CHARLESTON, W.Va. — Appalachian Power Company President Charles Patton told the state Public Service Commission Tuesday the company’s customers in West Virginia would save $1 billion if the PSC approved a proposal that would allow the company to purchase two coal-fired power plants.
A scheduled three-day evidentiary hearing got underway with Patton’s testimony. He explained what went into the decision to move toward the full purchase of the John Amos Power Plant in Putnam County and the 50 percent purchase of the Mitchell Power Plant in Marshall County. The transaction would be made with Ohio Power Company, another American Electric Power subsidiary.
Patton said Appalachian Power’s membership in a pool of AEP companies just wasn’t working. He said the company had to share the costs of those other companies while also purchasing power from them to run its own system. Patton said he decided Appalachian Power would leave the pool in December 2010.
“Did I know exactly how we were going to get our capacity and our energy going forward? I didn’t,” Patton testified Tuesday under cross-examination. “But I did know there were some looming costs as a deficit company in a pool that had become anachronistic and wasn’t working for us. I knew that.”
Patton stressed it was time for his company to become “hawkish” about meeting the needs of its own customers. He said purchasing the plants would create certainty about Appalachian’s power generation needs heading into the future.
“I didn’t want to be in an arrangement (the pool) that was very volatile and as I looked at it, it was going to have a significance ongoing cost to our customers,” he said.
Appalachian Power already owns most of the John Amos Plant. The proposal is to purchase the final two-thirds of the third unit. If approved by the PSC, Appalachian Power would also purchase half of the Mitchell Plant from Ohio Power. AEP’s Kentucky Power is looking at buying the other half.
The purchases would give Appalachian a total generating power of 1567 megawatts.
PSC Chairman Mike Albert said the hearing is expected to go to Thursday but could stretch into Friday.