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Apco defends plant transfers before PSC

CHARLESTON, W.Va. -- Appalachian Power officials continued Wednesday to defend their controversial proposal to take a greater ownership role in two coal-fired power plants, as West Virginia's Public Service Commission continued to try to sort out conflicting versions of the plan's potential impacts.

Steven Ferguson, director of regulatory services for Appalachian, said the ownership transfer is the best way to fix a long-standing deficit in the company's generating capacity.

"We would have sufficient capacity to serve our customers and not leave our customers to be served at the whim of the market," Ferguson told commissioners.

Ferguson was among the Appalachian Power witnesses in the second day of the PSC's hearing on the company's request 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.

The proposal is one of two cases in which the PSC is considering proposals by power companies to shift ownership of coal-fired generation plants to West Virginia-based subsidiaries. In the other case, FirstEnergy wants to transfer ownership of its Harrison Power Station to its Monongahela Power subsidiary.

Consumer advocates and environmental groups question both proposals, which are worth more than $2 billion combined. The critics worry about the impact on customer rates, argue that the power companies ignore potential gains from better demand-side energy efficiency programs and complain that the plan locks West Virginia into a long-term electrical-generation mix that is too narrowly focused on coal.

In PSC cases, most of the evidence comes through prepared testimony that is filed prior to the in-person hearing. At the hearings themselves, lawyers for various sides focus on cross-examining other parties' witnesses.

So on Wednesday, much of the day was spent with lawyers for the PSC staff, the agency's consumer advocate, and various intervening groups -- including the Sierra Club and West Virginia-Citizen Action Group -- cross-examining Appalachian Power officials who submitted testimony urging the PSC to approve the transaction.

PSC staff and consumer advocate lawyers, for example, continued to quiz Ferguson about the company's efforts to recover the costs of the plant purchases, not through a typical commission rate proceeding but by having the PSC not give customers a separate rate decrease they would otherwise have coming in a separate proceeding.

In written testimony, Richard Hornby, an expert for the PSC consumer advocate, explained that it's more difficult for utility regulators to truly assess requests for rate hikes through those sorts of separate proceedings.

Ferguson and Apco President Charles Patton testified that their company opposes delaying any cost-recovery petitions until Appalachian's next base-rate case. However, on cross-examination by PSC staff attorney Leslie Anderson, Ferguson said the most recent AEP annual report to stockholders said company officials would be "seeking cost recovery when they file their next base rate cases."

Also Wednesday, PSC Chairman Michael Albert grilled Sierra Club expert witness Jeffrey Loiter about whether efficiency programs are popular in West Virginia and can really save energy and money.

"You're talking about thousands of jobs," Albert said, "and I don't know that it's supported to the extent that you or the people who you work for are satisfied."

Albert said he wanted more "hard evidence" that Appalachian Power could address a larger portion of its generation deficit with programs to replace light bulbs and appliances or help residents improve home energy efficiency.

Citing various industry reports, Loiter's written testimony said Appalachian could save ratepayers $1.2 billion through 2026 and create 6,000 jobs by improving its demand-side energy efficiency programs.

Cathy Kunkel, an expert witness for the WV-CAG, said in her testimony that Appalachian Power's modeling of energy efficiency programs -- estimating long-term savings of 3.3 percent over 10 years -- is a "weak target." WV-CAG and the Sierra Club urged the PSC to force Apco to set a higher goal of more than 9 percent savings over a decade.

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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