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Va. approves sale of John Amos plant to Appalachian Power

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.

 They also noted that Appalachian Power ratepayers have had no prior investments in the Mitchell plant, but have had a stake in the Amos plant.

"We consider it relevant and important that Appalachian Power already owns (most of the Amos plant)," the commission's order said. "Virginia ratepayers already have made substantial investments in the Amos units."

The Virginia commission also echoed environmentalists' concerns, citing the risks associated from a lack of diversity in Appalachian Power's power-generating fleet. The commission said approving both acquisitions would raise Appalachian Power's percentage of electricity produced by coal-fired plants to 87 percent by 2017.

Byron Harris, director of the West Virginia Consumer Advocate Division, said the Virginia decision mirrored what his office told commissioners here.

"We think that acquiring both of these plants is just too risky," Harris said. "I think Virginia made the right decision, and I hope our commission does the same."

Harris said this was the first multi-state case he could recall in which Virginia regulators made their decision before their counterparts in West Virginia.

He said West Virginia could still approve the purchase of both plants - Appalachian Power does have the right to appeal the Virginia decision - but he didn't feel it was likely.

"They could still issue the order approving the full transaction, but it is kind of a moot point at this point," Harris said.

In addition to the power plant transfer, Virginia regulators also approved the proposed merger of Appalachian and Wheeling Power. They said they believed the merger of the two companies would be "neutral and potentially positive" for ratepayers.

West Virginia regulators are expected to rule on the transfer and merger cases in the coming months.

An Appalachian Power representative did not immediately respond to a request for comment.

Contact writer Jared Hunt at or 304-348-4836.


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