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WV PSC denies Appalachian Power’s plan to buy two wind farms

The state Public Service Commission has rejected Appalachian Power’s bid to buy two wind farms under development in West Virginia and Ohio.

The PSC said, “The proposed acquisitions, under the conditions and circumstances set forth in this record, are not in the public interest in West Virginia” in its order, issued Wednesday.

Among the reasons the PSC, which regulates utilities in the state, cited in rejecting the deal were Appalachian’s lack of need for the farms, concerns regarding the farms’ long-term cost and West Virginia customers likely bearing more of that cost after Virginia regulators rejected the proposed deal.

Appalachian announced its pursuit of the Beech Ridge II Wind Facility in Greenbrier County and the Hardin Wind Facility in Hardin County, Ohio, back in July 2017. It proposed to finance the projects’ development with an $84.6 million construction surcharge spread out over 10 years to ratepayers.

Appalachian has argued the wind farms would be a net benefit to customers over their lifespans, providing the company with a hedge against buying energy in the regional marketplace when prices are higher than normal. It has also said renewable energy credits would mean customers would notice little of the proposed construction surcharge and that a future carbon tax is likely, meaning renewable energy will be more appealing cost-wise.

Appalachian spokeswoman Jeri Matheney said the company is disappointed with the PSC’s decision. The acquisition would have provided customers with a low-cost energy source, she said.

But according to one filing, the PSC’s independent staff calculated that the wind farms would cost ratepayers $50 million more than if Appalachian just purchased energy from the market.

Appalachian also has customers in Virginia, and Virginia regulators denied in April the company’s request to buy the farms and then recover some of the costs from Virginia customers. The PSC staff noted the VSCC’s rejection in a filing and warned that West Virginia ratepayers could bear more of the farms’ cost as a result.

The PSC’s order said there is a “complete lack of any record on how we could go forward with the Wind Facilities acquisition in view of the denial by the VSCC” as long as Virginia ratepayers were shielded from the deal.

The PSC said in its order that the total revenue requirement, before factoring in renewable energy credits, for the wind farms would be $839.6 million over 25 years. Parties in the case disputed what exactly the value of the credits would be.

“Given the lack of need for the capacity from the Wind Facilities, it might seem an imprudent decision to place the above cited long-term base rate cost responsibility on West Virginia ratepayers,” the order said, adding later that the PSC is “not indifferent to the increasing public concern about the relative increase in electric rates.”

When Appalachian announced its pursuit of the wind farms, its president, Chris Beam, said the acquisitions would move the company further in the direction of “an energy company of the future.” The company has projected that by 2031, wind and solar power will make up 25 percent of its electricity generation.

Parent company American Electric Power supplies 3,200 megawatts of renewable energy to its customers. Beech Ridge and Hardin would have added 50 and 175 megawatts of power generation, respectively, to the company’s portfolio.

The company will continue to rely on its current purchase agreements for wind power, which include the Beech Ridge I Wind Farm in Greenbrier County and NextEra’s Bluff Point Wind Energy Center in Indiana, Matheney said.

Invenergy, which is behind the development of the two wind farms, declined to comment on the case.