CHARLESTON, W.Va. - Virginia regulators on Tuesday approved Appalachian Power's plan to buy Ohio Power's portion of the John Amos plant in Winfield but rejected the company's plan to purchase Ohio Power's 50 percent stake in the Mitchell plant in Moundsville.
While the West Virginia Public Service Commission has yet to weigh in, the Virginia decision, should it stand appeal, effectively ends Appalachian Power's attempt to acquire the Mitchell plant.
Appalachian Power last year announced plans to purchase a two-thirds ownership stake in Unit 3 of the John Amos plant and half of the 1,600-megawatt generating capacity of the Mitchell Plant in Moundsville currently owned by fellow American Electric Power subsidiary Ohio Power.
Ohio is currently deregulating its energy markets, forcing Ohio Power to become more competitive with its pricing.
Appalachian Power President Charles Patton said at a PSC hearing last month that purchasing assets at the two plants would help the company deal with a shortfall in its power-generating capacity.
He said the company has for years been forced to supplement local power demand by buying electricity from other companies. But prices have fluctuated dramatically, increasing costs for consumers.
With several power plants set to retire in 2015, Patton said the decision to buy the Mitchell and Amos units was necessary to boost the company's generating capacity and avoid going to the market for more power.
Environmental and consumer advocates have criticized the $1 billion sale, saying it was simply a maneuver by AEP to dump costly coal-fired assets onto Appalachian customers and would lead to higher electric bills.
While state regulators held a hearing on the matter earlier this month, Virginia's State Corporation Commission had already held its hearings looking into the case.
On Thursday, the Virginia commission decided to approve the purchase of the Amos plant unit, though for a lower price. It said Appalachian Power could buy the unit for $565 million, $53.4 million less than the company had proposed.
The commission said the reduced price more accurately reflects traditional regulatory accounting principles used to determine a plant's book value.
It said the Mitchell purchase presented too many risks to consumers.
"The Commission noted that APCo currently owns none of the Mitchell plant . . . has no track record of operating and maintaining the Mitchell plant or knowledge of all potential environmental and contractual risks associated with Mitchell," the commission's press release said.