AEP's plans to build two ultra-supercritical coal plants met with only partial success.
The John
W. Turk Plant was approved in Arkansas and Louisiana and now awaits approval
in Texas. This facility will use the latest technology to create electricity more
efficiently than traditional coal plants. AEP believes that coal must remain part
of the nation's generation because of its availability, consistent performance and
low cost. This technology is an important part of our country's ability to use coal
in the future. We will continue to develop coal and carbon capture technologies.
The second plant, proposed for Oklahoma, was not approved. As a result, Public Service
Company of Oklahoma is working with its stakeholders to assess how we will meet
growing energy demand in that region. (See
the Climate Change section for more information on this topic).
AEP also continues to pursue the construction of two IGCC coal plants, which convert
coal into a gas before combustion. IGCC plants can be highly efficient and can be
more easily configured for carbon capture than pulverized coal plants. Plants are
tentatively planned for West Virginia, which would serve Appalachian Power customers
in West Virginia and Virginia; and in Ohio.
The West Virginia Public Service Commission approved the 629-MW IGCC plant for Appalachian
Power in March 2008; Virginia's decision is pending. Once all approvals are in hand,
we are ready to begin construction. This advanced coal plant is important to meeting
the energy needs of both states.
Because of the Ohio restructuring law that took effect in 2000, the proposed Ohio
plant faces legal challenges. The Ohio Supreme Court ruled in March 2008 that the
plant cannot be added to the regulated companies' rate base and sent the case back
to the Public Utilities Commission of Ohio. We hope to resolve the issue.
Our stakeholders support adding carbon capture technology to these plants. We are
prepared to go forward with regulatory aspects of such an action when the economics
of this technology become clearer.
We are not building only coal plants; other fuels have a role to play as well. Natural
gas plants continue to be added to our generation fleet because of their favorable
emissions profiles, quick build times and scheduling flexibility. In 2007, AEP added
12 gas units with a total capacity of 2,020 MW. Although natural gas has a useful
place in our national energy system, it also has its limits due to price volatility
and supply issues.
In addition to building more generating capacity, we are also focusing on supply-side
efficiency in order to make the best possible use of existing generating capacity.
Generating unit efficiency is expressed in terms of heat rate – the amount
of energy required to generate one kilowatt hour of electricity. The less energy
that is needed, the more efficient is the plant.
AEP has long been a leader in efficiency. Our system-wide average heat rate for
AEP-owned coal-fired units was 9,962 Btu/kWh in 2007. In 2006, our heat rate was
9,915 Btu/kWh, which is just under 4 percent better than the national fossil fuel
average of about 10,300 Btu/kWh. Heat rate increased in 2007 primarily because of
the addition of three scrubbers. As additional environmental controls are retrofit
on plants, efficiency decreases, as reflected by an increase in heat rate.
To improve plant efficiency, we routinely evaluate design improvements and have
formed the Generation Performance Team to develop an integrated performance monitoring
program for heat rate improvement and to provide guidance for a coordinated, disciplined
approach to performance improvement. We also incorporate heat rate targets into
the Generation group's incentive compensation program.
