The Columbus Dispatch reports today that AEP has hired Goldman-Sachs to explore the potential sale of its unregulated coal-fired merchant generation fleet.
Coal-fired power plants are no longer profitable. AEP and FirstEnergy have been unloading these liabilities on the backs of ratepayers in regulated states, and even have cases pending to unload them in unregulated states.
The power plants are no longer profitable because the price of power has fallen below the cost to operate them, and these plants need a bunch of expensive retrofits to comply with new EPA regulations. AEP and FirstEnergy are in a bind because they placed all their eggs in the same basket by hanging onto coal plants way past the time when smart utilities unloaded them at fire-sale prices. Corporate greed strikes again!
The WV PSC just recently approved an AEP subsidiary's purchase of all but 140MW of one of the company's merchant plants, making Wheeling Power and Appalachian Power customers responsible for operating it and absorbing any losses.
In 2013, the WV PSC approved FirstEnergy's plan to dispose of its Harrison Power Station the same way, by making customers of Mon Power and Potomac Edison responsible for it.
The WV PSC never met a coal-fired power plant or rate increase that it didn't like.
Encouraged by the WV PSC, the Ohio companies next decided to try to unload more of their coal-fired assets on ratepayers in Ohio. Except... Ohio is a deregulated generation state. Demonstrating extreme creativity, the tedious twins came up with ingenious plans to shift responsibility for the plants to ratepayers anyhow. FirstEnergy came up with its "Powering Our Profits" plan. I don't know if AEP came up with a cutsie-poo name like FirstEnergy, but it also put forth a proposal to transfer responsibility for its plants to Ohio ratepayers.
Gotta wonder how those cases are going to turn out at the PUCO, considering:
Coal-fired power plants are no longer profitable. AEP and FirstEnergy have been unloading these liabilities on the backs of ratepayers in regulated states, and even have cases pending to unload them in unregulated states.
The power plants are no longer profitable because the price of power has fallen below the cost to operate them, and these plants need a bunch of expensive retrofits to comply with new EPA regulations. AEP and FirstEnergy are in a bind because they placed all their eggs in the same basket by hanging onto coal plants way past the time when smart utilities unloaded them at fire-sale prices. Corporate greed strikes again!
The WV PSC just recently approved an AEP subsidiary's purchase of all but 140MW of one of the company's merchant plants, making Wheeling Power and Appalachian Power customers responsible for operating it and absorbing any losses.
In 2013, the WV PSC approved FirstEnergy's plan to dispose of its Harrison Power Station the same way, by making customers of Mon Power and Potomac Edison responsible for it.
The WV PSC never met a coal-fired power plant or rate increase that it didn't like.
Encouraged by the WV PSC, the Ohio companies next decided to try to unload more of their coal-fired assets on ratepayers in Ohio. Except... Ohio is a deregulated generation state. Demonstrating extreme creativity, the tedious twins came up with ingenious plans to shift responsibility for the plants to ratepayers anyhow. FirstEnergy came up with its "Powering Our Profits" plan. I don't know if AEP came up with a cutsie-poo name like FirstEnergy, but it also put forth a proposal to transfer responsibility for its plants to Ohio ratepayers.
Gotta wonder how those cases are going to turn out at the PUCO, considering:
AEP has proposals pending with Ohio regulators that would provide a profit guarantee for five plants, four of which are part of the unregulated fleet. The company has said the plans would allow it to continue operating the plants, as opposed to a potential sale or shutdown.
But now it looks like AEP is getting ready to sell them instead. Smart move. Finally.
FirstEnergy is still too dumb to buy a clue.
FirstEnergy is still too dumb to buy a clue.
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