CHARLESTON, WV- “In Appalachian Power Co.’s billion-dollar proposal to buy shares of two coal-fired power stations from an AEP affiliate, the Virginia State Corporation Commission on July 31 approved the Amos purchase but rejected the purchase of Mitchell.
APCo has a parallel case before the Public Service Commission of West Virginia.
The VSCC approved a lower purchase price for the two-thirds of Amos unit 3 that it does not already own than that proposed by APCo: $565 million, compared with nearly $620 million. The commission said in a media release that the lower price ‘reflects the use of traditional regulatory accounting principles to determine the plant’s book value.’
The Virginia commission wrote that the risks associated with the Mitchell plant were greater than those associated with Amos 3. It noted that APCo owns none of the Mitchell plant, has no track record of operating and maintaining it and has no knowledge of all potential environmental and contractual risks associated with Mitchell.
The Virginia order may cast light on a similar case before the West Virginia commission only, in which Mon Power proposes to buy the Harrison coal-fired station from a FirstEnergy affiliate.
‘I think the fact that the Virginia commission has rejected part of APCo’s proposal is not good news for FirstEnergy,’ said policy analyst Cathy Kunkel, who has served as a witness in both cases for the West Virginia Citizen Action Group.
‘Part of the basis for Virginia’s decision was the lack of fuel diversity that Appalachian Power would have if it purchased the Mitchell Plant,’ Kunkel said, ‘and that issue is an even bigger problem for Mon Power if they acquire Harrison. The Virginia decision doesn’t have direct bearing on the West Virginia commission’s decision on Harrison, but it certainly makes FirstEnergy’s case look worse.’
By Pam Kasey, State Journal