Even with scrubbers, Amos, Mitchell use costly low-sulfur coal - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Even with scrubbers, Amos, Mitchell use costly low-sulfur coal

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The decision in Appalachian Power's billion-dollar proposal to buy generating capacity at Amos and Mitchell power stations could end up turning, in part, on the types of scrubbers APCo and its AEP affiliate decided earlier to install on those plants.  

APCo's proposal to buy 1,600 megawatts of generating capacity at the two West Virginia coal-fired power plants from sister company Ohio Power is in its third and likely last day, on July 18, of evidentiary hearing before the Public Service Commission of West Virginia.

In a brief monologue, PSC Consumer Advocate Division witness Billy Jack Gregg detailed concerns he expressed in his pre-filed written testimony. Gregg has intimate familiarity with the issues and history surrounding the case, having himself served previously as consumer advocate.

"Over the past 20 years, this commission and the parties typically involved in these proceedings have been involved in a number of cases that involve the bringing on of new capacity or retrofit of existing capacity with scrubbers necessary to comply with Clean Air Act requirements," Gregg started.

Up until the time Appalachian Power put the scrubbers on its John Amos plant several years ago, he said, all coal-fired power plant scrubbers that were installed to reduce sulfur emissions — typically a billion-dollar project for any power plant — had the ability to burn just about any type of coal. That included coal with a sulfur content up to about 7 pounds of sulfur per million British thermal units of energy content, or mmBtu.

And once the high capital investment was made on a power plant, the fuel price would go down.

"Because typically as you switch from low-sulfur to high-sulfur coal, there is a price bonus — you're trading out the higher fixed capital cost of the scrubber for lower running cost of the fuel that you use," he said. "That is what happened at Harrison, that is what happened at Fort Martin, that is what happened at Mountaineer."

But not, he said, at Amos.

Last year, when APCo made its annual filing to true up any under- or over-recovery of fuel and other variable costs, Gregg saw that fuel costs had not dropped significantly.

"I inquired specifically, ‘What's going on? Why are you still taking low-sulfur coal here?' And that is when it became evident that the scrubbers that were installed (at Amos) are limited to 4.5 pounds of sulfur/mmBtu, almost 40 percent less than the scrubbers installed at Mountaineer."

That same lower-sulfur type of scrubber was installed at Mitchell, he said, which although it is located in West Virginia is not as familiar to the West Virginia PSC because it has been operated under the jurisdiction of the Public Utilities Commission of Ohio.

"As a result, they've had to blend coal at almost 50-50 high-low sulfur in order to obtain a mix that would meet the 4.5-pound limit on the scrubbers," he said.

Gregg's concern with regard to APCo's proposal to purchase parts of Amos and Mitchell is that these plants are tied to higher-cost, lower-sulfur coal.

"It's not only higher-priced, but it is inherently becoming more volatile because most of the cutbacks in production in the past several years have occurred in Central Appalachian coal region" where lower-sulfur coal is sourced, he said.

"I think we're going to be condemned to riding a very scary price roller coaster for as long as we have to buy low-sulfur coal to supply these plants."

The company currently has about 2,000 megawatts of capacity that has limited scrubbing capacity and is exposed to the low-sulfur coal market and 1,300 MW that can burn high-sulfur coal. If the transfer is approved in full, he said, the limited scrubbing capacity would go to 3,700 MW.

Because of this, Gregg recommends, with the Consumer Advocate Division, that the commission approve APCo's purchase of either the two-thirds it does not own of Amos unit 3 or of half of Mitchell, but not both.

He would like to see the company issue a request for proposals to meet any additional needs.

The hearing, which resumes at 12:45, may be viewed on the commission's website; it is expected to finish on July 18.