sandy, and would produce a rate increase of roughly 14 percent.

AEP simultaneously requested the Virginia State Corporation Commission and the West Virginia Public Service Commission to allow it to transfer the other half of the Moundsville plant to Appalachian Power, which serves customers in both states.

While the West Virginia commission hasn’t ruled on the request, the Virginia commission last week denied the request.

That decision, however, doesn’t affect the request before the Kentucky PSC regarding the Big Sandy plant, according to AEP, Kentucky Power and the PSC.

“It doesn’t impact our request before the Kentucky PSC and we’re proceeding with that request,” said Ronn Robinson, communications manager for Kentucky Power.

“We need that generating capacity to replace the retiring units and the 800 megawatts we’re losing at Big Sandy,” he continued.

Andrew Melnykovich, PSC spokesman, said the agency is aware of the Virginia ruling and also aware that West Virginia hasn’t yet ruled, but he said neither directly affects the Kentucky case.

“We’re proceeding forward with our case and will continue to do so, absent some development which would change that,” Melnykovich said.

Opponents of the move say closing the Big Sandy coal-fired units will further depress the already struggling Kentucky coal industry and devastate the local economy in Lawrence County. State Rep. Rocky Adkins, D-Sandy Hook, and Lawrence County Attorney Mike Hogan want the PSC to require the company to investigate other options that would keep the Big Sandy units operating, such as installation of scrubbers.

The Moundsville plant is located just across the Ohio River from Ohio and the Big Sandy River from Kentucky and previously operated as part of the company’s Ohio fleet.

Transferring half the plant’s assets and generating capacity to Kentucky Power does two things. It replaces nearly all of the lost generating capacity of the two coal-fired units at Big Sandy while conforming to carbon emissions standards.

But it also allows AEP to transfer power that is currently part of the company’s unregulated Ohio operations to a regulated environment in Kentucky. Ohio has ordered the company to begin competing on the open power market.

Adkins has argued that’s a key motive for AEP because regulated utility markets — while requiring state approval of rates — nonetheless allow companies monopoly service areas free from price competition.

But Robinson of Kentucky Power and Melissa McHenry, director of external communications for AEP, said Monday the decision to transfer the assets of the Moundsville plant is simply a transfer of ownership assets and the most cost-effective way for AEP and Kentucky Power to deal with emissions limits.

“We feel this is the best option for our Kentucky Power customers,” Robinson said. The company has said installing scrubbers at Big Sandy would drive up electrical rates by more than 30 percent.

Melnykovich said a final decision by the Kentucky PSC is probably a “matter of weeks rather than of days.”

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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