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PSC gives OK to millions of dollars in upgrades to keep coal-fired power plants open

West Virginia regulators have ruled in favor of millions of dollar of investments necessary to keep three coal-fired power plants open past 2028 even though their counterparts in two other states concluded otherwise.

West Virginia’s three-member Public Service Commission issued an order today in favor of water quality upgrades that could keep the three power plants running until 2040.

The commissioners concluded the benefits of keeping the plants open outweigh the costs.

“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 cannot be discounted or overlooked,” they wrote in an 11-page order.

“Even a close call on the cost benefits to West Virginia customers becomes a clear decision to keep the Plants open when the Commission considers the benefits of the reliability of fuel secure base load generation capacity and other economic benefits to customers and the state and local economy.”

Chris Hamilton

The investments to extend the power plants’ lives had been favored by the West Virginia Coal Association.

“Keeping these coal plants operational is not only the cheapest option for ratepayers, doing so retains thousands of jobs at the power plants, maintains significant sources of state and local tax revenue, keeps the local communities around these facilities vibrant, and sustains the coal mines, miners and hundreds of associated vendors that supply these plants with fuel,” stated Chris Hamilton, president of the coal association.

“Compared to replacing the coal plants with other generation sources or buying power from the wholesale market, upgrading these three generation facilities is the least expensive option for West Virginia rate payers and is clearly in the best interest of our state and our citizens.”

Groups ranging from the Sierra Club to the West Virginia Manufacturers Association to AARP West Virginia said doing so would result in too much cost for West Virginia ratepayers.

Emmett Pepper

“This is outrageous. The Public Service Commission is, by law, required to balance the interests of ratepayers and utilities, with an eye to what’s good for the overall economy in the state. What we got with this decision is what is overwhelmingly good for utilities at the expense of their customers, and benefitting one slice of our economy to the detriment of everyone else,” said Emmett Pepper, policy director for Energy Efficient West Virginia.

“And let’s not forget that this is the government doing this to us. We have no choice for where we buy our electricity. The government is forcing all of us to pay more for these private companies to get richer. Anyone who cares about capitalism and free markets should be outraged at this.”

Karan Ireland

Karan Ireland of the Sierra Club said the order isn’t reasonable.

“We have a commission that’s made it clear that they are ready to double down on uneconomic coal plants, and West Virginians are going to be the people who pay for it,” she said.

“There are so many varied groups and voices that have come out against this deal for a variety of different reasons. All of those reasons are valid, but we didn’t really get to have all of that out in the open in another case.”

Gaylene Miller

AARP West Virginia called the order a deep disappointment.

“With this decision, the Commission has essentially abandoned its mission to balance the interest of current and future utility service customers with the general interest of the state’s economy and the interests of the utilities, tipping the scales in the favor of the utilities providers and against the West Virginia consumer,” said Gaylene Miller, state director.

Miller noted that most public comments indicated residential and industrial ratepayers were opposed.

“Thanks to the swift action of the Commission, American Electric Power will recoup its half-billion investment solely on the backs of West Virginia ratepayers, who will continue to export power they’re paying to produce to others states while seeing their own utility bills escalate for the foreseeable future,” Miller said.

Derrick Williamson

The West Virginia Energy Users Group, which represents big plants that use a lot of power, continued to evaluate the order and the commission’s reasoning, said Derrick Williamson, executive director.

“But we remain concerned about the long term cost consequences of this Order for the competitiveness of manufacturing and industry in West Virginia, especially given the substantial rate increases borne by Appalachian Power and Wheeling Power ratepayers over the last decade or more,” he said.

“It really makes little sense for West Virginia business and industry to be without a wide array of competitive or alternative energy options when West Virginia is clearly such a vibrant and diverse energy state.”

The decision balanced whether extending the lifespan of the three coal-fired power plants would be worth the estimated $443.8 million cost for the environmental upgrades necessary to do so.

The overall cost breaks down to $217.3 million for the John Amos plant, $82.7 million for the Mountaineer plant and $148.3 million for the Mitchell plant. The overall annual cost is an estimated $48 million.

Without the full array of environmental upgrades, the power plants might remain in operation for just the next few years, until 2028. With the changes, the power plants could remain in operation until 2040.

West Virginia regulators had already weighed the costs and benefits once and decided to go all-in on the upgrades. But two other states — Virginia and Kentucky — have a say-so in the future of the three power plants too. Regulators in those two states declined the full range of improvements.

Lawyers for Appalachian Power and Wheeling Power on Sept. 8 asked for the case to be reopened. The power companies said they needed a decision by tomorrow, Oct. 13, so they could meet a deadline to inform environmental regulators about their course of action.

Deciding what to do was up to the three commissioners including president, Charlotte Lane, a former state lawmaker who earlier served on the U.S. International Trade Commission; Renee Larrick, who was previously business manager for the Beckley law firm run by her husband, former state Lottery Director Alan Larrick; and the newest commissioner, Bill Raney, recently retired as president of the West Virginia Coal Association, a position he’d had for 18 years.

The commissioners decided to back their earlier decision, with much of their order noting that the costs of environmental upgrades to 2028 would be shared — but acknowledging that West Virginians would bear the cost of the upgrades beyond that.

But the commissioners also went into detail about the cost of not doing so — including the sunk cost of the power plants and the cost of transitioning to other energy resources.

Commissioners calculated that replacing the coal-fired generation with other sources such as combustion turbines, solar and wind would result in between $1.9 billion and $2.3 billion costs for West Virginia customers.

“Prematurely retiring the Plants at least twelve years prior to the current estimated retirement year of 2040, continuing to require ratepayers to pay for the capital costs on the stranded investment created by prematurely retiring the Plants and, adding to that the capital costs between $1.9 and $2.3 billion in capacity costs to replace the plants that could have continued to operate is not a decision that is supported by the evidence,” commissioners wrote.

“Such action by the Companies would be contrary to the public interest for a host of reasons beyond the impact of the costs on ratepayers.”

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