Power Engineering - AEP Ohio can recover IGCC pre-construction costs

11 April 2006 - American Electric Power (AEP) Ohio announced Monday that the Public Utilities Commission of Ohio had granted it permission recover the pre-construction costs, including the front-end engineering and design (FEED) study, for the Integrated Gasification Combined Cycle (IGCC) clean-coal plant from its Ohio customers.

The order represents an important step toward construction of a clean-coal power generation plant in Ohio, according to AEP.

The order also ruled that the company will incur the costs of the IGCC plant in meeting its provider of last resort (POLR) obligation to all customers in its certified territory and that the existence of these costs makes it reasonable to recover them through a POLR recovery mechanism.

Last September AEP signed an agreement with GE Energy and Bechtel Corporation to begin the front-end engineering design process for a 600 MW IGCC plant. It represented the first such engineering and design agreement undertaken for an IGCC plant of this scale.

"We are pleased that the Ohio Commissioners have approved the pre- construction costs for the IGCC clean-coal plant and ruled that it is reasonable to recover the costs of this facility through a provider of last resort (POLR) recovery mechanism that applies to all customers," said Michael G. Morris, AEP's chairman, president and chief executive officer.

AEP Ohio, a unit of AEP, filed a cost-recovery plan for the IGCC plant in Meigs County, Ohio, after the PUCO, in its January 2005 Rate Stabilization Plan order, suggested the company build an IGCC plant in the state.

AEP also has filed with the West Virginia Public Service Commission for approval of cost recovery for an IGCC plant adjacent to its Mountaineer Plant in New Haven, W.Va. The company has identified a third potential site for an IGCC plant in Lewis County, Ky.

AEP will need at least two base-load power plants early in the next decade to meet the projected growth in demand for electricity in the company's seven- state eastern operating area. AEP has proposed IGCC generation as this base- load generation.

IGCC technology converts coal into a gas and moves it through pollutant- removal equipment before the gas is burned in gas turbines that drive electric generators. The heat produced by the gas turbines is recovered in boilers that produce steam to drive a steam turbine also coupled to an electric generator. The integrated process results in fewer emissions of nitrogen oxide, sulfur dioxide, particulates and mercury, in addition to lower carbon dioxide emissions.

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