AEP To Purchase Ceredo Generating Station
The transaction, which is contingent on the receipt of required regulatory approvals from the Federal Energy Regulatory Commission (FERC), West Virginia Public Service Commission, and federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, is expected to close in the first quarter of 2006.
The Ceredo Generating Station, located near Ceredo, W.Va., is a natural-gas, simple-cycle power plant with a nominal generating capacity of 505 megawatts. AEP's Pro Serv subsidiary designed and built the plant for Columbia Energy. It was completed and began commercial operation in 2001. The plant has five employees who will have the opportunity to transfer to AEP.
"The purchase of the Ceredo Plant is part of our broad strategy to meet the growing electricity needs of our customers in our seven eastern states," said Michael G. Morris, AEP's chairman, president and chief executive officer. "As with the purchase of the Waterford Energy Center in Ohio (announced by AEP May 27), this plant adds low-cost, recently constructed capacity to help us keep pace with growth in our peak demand and maintain the 15 percent reserve margin required by the PJM Interconnection to ensure reliability. As a bonus with this acquisition, AEP engineers designed and built this plant, so we know what we are buying.
"We will operate this plant as peaking generation designed for use only when electricity demand is high. This purchase does not change our desire to build new clean-coal, IGCC (Integrated Gasification Combined Cycle) plants. The IGCC plants we would build on our system will be baseload generation used to supply the expected day-to-day electricity needs of our customers," Morris said.
Appalachian Power President and COO Dana Waldo said demand for electricity in West Virginia and Virginia is growing every year. "In December 2004, Appalachian Power reached an all-time peak in the demand for electricity from our customers in West Virginia and Virginia. Just last month, we reached a summertime peak. That makes it very clear that we need this additional capacity in times of high demand for electricity. But, purchasing this plant doesn't change the need for additional baseload clean-coal generation for AEP or the potential for West Virginia to be the site for one of AEP's IGCC clean-coal plants," Waldo said.
AEP has filed with the Public Utilities Commission of Ohio (PUCO) seeking cost recovery for a 600-megawatt power plant using IGCC clean-coal technology. The plant, which will be the largest commercial-scale IGCC plant in the United States, will be built in southern Ohio, once cost-recovery is received from the PUCO, and be in operation by 2010.
A second 600-megawatt IGCC plant is under consideration by AEP for Ohio, West Virginia or Kentucky, but no decision has been announced.
When the transaction closes, AEP will operate the Ceredo Generating Station as part of the company's generation pool that provides power to AEP's utility units serving customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia.
SOURCE: American Electric Power