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Appalachian Power seeks rate increase to prolong the lives of 2 coal plants

Appalachian Power seeks rate increase to prolong the lives of 2 coal plants

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The future of two coal-fired power plants in West Virginia, which produce nearly two-thirds of the electricity sold by Appalachian Power Co., could soon be determined by Virginia regulators.

Appalachian is asking the State Corporation Commission to approve a rate increase to pay for environmental improvements to its Amos and Mountaineer plants, at a cost of $2.50 a month for its average residential customer

Upgrading the plants’ coal ash disposal methods to meet requirements of the U.S. Environmental Protection Agency would allow them to remain in operation until 2040, the utility says.

But the Sierra Club is asking the SCC to deny the rate increase, which could force the plants to close by 2028.

Burning coal is an uneconomic way to generate power and a key contributor to climate change, opponents say. “It’s on its way out, and I think everyone knows that,” said Dori Jaffe, managing attorney for the Sierra Club. “The earlier they start the transition to renewable energy, the better it will be.”

Jaffe participated in a three-day SCC hearing that ended Thursday. A hearing examiner will make a recommendation to the full commission on Appalachian’s request for a rate increase. A final decision is expected by late August.

Appalachian says it is committed to using more renewable energy, such as solar and wind. But its attorney, Daniel Summerlin, argued that making the switch too fast would raise a “tremendous risk” of cost increases for ratepayers.

“The electric utility industry is in the midst of an unprecedented transition,” he told SCC hearing examiner Ann Berkebile, referring to a 2020 state law that requires Appalachian to use all carbon-free electricity by 2050.

“At the end of the day, no one knows what the next 20 or 30 years will hold,” he said.

Appalachian says that making improvements to the Amos and Mountaineer plants, and thus extending their lifespans to 2040, will provide flexibility as the utility navigates the challenges of acquiring enough solar and wind resources to serve its approximately 524,000 customers in Virginia.

For example, Summerlin said, the solar panels needed by the company could require up to 66 square miles, which amounts to an area about the size of Richmond.

While those details will take years to work out, Appalachian is seeking rate adjustment clauses to cover about $250 million it needs to spend on upgrades to unlined coal ash ponds at the two West Virginia plants.

If the retrofits are not made, federal environmental laws would force the plants to close by 2028. Half of the costs are being sought through a rate increase request that is pending before regulators in West Virginia, where Appalachian has about 458,000 customers.

Critics contend that Appalachian’s move away from coal has been too slow, and that it has only picked up speed with last year’s passage of the Virginia Clean Economy Act.

The Amos Plant was placed in service in the early 1970s; the Mountaineer Plant has been in operation since 1980. Both are located north of Charleston, West Virginia, and together they have a capacity of about 4,300 megawatts.

Appalachian no longer burns coal to generate electricity in Virginia. It closed its Glen Lyn Plant in 2015, nearly a century after it began operations in Giles County, and converted the 63-year-old Clinch River Plant to natural gas in 2016.

If Appalachian were to close its two West Virginia plants and replace them with a combination of renewable energy and battery storage, it could save ratepayers up to $1 billion, according to Rachel Wilson, an expert witness who testified this week for the Sierra Club.

At the hearing, Jaffe argued that Appalachian’s expense projections for converting to renewable energy are nearly double what they should be. Costs for solar are now 90% lower than they were in 2009, Wilson said, and the cost of wind has declined by 71% over the same time period.

But enough uncertainties remain to justify keeping the Amos and Mountaineer facilities in operation past 2028, the utility contends.

The plants “serve as a physical energy hedge, and without them, our customers would be increasingly exposed to potentially volatile energy costs,” Chris Beam, Appalachian’s president and chief operating officer, said in pre-filed testimony with the SCC.

Already, Appalachian customers are facing a number of proposed increases to base rates and rate adjustment clauses that, if approved in total, would increase the monthly bill of an average residential customer by $22 a month.

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Laurence Hammack covers environmental issues, including the Mountain Valley Pipeline, and business and enterprise stories. He has been a reporter for The Roanoke Times for more than three decades.

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