PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in
the City of Charleston 011 the 29&day of May 2015.
CASE NO. 15-0722-E-P
APPALACHIAN POWER COMPANY, DBA AMERICAN ELECTRIC POWER
Commission Staff petition to the Commission to drive
Appalachian Power Company to submit sufficient
information justifying the planned closure of electric
generating plants.

COMMISSION ORDER
The Commission requests additional information and that Appalachian Power
Company not take any irreversible actions regarding retirement of certain electric
generation units until the Commission has had an opportunity to review that information.

BACKGROUND

On May 8, 2015, Commission Staff filed a Petition asking the Commission to
direct Appalachian Power Company (APCo) to submit sufficient information justifying
the planned closure of electric generating plants. The plants subject to closure are Units 5
and 6 of the Glyn Lyn Plant, Units 1 and 2 of the Kanawha River Plant, Units 1 and 3 of
the Sporn Plant, and Unit 3 of the Clinch River Plant (the Disposition Units). Staff
requested that the Commission direct APCo to (i) submit sufficient information to justify
the planned closure of electric generating plants within thirty days and (ii) not take any
action that would render the plants permanently inoperable.
In support of its Petition, Staff stated that in Commission Case
Nos. 13-0764-E-CN (conversion of Clinch River Plant Units 1 and 2 to burn natural gas)
and 14-1152-E-42T (recent general rate increase proceeding), APCo referenced closure
of the Disposition Units. Further, in the Clinch River certificate case, APCo filed as a
closed entry on February 27, 2015 an informational filing describing the proposed
closures, noting that (i) the plants in question were not equipped to operate in compliance
with the Mercury and Air Toxics Standards Rule (MATS Rule), (ii) it would be cost
prohibitive to equip the units with the environmental facilities required by the MATS
Rule, (iii) retirement of the units was scheduled for no later than June 1, 2015, (iv) other
units of the Sporn Plant and the entirety of the Kammer Plant owned by AEP Generation
Resources, Inc. will also be retired, and (v) APCo has taken appropriate measures to

 ensure that its customers continue to receive reliable, high quality electric service after
the plants are shut down.
Staff noted that a previous plant closure, the Cabin Creek Plant, was preceded by a
filing by APCo for Commission authority. Appalachian Power Company, Case No. 896 1
(Commission Interim Order, June 30, 1977). Staff asserted that other than declaratory
statements by APCo that retirement of the plants is the best course of action, APCo has
not provided the Commission any supporting information. Staff suggested that the
Commission require information similar to the information obtained from Monongahela
Power Company regarding the closure of its plants in Case No. 11-1274-E-P
(Commission Order April 2,2012).

On May 13, 2015, APCo filed a Motion to Dismiss Staff Petition. APCo asserted
that the Commission addressed the retirement of the Disposition Units as part of several
recent cases. Specifically, APCo cited:
1.
Testimony in the Clinch River Plant certificate case discussed potential
approaches to addressing the APCo power supply needs given the impact of the
MATS Rule.
2.
Further, in Case Nos. 11-1775-E-P, 12-1655-E-PC, and 14-0546-E-PC the
Commission approved the transfer of generating assets to APCo and Wheeling
Power Company to meet power supply requirements. The power supply studies in
those cases were predicated on, among other factors, the retirement of the
Disposition Units. The parties in those cases did not dispute the impact of the
MATS Rule or the need to retire the Disposition Units.
3.
Retirement of the Disposition Units also resulted in multiple filings and
approvals by the Commission for significant modifications to the regional
transmission system. Case Nos. 13-0612-E-CN, 13-1 106-E-CN, 13-1204-E-CN,
13-1454-E-CN, and 13-1455-E-CN.

4.
Case No. 14-1221-E-CS was a Siting Certificate for Moundsville Power,
LLC to construct and operate a natural-gas fired wholesale electric generating
facility required, in part, because of MATS-driven retirement of coal-fired
generation capacity in the PJM region.
5.
Additional information regarding retirement of the Disposition Units was
presented in the pending APCo rate case, Case No. 14-1152-E-42T, and
depreciation case, Case No. 14-1151-E-D. In the depreciation case, Staff disputed
the appropriate level of the new depreciation rates and the appropriate amount of
post retirement Generation Operation and Maintenance for the Disposition Units

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 to be reflected in base rates, Staff did not dispute the need to retire the Disposition
Units or that they would be retired.
APCo asserted that the Staff petition was untimely in light of the APCo February 27,
2015 informational filing and the cases listed above. APCo stated that it would be
willing to answer any additional questions the Commission may have but that there is no
need for an evidentiary proceeding in which APCo would be asked to justif) the planned
deactivation and retirement of the Disposition Units. APCo asked that the Commission
dismiss this case.

