CHARLESTON, W.Va. -- Members of the state Public Service Commission on Tuesday began hearing testimony on Appalachian Power's proposal to take a greater stake in two coal-fired power plants, in the second in a pair of cases that could help determine the future of West Virginia's energy industry.
Appalachian Power wants approval to acquire more of the John Amos plant near St. Albans and half of the Mitchell plant near Moundsville from a sister American Electric Power subsidiary, Ohio Power.
As they did with a similar proposal by FirstEnergy to transfer ownership of its Harrison plant to its West Virginia subsidiary, Monongahela Power, environmental organizations and consumer advocates have joined in questioning the plan.
They worry about the impact on customer rates, argue that the power companies ignore potential gains from better demand-side energy efficiency programs, and complain the plan locks West Virginia into a long-term electrical generation mix that is too narrowly focused on coal.
During testimony that lasted much of the day Tuesday, Appalachian Power President Charles Patton repeatedly defended his company's proposal, saying it was the best deal for the company, its customers and the state.
"Assets like these are going to be very valuable going into the future," Patton told commissioners. "These assets make sense for us."
The Appalachian Power proposal can be confusing, but basically has three major parts.
-- Appalachian Power would acquire the last 867 megawatts of the 2,900-megawatt Amos plant that it doesn't already own.
-- Appalachian would get half of the 1,600-megawatt Mitchell plant.
-- Finally, Appalachian would merge with sister AEP company Wheeling Power.
Patton said the proposal grows out of his company's efforts to emerge stronger following the breakup of a generation-sharing pool among it and other subsidiaries of Ohio-based AEP.
Along with the closure of several smaller power plants, the pool breakup -- happening amid evolving environmental regulations, increased competition in power generation markets and a variety of other changes -- leaves ApCo short of the generation it needs to serve its West Virginia customers.
"There was all of this confusion, all of this uncertainty," Patton testified. "I wanted to get certainty."
But former top PSC consumer advocate Billy Jack Gregg submitted written testimony on behalf of his former office arguing that the PSC should only approve one of the two plant transfers Appalachian wants.
Gregg explained that while both Amos and Mitchell have "scrubbers" to remove sulfur dioxide air pollution, the equipment at both facilities is limited, requiring the plants to burn a mixture of both high- and low-sulfur coals. These limits put the plants -- and if the transfers are approved Appalachian's customers -- at greater risk of the growing volatility in the coal market, Gregg said.
"If the proposed acquisition is approved, the amount of ApCo's capacity with limited scrubbing capability will rise to 3,700 megawatts, or approximately 48 percent of ApCo's total capacity," Gregg said. "I believe this course of action would be inherently risky and would lock ApCo and its customers into higher and more volatile coal prices for the long term."
And other groups, including the Sierra Club and Energy Efficient West Virginia, argue that the PSC should be forcing power companies to spend more effort and money on energy efficiency programs that could cut electrical bills and create jobs.
"It is just common sense for Appalachian Power to invest in energy efficiency before going out and purchasing expensive coal power plants," said Stacy Gloss, project manager for Energy Efficient West Virginia.