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Over staff objections, W.Va. regulators OK plan to save coal plant

Despite concerns raised by public staff and the state's consumer advocate, West Virginia regulators have approved changes to a power sales contract that could preserve a merchant coal plant.

The Public Service Commission of West Virginia on May 3 approved an increase in the electric energy purchase agreement, or EEPA, between the operator of the 80-MW Grant Town Cogen waste coal plant and FirstEnergy Corp. subsidiary Monongahela Power Co. that will ultimately be borne by ratepayers.

The EEPA requires Mon Power to purchase the generation output of the Grant Town plant from American Bituminous Power Partners LP, or AmBit, at the avoided energy cost rate plus an agreed capacity cost rate for up to 80 MW. The current capacity cost rate is $34.25 per MWh, but it was scheduled to decrease to $27 per MWh upon repayment of revenue bonds in October 2017.

The PSC's order extends the current capacity rate of $34.25 per MWh for the duration of the contract, which expires in October 2035. The order also allows Mon Power and another FirstEnergy utility, Potomac Edison Co., to pass these costs along to their retail customers.

"Because the rates paid by customers already include the $34.25 per MWh for purchased power, there will be no change in customer rates resulting from this order," the PSC wrote.

West Virginia's regulatory staff and Consumer Advocate Division opposed the changes to the contract, which surfaced in June 2015 as an attempt to keep the coal plant in Marion County, W.Va., operating. The PSC in October 2016 denied a plan to amend the EEPA tied to the market cost of energy and capacity.

The PSC in May 2017 granted a joint petition by AmBit and Mon Power to consider new amendments to the contract. The amended plan would have required Mon Power to purchase the generation output of the project from AmBit, the waste coal plant's operator, at the avoided energy cost rate plus a modified capacity cost rate of 4 cents per kWh, or $40/MWh, through the life of the contract.

But the commission, in its May 3 order, said the requested increase to $40/MWh "would exceed the avoided cost rate that AmBit is entitled to receive" and would result in rates that are not "just and reasonable" pursuant to federal and state regulations. It found, however, that extending the existing $34.25/MWh rate component is just and reasonable.

In a May 14 petition for reconsideration, staff argued that the PSC's order "disturbed the holdings of prior commissions" by engaging in retroactive ratemaking and that "it is significant that none of the customer groups support the amended EEPA."

"The staff respectfully requests the commission reconsider its final order and provide proper cost protections for Mon Power's ratepayers," the petition states. "The two parties to the amended EEPA failed to give any import to the cost impact to Mon Power's ratepayers. AmBit had no duty to be concerned with Mon Power ratepayers and Mon Power failed to be concerned with the rate interests of its customers." (PSC docket 17-0631-E-P)