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Is AEP Unloading a Power Plant on KY Consumers?

GRAPHIC: Dozens of coal-fired power plants east of the Mississippi have been shut down or are slated to retire (in red). Chart by Downstream Strategies.
GRAPHIC: Dozens of coal-fired power plants east of the Mississippi have been shut down or are slated to retire (in red). Chart by Downstream Strategies.
May 22, 2013

CHARLESTON, W.Va. - Although more coal-fired power plants are shutting down, some corporations - such as American Electric Power - are trying to sell coal-generating capacity to customers in West Virginia and Kentucky.

Critics say the corporations are trying to move plants that are no longer cost-effective onto the backs of ratepayers who would have no choice but pay for them. Alex DeSha, a Sierra Club organizer in Kentucky, said that's what's going on with a plan to have an AEP subsidiary, Kentucky Power, take half of the Mitchell power station in Moundsville, W.Va., from a deregulated AEP subsidiary in Ohio.

"It's essentially playing a shell game with our money," he said. "They're buying an old, outdated power plant and they're locking us into coal-fired generation for an extended period of time."

This summer, power companies want to move the energy and related costs from all or part of three coal-fired generating stations onto ratepayers in Kentucky and West Virgina. In this case, according to AEP, it needs to replace the capacity lost as it retires part of the Big Sandy plant. But Cathy Kunkel, a policy analyst for Energy Efficient West Virginia, said dozens of coal plants are being shut because of competition from cheap natural gas.

If AEP tried to sell the Mitchell plant on the open market, Kunkel said, it might get only a quarter of what the company says it's worth.

"The low price of natural gas has really driven down open-market sales of coal plants," she said. "It's cheaper to generate and buy power from natural gas plants."

Critics of the Mitchell plant sale say it would be cheaper for power customers in the long run if AEP would work to reduce demand through energy-efficiency programs. DeSha said those programs have worked in other places. AEP is doing just that in Ohio, he said, where it can't force ratepayers to bear the cost of outdated plants. However, DeSha said, the company appears to be doing just the opposite in Kentucky.

"We have not seen them pursue much of an energy-efficiency program," he said, "while in Ohio, aggressively investing in energy-efficiency."

Critics say the plan would raise rates by 8 percent and make consumers more dependent on a single fuel source - perhaps adding to future costs - while making the deregulated Ohio subsidiary more diversified and flexible.

The Kentucky Public Service Commission will hold a hearing on the issue at the end of the month.

Dan Heyman, Public News Service - KY