Economic value of Mitchell coal-fired plant to Marshall County under scrutiny as hearings approach

Worries run deep in Marshall County over the imperiled 50-year-old Mitchell coal-fired generating facility.

“We are such an economically depressed area already. The closing will devastate our area.”

“Closing this plant would be yet one more nail in the coffin of this region.”

“My job and my family depend on coal.”

These respective remarks from Kathryn McGilton of Moundsville, Michael Wolen of Wellsburg and David Willson of Daniels sum up the majority of sentiments expressed by locals and union and government officials in comments submitted to the Public Service Commission of West Virginia in advance of a case that could determine Mitchell’s fate.

American Electric Power subsidiaries Appalachian Power and Wheeling Power said in a Dec. 23 filing with the commission that operations would cease in 2028 if the companies choose to retire the plant rather than make an additional investment to ensure the facility complies with federal wastewater guidelines.

The utilities did not identify which option they prefer, although they said it would benefit customers to ensure compliance with the wastewater rule and a federal rule regulating coal combustion residuals at Putnam County’s John Amos and Mason County’s Mountaineer coal-fired plants.

It’s easy to understand why the Marshall County Commission and the Regional Economic Development Partnership organization serving Marshall County have lobbied for the plant’s survival. Mitchell employed 214 people at combined pay of $26.8 million in 2020.

The county population fell 7.8% from 2010 to 2019 according to the census, 3 percentage points more than neighboring Belmont County, Ohio, and more than twice the rate of West Virginia’s nation-leading decline of 3.2% over the past decade.

“It provides a good living wage to hundreds of people whose wages in turn help support Marshall County’s tax base,” 25-year Mitchell plant employee Wayne T. Ebeling of Moundsville wrote of the plant.

“In our Northern Panhandle of West Virginia, there are very few opportunities like the one I have if any at all,” wrote 15-year Mitchell plant employee Edward R. Sincavich of Wheeling. “The nearly 200 direct employees at the Mitchell Plant and the local unionized contractors and support trades and their respective incomes contribute immensely to our local economy.”

In its comment to the Public Service Commission, the Regional Economic Development Partnership recalled AEP’s 2015 retirement of the Kammer coal plant also in Marshall County.

“[T]he closure of the Mitchell Plant in the shadow of the decommissioning of the Kammer Plant will have a seismic impact on the momentum of economic development,” the organization wrote in its comment.

But that momentum has already stalled.

American Electric Power also retired coal plants in Mason County in 2015 and Kanawha County in 2017. Ten conventional steam coal plants have been retired in West Virginia since 2005, and only nine remain in the state, according to U.S. Energy Information Administration data.

Eyeing its goal of net zero carbon emissions by 2050, American Electric Power plans to add more than 10,000 megawatts of new renewable resources to its generation portfolio by 2030 and is investing in a more modern power grid and new energy technologies.

The Columbus-based utility has retired or sold nearly 13,500 megawatts of coal-fueled generation and anticipates reducing coal capacity by an additional 5,600 megawatts by 2030.

Differing testimonies

Testimony filed by Public Service Commission staff recommended that American Electric Power look beyond coal to renewable energy sources.

Commission engineer James C. Weimer recommended the commission approve all requested environmental upgrades but added that a reduction in carbon dioxide emissions and lower fuel cost should compel Appalachian Power and Wheeling Power to consider converting the three coal-fired plants — especially the Mitchell site — to liquified natural gas combined-cycle plants after 2030.

“Serious consideration should be given to adding significant rooftop solar, large photovoltaic solar, solar concentration, wind and small modular nuclear generation located in the state of West Virginia,” Weimer wrote, “with the coal fields as the initial preferred locations for the majority of renewables.”

Public Service Commission utilities analyst Geoffery M. Cooke did not recommend the commission approve surcharges that American Electric Power’s subsidiaries proposed for environmental compliance upgrades.

Appalachian Power and Wheeling Power are seeking permission to perform all of the work at all of the plants, which they estimate would cost $317 million. The utilities listed potential project-related residential, commercial and industrial rate increases of 1.59%, 1.52% and 1.72%, respectively. The proposed increased project-related rates and charges would produce $23.5 million in additional annual revenue, according to the companies.

