- Pact guarantees eight-year payment for coal electricity
- AEP will develop 900 megawatts of wind, solar as part of deal
American Electric Power Co. said it reached a settlement in Ohio with state regulators, environmental groups and other parties for long-term contracts with its coal-fired generators.
Under an eight-year agreement, AEP’s Ohio utility would buy electricity from coal-fired power plants also owned in part by AEP, the Columbus, Ohio-based company said Monday in a statement. It would raise the monthly household bill by 62 cents in the first year, AEP said. The Public Utilities Commission of Ohio is expected to rule on the agreement in early 2016.
The announcement allows AEP to subsidize revenues for its financially challenged coal-fired power units in exchange for eventually shutting down or converting some of those units to gas and building new renewable energy projects. It comes on the heels of a settlement reached by FirstEnergy Corp. in Ohio that allows for the utility to keep its money-losing coal units open.
Power producer Dynegy Inc. said the pact supports “anti-market" subsidies with costs borne by Ohio residents and businesses in favor of AEP shareholders. Dynegy owns generation units that compete with plants owned by AEP and FirstEnergy.
AEP agreed to co-fire with natural gas at two units by Dec. 31, 2017, and retire or use only natural gas at those units along with another by the end the next decade, the statement said. AEP will also develop at least 900 megawatts of wind and solar energy projects over the next five years and provide up to $100 million in customer credits over the eight-year contract.