Appalachian Power moves toward renewables, Mon Power considering more investments in coal

CHRIS DORST | Gazette-Mail file photo
The John Amos Power Plant near St. Albans. Although Appalachian Power plans to continue to rely on the coal-fired plant over the next decade, the utility is looking to diversify its energy sources, according to plans filed with the state Public Service Commission.

West Virginia’s four largest electric utilities have revealed plans for what the state’s power production might look like over the next 10 years.

First Energy’s and American Electric Power’s West Virginia subsidiaries filed their integrated resource plans, a type of roadmap used by power companies, with the state Public Service Commission on Dec. 30.

While the companies have conducted integrated resource planning in the past, this is the first time the utilities have been required to make the plans public in West Virginia, after a bill passed by the West Virginia Legislature in 2014 and the PSC issued an order last year.

The planning documents, which rely on cost calculations, electric demand data and energy forecasts, highlight where the electricity for homes and businesses in West Virginia may come from in the coming decade and give a vague understanding of what investments might be made by the companies in order to supply that power.

For Appalachian Power and Wheeling Power, the plans show that both American Electric Power subsidiaries will continue to rely on the John Amos, Mitchell and Mountaineer coal-fired plants to supply a majority of the energy needed for their 475,000 customers in West Virginia. But the documents also highlight Appalachian Power’s attempt to diversify its energy portfolio, adding more solar and wind energy, as the company moves closer to 2025.

It’s a different story for the Mon Power and Potomac Edison. The First Energy subsidiaries will continue to provide roughly 389,000 customers with electricity largely from the Harrison and Fort Martin coal-fired power plants. But where Appalachian Power expects to move toward alternative energy sources, the First Energy companies are considering additional investments in coal power.

The First Energy resource plan considers purchasing another existing coal-fired power plant in order to meet an expected 700-megawatt deficit by 2020, and it suggests retrofitting the Harrison and Fort Martin plants to let them co-fire with natural gas.

“At a high level, we have identified existing coal plants as the option that appears to be the lowest-cost solution to meet our capacity shortfall,” said Todd Meyers, a spokesman for Mon Power and Potomac Edison. “This option would require an agreement between Mon Power and any seller at a price that allows this to remain the lowest cost solution.”

James Van Nostrand, a West Virginia University law professor and the director of the Center for Energy and Sustainable Development, said co-firing the Harrison and Fort Martin plants is a good course of action, but he can’t understand how buying another coal plant is the best choice for the companies’ ratepayers.

“It’s shocking if they get away with buying more coal,” Van Nostrand said. “It’s a tale of two utilities, in terms of one that gets it and another that is sticking its head in the sand.”

Renewable energy sources like wind and solar are becoming cheaper, as they continue to benefit from reapproved tax incentives. Natural gas has started to outcompete coal as the dominant source of power. Residential and commercial customers have continued to install rooftop solar. The U.S. Supreme Court is set to rule on the Federal Energy Regulatory Commission’s jurisdiction to regulate aspects of electricity demand. And the Obama administration’s highly-contested Clean Power Plan continues to work its way through the federal court system, even as it begins to affect price outlooks for coal and other carbon-based power after 2022.

West Virginia Attorney General Patrick Morrisey is among the leaders of the legal battle against the Clean Power Plan, which seeks to reduce carbon emissions by 32 percent before 2030 in order to combat global warming. Gov. Earl Ray Tomblin announced in October that West Virginia would submit a plan to implement the new regulations if they are upheld in court.

In their resource plans, Appalachian Power and First Energy approach those federal regulations somewhat differently, with Appalachian Power officials attempting to adjust their forecasts to account for the carbon rules using an estimated carbon tax of $15 per metric ton.

“These rules are still being reviewed, and individual state plans may not be finalized and approved for a number of years,” Appalachian Power officials wrote. “Even so, [Appalachian Power] has considered a portfolio of resources that will provide a path to reduce the intensity of its carbon emissions.”

That statement mirrors comments made by Charles Patton, Appalachian Power’s president, when he told a crowd at the state’s Energy Summit in October that coal was declining even without the federal carbon rules.

“I guess what we would expect is that some kind of rules will apply,” Jeri Matheney, Appalachian Power’s communication director, said last week. “Even if it’s not the exact Clean Power Plan, we expect there would be rules governing carbon emissions.”

In contrast, First Energy’s model, while calculating in a price for carbon, still finds that an existing coal plant would be the cheapest source of energy. But Meyers would not disclose what exact price was placed on future carbon emissions in the forecast.

“We are not providing the calculations behind carbon dioxide or other aspects of our levelized cost analysis,” Meyers said.

One of the main themes of all of the integrated resource plans is an increased emphasis on natural gas, which has surpassed coal as the number one source of energy nationally since July, according to the U.S. Energy Information Administration.

Appalachian Power already owns two gas-fired power plants, including the 580-megawatt Dresden plant in Ohio and the 505-megawatt Ceredo plant in West Virginia. The company is also working to convert its aging Clinch River plant in Virginia to gas.

Some of First Energy’s top choices for the companies’ future power supply also involve investments in natural gas, which has dropped in price because of increased production nationally.

One plan calls for new equipment to be installed at the Harrison and Fort Martin plants that would allow up to 30 percent of the 3,000 megawatts of capacity to be transferred to natural gas generation at a cost of $55 million to $80 million for each of the five boiler units.

And if the idea of purchasing another existing coal plant doesn’t work, another scenario involves building one or more new gas turbines.

But only Appalachian Power specified a plan to adopt wind turbines and solar arrays into its energy mix over the next 10 years.

In total, Appalachian Power expects an increase in its renewable energy capacity by 9.1 percent by 2025, including an estimated 260 megawatts from large-scale solar and 750 megawatts from wind farms.

Appalachian Power also expects residential solar installations to grow by 5 percent per year, equaling 14 megawatts of capacity by 2025 — far greater than the current combined capacity of 0.5 megawatts.

Company officials believe that distributed generation will reduce the amount of electricity demand by their customers.

“While APCo does not have control over how, and to what extent this resource is deployed, it recognizes that distributed rooftop solar will reduce [Applachian Power’s] capacity and energy requirements,” company officials wrote.

Van Nostrand said Appalachian Power’s diverse resource planning really shows a change in the company’s stance from a few years ago.

“It’s a great piece of work,” he said.

Alternatively, First Energy laid out no specific plans to adopt renewable energy, didn’t take into account any type of growth in rooftop solar and questioned the applicability of most alternative energy sources in West Virginia, outside of wind.

“Numerous renewable energy sources are under development or currently exist, but many sources, like solar, geothermal, new hydro and tidal, are not economic options for Mon Power with the companies’ service territories,” First Energy officials wrote.

Meyers said the resource plan didn’t move toward renewable energy because it was a more costly choice under the company’s pricing model, and that it didn’t account for rooftop solar installations because the technology wouldn’t make a big impact on the companies’ estimated capacity shortfall of 850 megawatts by 2027.

Van Nostrand said he was skeptical of First Energy’s calculations, and he noted that its calculations on wind and solar prices don’t take into account tax credits that were passed by Obama and the Republican-led Congress in December.

“This is like a Neanderthal utility in what they say about renewables. It’s unbelievable,” he said. “It is a primitive analysis. It is the type of resource plan I would expect a utility to perform 30 years ago.”

Reach Andrew Brown at andrew.brown@wvgazettemail.com, 304-348-4814, or follow @Andy_Ed_Brown on Twitter.

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