‘High level of uncertainty’

Testifying on behalf of the West Virginia Energy Users Group composed of large industrial users, Stephen J. Baron, president of Atlanta utility rate consulting firm Kennedy and Associates, didn’t address the companies’ request for environmental upgrade approval but opposed their surcharge request.

“Given the high level of uncertainty associated with future [carbon dioxide] regulations, this marginal benefit from continued operation of Mitchell is subject to a high level of uncertainty itself,” Baron wrote. “The Companies are requesting that their captive customers bear this risk by virtue of … approval and cost recovery, thereby insulating themselves and their shareholders from the investment risk.”

But testifying for the Public Service Commission’s Consumer Advocate Division, an independent arm of the commission that represents the interests of utility customers, utility fuel procurement and coal contract dispute expert Emily S. Medine contended the case for environmental compliance upgrades was stronger than even the companies argued, supporting investments for Wheeling Power’s share of the Mitchell plant.

Medine suggested ratepayers would be adversely affected if the companies retired coal-fired generation capacity early.

The Mitchell plant also is regulated by the Kentucky Public Service Commission since Kentucky Power also owns the facility. The Kentucky Public Service Commission will rule by Aug. 6 on a companion case filed by Kentucky Power seeking approval for environmental upgrades at the Mitchell facility. The Amos and Mountaineer plants also are regulated by the Virginia State Corporation Commission, which will render a decision by Aug. 23 on Appalachian Power’s request for environmental upgrade approval at those two sites.

Coal-fired power generation supports $4.8 billion in state economic output, $725 million in employee compensation and $97.3 million in tax revenue, according to estimates by John Deskins, director of the West Virginia University Bureau of Business and Economic Research.

At the other end of the spectrum, Sierra Club witness and electric utility expert Rachel Wilson testified that the least costly option for ratepayers would be investing only in a coal ash disposal upgrade at the Amos facility before retiring it in 2028. Wilson estimated that option would save ratepayers $1.4 billion without a future price on carbon emissions and more than $2.4 billion with one.

The model for a better economic future for Marshall County is nearly 3,000 miles away, said Sean O’Leary, senior researcher at the Johnstown, Pennsylvania-based nonprofit think tank Ohio River Valley Institute. He cited a plant owner-funded $55 million economic transition plan for Centralia, Washington, finalized in 2011 to help that community deal with the closure of a coal mine and retirement of a coal plant.

O’Leary noted the average monthly residential bill (as measured by the residential rate for 1,000 kilowatt-hours) for American Electric Power’s West Virginia utilities escalated from $55.28 in 2006 to $138.57 in 2021.

“As in other states whose energy systems are highly dependent on coal-fired power, West Virginia utility customers have seen their electric bills increase substantially over the past decade,” O’Leary wrote.

Weighing a transition

The best economic course of action for Marshall County, O’Leary said, would be for American Electric Power to forgo environmental compliance work at Mitchell facility, allow it to retire in 2028 and invest part of the savings in an economic transition plan rather than spend on a plant whose production and employment is likely to decline as average monthly bills increase.

A multiagency work group created by President Joe Biden to tackle climate change released a report last month that identified the Wheeling U.S. Bureau of Labor Statistics area as third-most affected by coal-related declines in the country. That gives O’Leary hope.

“Because concern for the development of effective economic and energy transition models in Appalachia is widely shared in both government and the private philanthropic sector, a commitment to transition in Marshall County and the surrounding counties would be viewed by many prospective funders as an important and worthy project,” O’Leary said.

To what extent Marshall County leans into that transition is up to state utility regulators, American Electric Power and the local officials who don’t want to see their fellow residents left behind. Public Service Commission hearings are scheduled next month and a ruling is expected by the end of January.

All options are on the table for the commission, and the economic pressure is high.

“[W]hile the Commission traditionally weighs the proposals and counter proposals that are put forward by parties in a case, the Commission has the ability to order actions outside the parties proposals and recommendations,” Commission Chairwoman Charlotte Lane said in an emailed statement.

“[The] Mitchell plant has given me my ability to take care of my disabled wife and child,” 14-year American Electric Power employee Jason Hill wrote to the commission. “I would like to continue to do so with the hopes that you would keep the Mitchell plant open as long as possible.”