Energy News Today

PSC Makes Right Decision on Coal-Fired Power Plants

The West Virginia Public Service Commission is taking considerable heat from various groups over its decision to allow for environmental upgrades to three major coal-fired power plants in the state.

Some of the opposition is rooted in the higher customer costs to pay for the improvements.  Others believe the upgrades will artificially prolong the life of coal-based electricity at a time when the country is moving more toward alternative fuels.

However, a close reading of the PSC decision reveals that the commissioner made the right choice for several reasons.

The ruling means the Mountaineer, Mitchell and John Amos power plants will be able to continue operations until at least 2040. Without the upgrades, which cost an estimated $444 million, the plants would have to shut down on or before 2028.

Continued operation secures baseload electricity for the customers of Appalachian Power and Wheeling Power in West Virginia. In addition, any excess power can be sold.  Public and political sentiment may be against coal, but when demand warrants, most customers just want to know the lights will come on.

Charlotte Lane

The power plant operations have secondary and tertiary benefits, as the decision noted, and PSC Chair Charlotte Lane acknowledged during an interview on MetroNews Talkline.

“It would cost a lot more to shut down the plants than these upgrades,” Lane said.  “You’d lose almost 600 jobs, $85 million in wages.  Shutting them down prematurely would have a severe impact on the local economy.”

Without Amos, Mitchell and Mountaineer, West Virginia would have to get electricity from other sources, primarily combustion turbines, wind and solar.  The PSC estimates the replacement costs for that capacity for West Virginia customers would be between $1.9 and $2.3 billion, at least four times the cost to customers for the environmental upgrades.

Additionally, ratepayers are already paying for previous improvements at the plants.  Premature shutdowns mean those will be “sunken costs.”  That is tantamount to continuing to make car payments after your vehicle has quit running.

Some of the power generated from the plants goes to customers in Virginia and Kentucky.  Opponents note that regulatory agencies in those states rejected the request for the environmental upgrades, meaning the total cost will fall to West Virginia customers.

That is true.  However, neither Virginia nor Kentucky receives any of the ancillary benefits from the plants.  Additionally, since those states will not pay any of the operating costs, they also will not be able to use the plants for their power generation after 2028 unless they want to buy the power on the open market.

No one wants to pay higher electricity bills, but the rate increases will be nominal.  According to estimates, when the work is completed on the upgrades (probably by late 2023), 2024 rates will increase by about $5 a month for the average residential customer.

As the PSC concluded, “Even a close call on the cost benefits to West Virginia customers becomes a clear decision to keep the plants open when the Commission considers the benefits of the reliability of the fuel secure baseload generation capacity and other economic benefits to customers and the state and local economy.”

The role of coal as a primary energy source continues to diminish, but the transition to alternative fuels cannot be done overnight.  The PSC decision enables these three West Virginia coal-fired power plants to continue to supply reliable and reasonably priced electricity for the state and other customers on the grid while also benefiting the state’s economy for the next two decades.

 

Read More: PSC Makes Right Decision on Coal-Fired Power Plants

2021-10-17 23:27:12

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