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 February 15, 2012
AEP to Trim Coal Retirement Capacity

 American Electric Power (AEP) may continue operating Big Sandy Unit 2, an 800-MW coal-fired power plant in Kentucky, if state regulators approve a 31% rate increase to help pay for pollution controls. The measure would trim the company's planned coal retirements to 5,138 MW, not 5,909 MW, as the company had announced last June.

In June, AEP had said that to comply with environmental regulations, it would need to shutter nearly 6 GW of coal-fired generation; upgrade or install new advanced emissions reduction equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and build 1,220 MW of natural gas--fired generation.

The compliance plan, estimated to cost between $6 billion and $8 billion through 2020, included retiring Units 1 and 2 of the 1,078-MW Big Sandy Plant in Louisa, Ky., by December 2014 and rebuilding them as a 640-MW gas plant by December 2015.

"We later decided to apply to the Kentucky Public Service Commission to get regulatory approval for a rate increase to cover the cost of installing a scrubber on that unit instead of retiring it," AEP spokesperson Melissa McHenry told POWERnews. "If we don't receive cost recovery approval for the scrubber, Big Sandy Unit 2 will be retired. We still plan to retire [the 278-MW] Big Sandy Unit 1."

The company recently began commercial operation of the 580-MW Dresden natural gas--fired plant in Ohio. That $366 million project will supply power to AEP's Appalachian Power customers in West Virginia, Virginia, and Tennessee.

"Natural gas will become an increasing part of AEP's generating portfolio in the coming decades as a result of the development of shale gas reserves and new environmental regulations, but we continue to believe our company and our nation need a diverse electricity generating portfolio that also includes investment in cleaner coal technologies, nuclear and renewable power," said Nicholas Akins, AEP's president and CEO.

A majority of units AEP slated for retirement in 2014 are located in Ohio and West Virginia. Earlier this month, Ohio-based FirstEnergy said it would close 3,349 MW of coal-fired capacity in Ohio, West Virginia, Maryland, and Pennsylvania. That company cited "high costs" to implement the Environmental Protection Agency's recently finalized Mercury and Air Toxics Standards as the reason for the planned closures by Sept. 1, 2012.

Sources: POWERnews, AEP