The news:
The State Corporation Commission has rejected a proposal by Appalachian Power Co. to build a 629-megawatt, coal-fired power plant in West Virginia, stating that its $2.23 billion cost estimate was “not credible.” (Read the SCC press release here.) The plant would supply electricity to Apco’s service territory in western Virginia.
The proposed Apco plant bears similarities to a $1.7 billion coal-fired power facility proposed by Dominion in Wise County. Both would use a relatively novel coal gasification process to reduce pollutants, and both would be designed to incorporate carbon-sequestration technologies to capture emissions of CO2 greenhouse gases, if and when they become commercially viable. While the SCC approved the Dominion facility on the grounds that General Assembly legislation had usurped the commission’s usual oversight role by declaring the plant to be in the public interest, the commission was under no such restrictions with the Apco proposal.
The SCC found that APCo’s proposal was neither “reasonable” nor “prudent,” a finding that must be made under Virginia law before Virginia consumers can be charged for the costs of a new power plant. Among the problems: Apco has no fixed-price contract for any appreciable portion of the construction costs, and there are no meaningful price or performance guarantees or controls for the project.
Of potentially broader significance, the SCC questioned the economics of the coal gasification technology on the scale that Apco proposes:
The use of IGCC technology for a coal-fired power plant of this size (629 megawatts) posed additional uncertainties and risks for Virginia ratepayers. The SCC noted that this would be the largest commercial power plant to use IGCC technology constructed to date, and that APCo had “confirmed that there are only two IGCC power plants operating in the United States and both plants are ‘less than half’ the size” of APCo’s proposed plant.
“The record … indicates that there is no proven track record for the development and implementation of large-scale IGCC generation plants like the one proposed by APCo,” the SCC continued.
Finally, the SCC contended that there was no credible way to forecast how much it would cost to implement the carbon-sequestration technology, which Apco had estimated at between $200 million to $300 million.
Bacon’s spin on the news:
Kinda makes you think that the SCC never would have OK’d the Dominion plant if given a choice, doesn’t it?
Meanwhile, given the new, higher environmental standards to which coal-fired power plants are being held in the United States, far fewer will be built than thought only a few years ago. Power companies hewing to the Big Grid model of centralized, large-scale power sources connected to population centers by high-voltage transmission lines will have little choice but to turn to nuclear power… which the environmentalists are sure to oppose with equal zeal. That will leave us to the tender mercies of small-scale, renewable energy sources, which, however cool they are, are unlikely to meet projected increases in demand over the next 10 years.
I think we can confidently predict a future of much higher electricity rates in Virginia. Consumers will have no choice but to conserve. The market for energy conservation technologies and business models is looking very bullish.
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