By James Van Nostrand
Few cases better illustrate the abject failure of the West Virginia Public Service Commission to protect ratepayers than its approval last month of American Electric Power’s proposal to charge its West Virginia customers $383.5 million for environmental upgrades at its three coal plants in the state.
The expenditures are necessary to keep the Mitchell, Amos and Mountaineer coal-fired power plants open past 2028. AEP’s own testimony in the case showed that the ratepayers of Wheeling Power — which owns the Mitchell plant — would save $27 million per year if the plant were retired in 2028, instead of making the upgrades. The PSC approved AEP’s request anyway.
That the decision was a bad deal for ratepayers was confirmed by companion decisions in Virginia and Kentucky regarding the same upgrades at the same plants. In July, the Kentucky Public Service Commission said “no” to Kentucky Power (an AEP affiliate) recovering a portion of the Mitchell upgrade costs from Kentucky customers.
Last month, the Virginia State Corporation Commission said “no” to Appalachian Power recovering a portion of the upgrade costs related to the Mountaineer and Amos plants from Virginia customers. Those decisions were consistent with the evidence in the case: It is a bad deal for ratepayers — whether in West Virginia or Virginia or Kentucky — to invest more money in decades-old plants that are already uneconomic just to keep them open for another 12 years, as their cost-competitiveness continues to decline in the face of cheaper alternatives.
The response of AEP? Refile the case at the PSC in September and ask West Virginia ratepayers to pick up the costs rejected by Virginia and Kentucky. Think of it this way: As West Virginia University lines up against Virginia Tech at Puskar Stadium on Saturday, would you want part of your ticket price to help pay the salary of Hokie football coach Justin Fuente? When WVU tips off against Kentucky at the WVU Coliseum in basketball, would you want your ticket proceeds to help pay the salary of Kentucky Coach John Calipari? No, of course not.
But that’s what AEP is seeking in this filing. Virginia and Kentucky have both said “no” to spending additional money on these uneconomic coal plants, so AEP refiled its case to stick West Virginia with the unrecovered costs, thereby increasing its request from $383.5 million to $448.3 million.
In my 40-plus years in the energy business — including five years at one of the best utility commissions in the country and more than 20 years representing electric utilities in rate cases in six states — I have never seen anything quite as audacious as AEP’s push for almost a half-a-billion dollars to keep its old, noncompetitive power plants running.
AEP has publicly committed to achieving net-zero carbon emissions by 2050, with an interim target to cut emissions 80% from 2000 levels by 2030. But those are corporate goals that come out of AEP headquarters in Columbus, Ohio, applicable throughout its 11-state service territory. They obviously don’t apply in West Virginia.
Why not? AEP knows that the PSC will approve whatever it wants, as long as it involves keeping coal plants open.
In the period between the PSC’s August decision approving AEP’s initial request and its new filing in September, Bill Raney, former president of the West Virginia Coal Association, has now joined the PSC as its newest commissioner. If you think that improves the prospects for the PSC stepping up and protecting ratepayers, I’ve got a 50-year-old money-losing coal plant to sell you.
No, wait! The PSC already approved those deals when it authorized Appalachian Power to buy Amos (2013) and Wheeling Power to buy Mitchell (2014) from AEP’s unregulated subsidiary, AEP Generation Resources. These two plants started losing money for AEP shareholders in the competitive wholesale markets in the early 2010s, so AEP decided to dump them on the backs of the West Virginia ratepayers. AEP executives knew the PSC would approve the deals, and they were right.
Due in large part to bad deals like this, AEP’s electricity prices for residential customers in West Virginia have more than doubled — an increase of 122% — between 2008 and 2020. During the same years, West Virginia’s electricity prices for all customers have increased at five times the national average. No ratepayers in other states in the country have had their electricity prices increase faster than in West Virginia.
Stop the madness. It’s time for the PSC to step up, do its job and act in the best interests of West Virginians, instead of approving whatever the coal industry and the coal-burning utilities want. Even utility regulators in pro-coal Kentucky and Virginia flatly rejected AEP’s deep dive into their citizens’ wallets.
While it was once said that what’s good for the coal industry is good for coalfield states, it is just the opposite that holds true now.
James Van Nostrand is director of the Center for Energy & Sustainable Development at the West Virginia University College of Law and author of a forthcoming book, The Coal Trap: How West Virginia Was Left Behind in the Clean Energy Revolution.
Note: This previously appeared in The Charleston Gazette.
Abandoned Mine Lands and Infrastructure
Although by the time you read this things may all be resolved and we can go back to thinking about something else, as the Voice goes to print big questions of infrastructure hang in the air, big proposals careen around Washington, etc. See the story on p. 7 of this issue.
As that story points out, many of the things proposed will have very real impacts upon environmental protection in West Virginia. One of those (one in which WVHC has taken a great interest in the past) is the Abandoned Mine Lands Program.
The Abandoned Mine Lands Program was set up to fix mines that were mined and abandoned before the Surface Coal Mining Reclamation Act passed in 1977. The federal Office of Surface Mining collects a fee on each ton of coal mined and distributes the money to states to correct unreclaimed mines in that state.
The fee was first imposed in 1977 for a limited time. Every few years it expires; Congress looks to see if there still are unreclaimed mines. If there are, Congress renews the fee.
The fee runs out this year. Its renewal is part of one of the infrastructure packages. If that package does not pass, there will be no money to reclaim the remaining abandoned mines, including several in West Virginia.