American Electric Power is asking state regulators to guarantee income for four coal-fired power plants, adding to a lively debate about how best to maintain an adequate electricity supply.
The proposal, submitted yesterday, would allow Columbus-based AEP to charge consumers for the cost of operating the plants if the cost exceeds the market value of the electricity generated. At the same time, consumers would receive a credit if market prices rise above the cost of running the plants.
The plan would lead to a monthly charge of about $2 per month for a typical household starting in June. However, AEP says there would be a net savings over the first 10 years.
“The confluence of deregulation, flawed capacity markets and increasingly onerous environmental regulations is significantly changing the (electricity) generation landscape in Ohio,” said Pablo Vegas, president and chief operating officer of AEP Ohio, in written testimony filed yesterday.
“AEP Ohio is proposing (this plan) to address these changes, increasing price stability to its customers and protecting the local Ohio economies which it serves.”
This is the latest in a series of proposals by Ohio utilities that have drawn fierce opposition from environmentalists and rival electricity suppliers.
If regulators reject the proposal, AEP says it might shut down some or all of the plants, which employ more than 1,100.
The plants are:
— Conesville in Coshocton County, which generates 1,149 megawatts of electricity.
— Stuart in Brown County, 600 megawatts.
— Cardinal in Jefferson County, 592 megawatts.
— Zimmer in Clermont County, 330 megawatts.
The total capacity is 2,671 megawatts. A megawatt is enough electricity to provide for the needs of about 1,000 houses.
“These plants provide tremendous economic benefit,” Vegas said in an interview. “If they go away, (the economic benefit) won’t come back.”
This would leave AEP-owned Ohio plants generating about 4,000 megawatts that would not have such a guarantee and would need to compete on the market. (The total does not include several plants that are scheduled to be shut down in the next year or so.)
Ohio’s market structure is the result of electricity deregulation, which has led to a gradual transition to a system in which prices are set by market forces instead of regulators.
FirstEnergy and Duke Energy have offered proposals with elements similar to those in AEP’s plan. The Public Utilities Commission of Ohio will determine whether this approach is allowed under state law.
AEP has previously asked for this type of arrangement for its share of the Kyger Creek Plant, a coal-fired power plant in southeastern Ohio that has eight co-owners. That proposal is part of a rate plan filed in December that awaits a ruling by the PUCO.
People close to the process have speculated that the PUCO is going to wait until after the November election to rule on the various proposals. The agency has declined to comment on its timetable.
FirstEnergy has asked for a similar setup that would apply to Davis-Besse Nuclear Power Station, the coal-fired W.H. Sammis plant and the company’s share of Kyger Creek. Duke’s plan is the smallest, applying only to its share of Kyger Creek.
None of the proposals would affect power plants that already are slated to be shut down. Instead, the plants covered by this proposal probably are at risk of being shut down.
Utility executives say the plants are needed to provide adequate electricity at a time when power companies are closing coal-fired plants to comply with environmental regulations.
The executives point to the extreme cold weather in January as an example of a time when just about every power plant was needed to avoid brownouts.
This idea is not unique to Ohio. For example, Exelon is asking for assistance in maintaining its nuclear-power plants in Illinois.
In Ohio, much of the opposition is because of concerns about subsidizing and prolonging the life of old coal-fired power plants.
The Sierra Club has launched a media campaign with messages including: “Your family shouldn’t have to pay more for dirty energy from outdated coal plants.”
Several thousand residents have submitted comments to the PUCO in the cases; nearly all of the comments are in opposition.