West Virginia ratepayers may have to take on more of the cost burden if the state wants to keep three large coal plants online beyond 2028.
American Electric Power Co. Inc. utilities Appalachian Power Co. and Wheeling Power Co. petitioned West Virginia regulators to reopen their case (docket 20-1040-E-CN) and consider increasing the state's jurisdictional share of environmental compliance costs at the 2,900-MW John E. Amos, 1,299-MW Mountaineer and 1,560-MW Mitchell (WV) power plants.
The utilities are seeking an order by Oct. 13 that the Public Service Commission of West Virginia wants them to proceed with projects needed to comply with the U.S. Environmental Protection Agency's Effluent Limitation Guidelines, or ELG, on all three plants or to identify which plants and which units can proceed with compliance work. In addition, the utilities want state regulators to acknowledge "that additional investments and [operations and maintenance] expenses at the plants will be needed prior to 2028, and will be the responsibility of West Virginia customers, if the plants are to operate beyond 2028."
Also, the utilities want the West Virginia PSC to commit to authorizing cost recovery for environmental compliance and operations and maintenance investments as long as they are "reasonably and prudently incurred."
In early August, the West Virginia PSC granted a certificate of public convenience and necessity that allows Appalachian Power and Wheeling Power to make the modifications necessary to comply with federal environmental regulations under the ELG and Coal Combustion Residuals, or CCR, rules and recover a portion of the costs from ratepayers.
"Although the companies did not provide an estimate of West Virginia's jurisdictional share of the total costs ... the commission estimates that it would be $169.55 million given a [50%] ownership interest in Mitchell and a 41.1[%] allocation of investments in Amos and Mountaineer," the PSC wrote in its order.
Cost recovery sought in Kentucky, as well as Virginia
The utilities have also sought cost recovery for compliance work from state regulators in Kentucky and Virginia.
The Mitchell plant in Marshall County, W.Va., is co-owned by AEP subsidiaries Kentucky Power Co. and Wheeling Power. Appalachian Power owns the other two plants.
The Kentucky Public Service Commission (docket 2021-00004) approved Kentucky Power's request to pursue construction projects for the Mitchell plant to comply with the CCR rule. The Kentucky PSC, however, rejected Kentucky Power's request for work designed to comply with the ELG rule.
The Virginia State Corporation Commission on Aug. 23 approved (SCC docket PUR-2020-00258) about $27.4 million in cost recovery through an annual rider for upgrades and other construction projects needed at the Amos and Mountaineer plants to comply with the CCR rule.
However, the Virginia State Corporation Commission rejected approval of about $4.2 million in initial rider recovery for upgrades needed to comply with the ELG rule. Regulators left open the possibility of Appalachian Power reapplying for approval of these investments.
Appalachian Power testified that the total Virginia jurisdictional share of the ELG investments would be about $60 million.
In their filing with the West Virginia PSC, Appalachian Power and Wheeling Power provided updated cost estimates that show the total cost of CCR and ELG compliance work at all three plants is now $448.3 million. The annual revenue requirement for West Virginia would be about $48 million for full compliance work given the state's jurisdictional share of CCR costs and full allocation of ELG expenses, according to the utilities.