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Va. ruling befuddles Appalachian Power, Public Service Commission

The state Public Service Commission is trying to figure out the effect a Virginia regulatory commission decision had on three Appalachian Power cases currently on the agency's docket.

On Aug. 1, Virginia's State Corporation Commission weighed in on Appalachian Power's plan to buy portions of two West Virginia power plants, approving one but rejecting the other.

The decision left APCo confused as to how it will proceed, and now it looks like the West Virginia PSC is feeling the same way.

It's a complicated matter involving three cases before the commission:  

  • The case seeking the approval of the merger of Appalachian and Wheeling Power - both subsidiaries of American Electric Power.
  • The case seeking approval of Appalachian's purchase of a two-thirds ownership stake in Unit 3 of the John Amos plant and half of the Mitchell Plant in Moundsville, both currently owned by fellow AEP subsidiary Ohio Power.
  • APCo's annual Expanded Net Energy Cost fuel rate case. In that case, the company is seeking to offset the increased rates from the power plant purchases through a reduction in the rates covering their annual fuel cost.
  • With several coal-fired power plants set to go offline in 2015, APCo officials say the purchase is necessary to boost the company's generating capacity.

    Environmental and consumer advocates have criticized the proposed $1 billion transaction, saying it was an AEP maneuver to dump more costly coal-fired assets onto Appalachian customers.

    Virginia regulators partially sided with those groups. They approved the Wheeling-APCo merger and the Amos purchase but rejected the Mitchell transaction, saying it presented too many risks.

    AEP President Nicholas Akins said that decision was "disappointing" and "a complicating factor." Without the Mitchell plant, he said the merged companies would not have enough resources to serve their customers.

    Akins said leaving the two companies as they are could be a better deal.

    This case was one of the rare times Virginia regulators ruled on a matter before their counterparts in West Virginia.

    Last week, commissioners admitted the Virginia decision effectively renders much testimony and evidence presented so far in the case moot.  

    "All of the scenarios projected in this proceeding are potentially impacted by the VSCC decision," the commission wrote in an order last week.

    The commission asked APCo to respond detailing how the Virginia decision affected its plan and asked if it should hold further hearings in the case.

    On Monday, APCo responded by saying the PSC should not hold further hearings and should weigh the matters in the case "on their own independent merits, irrespective of what any other regulatory authority may have determined in another proceeding."

    The company said it has the option of appealing the Virginia decision, though it has yet to do so. It also said it has begun the process of examining alternatives to the merger and plant purchase, but said, "Such a process is complex and will require considerable time and effort."

    So it appears it might be some time before ratepayers learn how this complicated affair will affect their bank accounts. 

    Contact business editor Jared Hunt at business@dailymail.com or 304-348-4836.   


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