With the utlitiy planning to shutter about 6,000 megawatts of coal-fired generating capacity, including more than 2,000 megawatts in Ohio, over the next several years because of new U.S. Environmental Protection Agency rules, the decision by the Public Utilities Commission of Ohio could have broader ramifications. Other Ohio utility companies, including FirstEnergy Corp., have announced plans to close older coal plants largely because of the EPA’s Mercury and Air Toxics Rule and Cross-State Air Pollution Rule. FirstEnergy said in late January it would retire six vintage coal plants, including four in Ohio and one each in Pennsylvania and Maryland.
AEP’s cost recovery application drew opposition from a wide range of stakeholders, ranging from the Ohio Office of Consumers’ Counsel to FirstEnergy Solutions, a FirstEnergy subsidiary, to the commission staff.
Staff argued that AEP’s Ohio Power subsidiary, which operates Sporn, already has been compensated for the costs it sought to recover from customers, saying Sporn 5 should have been fully depreciated in 2010. The unit was built in 1960.
AEP disagreed. The company maintained that depreciation rates established more than 15 years ago should not be used to override its accounting books. AEP claimed the closure costs reflected in depreciation rates substantially underestimated the actual closure costs that apply to Sporn 5, “in light of the dramatic intervening increase in environmental regulations that apply to coal-burning power plants.”
But AEP’s arguments failed to persuade the regulators. Citing Ohio law, the commission said it lacked the legal authority to approve the company’s request. “Just as the construction and maintenance of an electric generating facility are fundamental to the generation component of electric service, we find that so too is the closure of an electric generating facility,” the PUCO said.
AEP spokesman Jeff Rennie said on January 30 that a final decision had not been made on whether to appeal the commission ruling.