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AEP requesting purchase-power agreement rider on bills.

American Electric Power Co. (AEP), for decades one of the largest electric utilities in the United States, is asking Ohio regulators to, in essence, approve price guarantees that would allow for the continued operation of four coal-burning power plants--Conesville, Zimmer, Stuart and Cardinal--representing nearly 2,700 megawatts of generation capacity.

AEP's request for a so-called purchase-power agreement (PPA) rider to be included in the monthly bills of its approximately 1.5 million Ohio customers is expected to be acted upon by early December by the Ohio Public Utilities Commission (PUC).

Before then, the commission could rule on a separate application by the Columbus, Ohio-based company covering some 400 megawatts of the Ohio Valley Electric Corp. (OVEC) that AEP controls. OVEC, created in the 1950s to supply electricity to a uranium enrichment plant in Portsmouth, Ohio, operates the Kyger Creek and Cliffy Creek baseload coal plants in Ohio and Indiana, respectively. Together, they produce more than 2,200 megawatts of electricity. Several other regional electric utilities also are part owners of OVEC.

The AEP requests come as the company prepares to retire more than 6,000 megawatts of coal-fueled generation in the Midwest over the next couple of years to comply with new federal Environmental Protection Agency rules.

The largest PPA sought by AEP applies to nine units at the four plants. Together, the nine units burn an estimated 10 million tons of thermal coal annually and are major customers for coal mines in several states. In all, AEP is expected to burn about 55 million tons of coal in 2014.

In Ohio, only AEP's 2,600-megawatt Gavin coal plant along the Ohio River near Cheshire would not be covered by a PPA.

AEP contends customers could save millions of dollars over the next decade under the plan. AEP Ohio, a subsidiary, would be entitled to the capacity, energy and ancillary output of AEP's share of the nine units. Other utilities also own portions of the plants. AEP Ohio would bid all of the energy, capacity and ancillary services related to the units into the PJM Interconnection LLC market and pass along the resulting net benefits or cost to its customers. PJM is an electric grid operator based in Pennsylvania.

As of late October, the PUC had not tipped its hand on how it will rule. It has received dozens of comments, both for and against the AEP proposal. A group of major commercial customers including Lowe's, Costco and Staples voiced opposition to the plan in October.

Nevertheless, UBS Securities said in a late October report it expects the PUC to approve the OVEC PPA, as well as a PPA for at least the Conesville plant.

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Title Annotation:NEWS; American Electric Power Co
Comment:AEP requesting purchase-power agreement rider on bills.(NEWS)(American Electric Power Co)
Publication:Coal Age (1996)
Geographic Code:1U3OH
Date:Nov 1, 2014
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