AEP, Sierra Club Agree on Rate Hikes to Support Coal Plants

Dec 16, 2015

An environmental group and a major utility have reached an agreement that could change the future landscape of energy generation for that company. But as Statehouse correspondent Andy Chow reports, others aren’t so sure about that.

It’s not every day you see environmentalists reaching an agreement with a large energy company. But because of such a deal, the Sierra Club’s Ohio Chapter says it will not stand in the way of AEP’s latest settlement with the Public Utilities Commission of Ohio.

Under the plan, AEP customers in Ohio could see an increase in their monthly electric bills. Those fees will go towards keeping several coal plants afloat if they can’t make money in the marketplace.

What's different about this agreement
This is known as a Power Purchase Agreement and it’s something the Sierra Club’s Beyond Coal campaign has been vigorously fighting against. But the group’s Dan Sawmiller says this recent plan includes several compromises that phase out coal in a responsible way.

The coal plants will keep running through the added fees on electric bills, but in return AEP promises to shut down three coal units by 2030. The utility has also agreed to make the largest solar power investment in Ohio history. That’s expected to bring job growth, most likely to the Appalachian area. Sawmiller says those provisions brought his group around to embracing the AEP plan.

 

Dan Sawmiller with the Sierra Club’s Ohio Chapter sitting in their office downtown Columbus
Credit ANDY CHOW / STATEHOUSE NEWS BUREAU

  “Often times it’s a bit out of our control what the utilities will do in those communities and with their working families that keep those facilities profitable so what we have here is an agreement from AEP that they will address those types of concerns and those workers won’t be left out in the cold.”

Sawmiller admits it’s not a perfect plan but says this represents a good compromise.  “This stipulation tells the story of how to move beyond coal to clean energy.”

AEP Spokesperson Terri Flora agrees. She says this deal symbolizes a dynamic shift where different groups were able to reach an agreement on how to phase out coal.  “It really shows the commitment of those coming to the table," says Flora. "Yes it doesn’t give everybody everything that they wanted but it does show that compromise in order to move this forward, everyone sees the benefit of doing this.”

Some still see a bailout
But other environmental advocates continue to stand against any agreement that allows customers to foot the bill for coal power plants, calling it a coal plant bailout.

Coal has been lagging in the marketplace behind energy efficiency, renewables and natural gas. Trish Demeter with the Ohio Environmental Council believes these plants pour out too much pollution and that they would’ve shut down faster without this agreement.

The Ohio Environmental Council's Trish Demeter says they do not support the AEP plan.
Credit OHIO ENVIRONMENTAL COUNCIL

 

  “We’re moving towards a carbon conscious future, customers are empowered to make more sustainable choices for how they’re getting their energy and we say that the market -- the way things have been going -- would’ve continued to put pressure on these plants to close much sooner.”

Flora disputes that claim and says there were several options still on the table, such as selling the plants to someone who didn’t plan on phasing out coal or investing in green energy.

“These plants, especially the ones that we wholly own, will stop coal usage sooner than we anticipated. It’s a drastic reduction or acceleration of that and that’s why the Sierra Club has joined in on this, they see that that’s a balanced approach.”

AARP Ohio and the Environmental Defense Fund were other groups that came out strongly against this settlement.

AEP says those hikes customers would see in their monthly bills will only last a few years at the most.

Comparisons with FirstEnergy's plan
FirstEnergy also filed a new plan for a Power Purchase Agreement but that was not as well received. All the environmental groups, including the Sierra Club, say it doesn’t do anything to promise phasing out coal and instead kicks the can down the road.

Both plans will now go before the Public Utilities Commission of Ohio for approval. That’s expected to happen sometime in the first half of next year.