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APCo rate hike request rejected

Staff • Apr 15, 2008 at 12:00 AM

Power regulatory officials in Richmond officially said no Tuesday to a proposed $2.3 billion coal-fired plant by Appalachian Power Co. that was to be built in Mason County, W.Va.

The decision by the State Corporation Commission also nixed a request by the Ohio-based electric firm to increase rates to its Virginia customers to recoup costs associated with building the plant.

The SCC opinion coincided with Attorney General Bob McDonnell’s official report on the APCo plan, calling it neither reasonable nor prudent and citing the capital costs for the new plant, which was slated to use integrated gasification combined cycle technology.

“This (proposal) represents an extraordinary risk that we cannot allow the ratepayers of Virginia in APCo’s service territory to assume,” said a SCC statement issued Tuesday.

The requested increase for the Virginia customers marked the third such move by APCo in as many months. The company has also put in for rate increases for its service territories in West Virginia and Tennessee.

APCo Chief Operating Officer and President Dana Waldo told the Times-News last month that his company plans to file paperwork with the Federal Energy Regulatory Commission in May for a 20 percent wholesale rate increase for its Kingsport service corridor.

The rising cost of coal in the worldwide market and constructive measures at existing plants to comply with the Clean Air Act were some of the reasons given by Waldo for the need to raise rates.

The integrated gasification combined cycle (IGCC) process APCo planned to use for this new facility in West Virginia also drew questions from the SCC.

If it were built, it would be one of only three such plants in the United States, APCo officials told the commission, and the new plant would be twice the size of the current plants.

“The record … indicates that there is no proven track record for the development and implementation of large-scale IGCC generation plants like the one proposed by APCo,” says the SCC report.

The SCC also indicated in its decision that given the absence of a credible cost estimate, the use of IGCC technology for a coal-fired power plant of this size (629 megawatts) posed additional uncertainties and risks for Virginia ratepayers.

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