RICHMOND — The State Corporation Commission (SCC) has
approved the acquisition by Appalachian Power Company (APCO) of the remaining portion
of the Amos electric generating plant that it did not already own.
APCO already owns units 1 and 2 and one-third of unit 3 of the coal-fired, 2,900-megawatt
John Amos generating plant complex located in Winfield, W. Va. The SCC allowed APCO
to acquire the remaining interest in the Amos 3 plant from an affiliate company
at a price of $565 million, which is $53.4 million lower than the price APCO proposed
to pay. The SCC said the lower price reflects the use of traditional regulatory
accounting principles to determine the plant’s book value.
While approving the Amos 3 acquisition, the SCC rejected APCO’s request to purchase
half of the Mitchell coal-fired generating plant in Moundsville, W. Va. at a price
of $536 million, also from an affiliate. The SCC wrote that the risks associated
with the Mitchell plant were greater than those associated with Amos 3. The Commission
noted that APCO currently owns none of the Mitchell plant and has no track record
of operating and maintaining the Mitchell plant or knowledge of all potential environmental
and contractual risks associated with Mitchell and further, that APCO ratepayers
have no prior investments in the Mitchell plant. In distinguishing Mitchell from
the Amos 3 acquisition, the SCC wrote, “We consider it relevant and important that
APCO already owns [most of the Amos plant] … Virginia ratepayers already have made
substantial investments in the Amos units.”
In denying the Mitchell acquisition, the SCC also cited the risks associated from
a lack of diversity in APCO’s generating fleet. Approving both acquisitions would
raise the percentage of coal-fired electricity produced by APCO’s generation fleet
to a projected 87 percent by 2017.
The SCC also approved APCO’s request to merge with Wheeling Power, a distribution
utility located in northern W. Va. The SCC found that APCO’s representations that
the rate impact on Virginia ratepayers would be neutral and potentially positive
were reasonable. However, the SCC directed that APCO provide a $3.3 million rate
credit to Virginia ratepayers to resolve timing concerns and the SCC will review
evidence in APCO’s next biennial review and fuel proceedings as to the effect of
the merger on Virginia ratepayers.
Case Number PUE-2012-00141