On May 15, 2015, Staff filed a response to the APCo motion to dismiss. Staff
acknowledged the cases cited by APCo but noted that the Disposition Unit closures were
not the purpose of those proceedings. Further, the Commission did not grant approval of
the Disposition Unit closures in any of those proceedings. Staff states that it does not
suggest that the plants should not be retired, but rather that the Commission should have
an opportunity to review the basis for the decision to close the Disposition Units prior to
any irreversible action that would forestall reopening. Staff also acknowledged the
February 27, 2015 informational filing, but stated that it was not the type of notice that
Staff had expected, and in any event did not contain sufficient information for the
Commission to determine whether closure of the Disposition Units was the best course of
action. Staff suggested that if the energy efficiency, demand side management, and solar
power generation cited by APCo do not meet estimates, the Commission might regret not
reviewing the current plans to dismantle plants that are still being paid for by customers.
Staff asked that the Commission deny the APCo motion to dismiss.
On May 18, 2015, APCo filed a reply to the Staff response to the APCo motion to
dismiss. APCo noted that in the Commission January 2015 Reports to the West Virginia
Legislature, the Commission reported the planned retirements of the Disposition Units
without any indication that there was anything uncertain or unsettled about them.
DISCUSSION
These types of proceedings related to retirement of utility facilities sometimes
generate tension and can be problematic because they can pit the rights of the utility to
own and manage their utility business and properties in the way that they deem proper
under the law against the statutory authority of the Commission to assure that the utilities
have adequate and suitable facilities to render their statutory obligations. These decisions
are also frequently affected by outside factors, such as local employment and economic
stability, which while they generate real concerns in the areas where these plants are
located, are not specifically imbued with the public service obligation on the utility’s total
customer base.

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 The world of coal-fired electric generation is undergoing upheaval. New and
pending emission rules, including carbon emission rules issued by the federal EPA are
changing the landscape and it is difficult to predict the outcome with precision. Because
of this change and uncertainty, it may be prudent not to foreclose some available options
for electric generation for some of these foreclosures.
To help the Commission further understand the impact of the proposed retirements
we request that (i) APCo respond to the questions below and (ii) APCo not take any
irreversible actions that would prevent reopening any of the Disposition Units or
alternative uses of the plant sites as non-coal generation sites until further order of the
Commission. The Commission intends to act on this matter as quickly as possible.

FINDINGS OF FACT
1.

APCo intends to retire the Disposition Units no later than June 1,2015 .

2.
The Commission would like to see additional information regarding the
Disposition Units.
CONCLUSION OF LAW
Additional information regarding disposition of the Disposition Units is necessary.

ORDER
IT IS THEREFORE ORDERED that Appalachian Power Company not take any
irreversible action that would prevent reopening of the Disposition Units or alternative
uses of the plant sites as non-coal generation sites until further Order of the Commission.

IT IS FURTHER ORDERED that Appalachian Power Company file a response to
the following questions on or before 4:OO p.m., June 10, 2015. Staff should file its
comments within ten days of the Appalachian Power Company filing. The questions:
1.

2.

Please describe the intended disposition, and a timeline for that disposition, of
each of the Disposition Units. Specifically, whether the Disposition Unit is to be
sold, retired, retired but maintained as a possible back-up or emergency coal-fired
plant, retrofitted to bum natural gas, retrofitted to produce electricity by some
other method, dismantled (in whole or in part), or some other disposition.
Provide a copy of any notice that was sent to PJM regarding the Disposition Units.
Please note whether that notice included an indication of the specific ultimate
disposition of the Disposition Units.

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 3.

Has PJM issued its Reliability Status Report regarding reliability impacts if the
Disposition Units are closed? Provide a copy of the Status Reports and any replies
or intermediate correspondence between APCo and PJM regarding the reliability
impact. Further, please indicate (i) whether required upgrades discussed by PJM,
if any, would be made by APCo, or some other PJM Transmission owner, (ii) the
cost of the upgrades in total, the annual PJM revenue requirement and the annual
revenue requirements, for APCo customers, and (iii) whether the cost of the
necessary transmission upgrades across the PJM system was factored into the cost
analyses regarding closing the plants.

4.

Provide a schedule showing the gross plant balances associated with each
Disposition Unit and the related accumulated reserve for depreciation and deferred
income taxes. Summarize and explain the accounting entries that would be made
if the plants are retired as proposed by APCo.

5.

Has there been any consideration of converting any of the Generation Units to
alternative fuels? Please explain this answer. Explain if the feasibility of
conversion to natural gas or other fuel sources was part of the initial decision
making process before announcing retirement of the plants. If it was not, please
explain why fuel conversion was not considered at that time?

6.

Describe the construction work that would be required and provide the estimated
time period that each unit would be out of service if expenditures were to be made
to allow such plant site to operate (i) as a coal fired plant or (ii) as an alternative
fuel source generation plant.

I.

Explain whether, and how, the deactivation process and site work would be
different if one or more of the Disposition Units were determined to be an
economically viable candidate for non-coal-fuel generation.

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 IT IS FURTHJZR ORDERED that the Executive Secretary of the Commission
serve a copy of this order by electronic service on all parties of record who have filed an
e-service agreement, by United States First Class Mail on all parties of record who have
not filed an e-service agreement, and on Staff by hand delivery.

A True Copy, Teste,

Ingrid Ferrell
Executive Secretary

JJWism
150722c.doc

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