- American Electric Power has tweaked a power purchase agreement that would subsidize coal-fired generation, addressing the concerns Ohio regulators expressed when they rejected the proposal in February.
- AEP's amended proposal makes changes to oversight and regulatory review of the contracts, Argus media reports, and addresses concerns that risk should be split between the company and ratepayers.
- The proceeding is being closely watched by FirstEnergy and Duke, both of whom have made similar proposals have coal-fired generation subsidized by ratepayers.
After officials in February rejected AEP's proposal to guarantee income from certain coal units, the company retooled the power purchase agreements and has asked the Public Utilities Commission of Ohio to reconsider its decision. The proposals are aimed at supporting more than 3,000 MW of aging generation the company says is still needed for reliability but could become unprofitable in coming years because of emissions regulations and cheap natural gas.
If approved, the arrangement could "truly stabilize retail customer rates" AEP Ohio president Pablo Vegas told Argus. The tweaked proposal addresses concernd about regulatory oversight and periodic reviews, as well as risk and information sharing.
Environmentalists have opposed the plan, which they characterize as a "bailout," saying the state should move away from its dependence on coal power. But the generators maintain the plants are necessary for reliability, and the deals will ultimately benefit consumers.
Argus reported that AEP is requesting expedited review of the proposal beucase the company's three-year energy plan begins in June.
PUCO's decision in February to reject the proposal did not find the arrangements illegal, but not in the best interest of consumers, opening the door for AEP to modify the plan. The final decision could impact the plant's ownership, ultimately. CEO Nick Atkins confirmed at a shareholder meeting last month that the company is leaning toward disposing of its unregulated generation in Ohio.
"At this point, looking at it, you would have to lean toward that direction because there clearly is volatility in that business and it’s very difficult to invest," Atkins said.