AEP Head Promotes IGCC While Warning of "Economic Brownout"
Many of you have probably noticed the news about AEP's comments to market analysts that capital spending for 2007/2008 would be trimmed by more than $500 million. They say that this is due, in large part, to delays in expected approvals by Ohio and W. Virginia PUCs of their plans to move forward with their IGCC plants on those states.
But since most of you are not likely to be tuned into what was published yesterday in the Charleston (WVa) Daily Mail, we thought that we'd bring to your attention a speech made by Mike Morris, AEP's chairman, as a keynote address at a fund raising dinner held locally for the Concord University Foundation.
In what could very well have been mistaken for a political speech, with election day just about a month off, Morris, used his podium to warn of a possible national "economic brownout" if new electric power generating plants don't start getting built. "There just won't be enough electricity to sustain the economic growth everyone wants" was the way the Daily Mail editor captured the essence of Morris' comments.
Morris went on to say that AEP believes that the answer to increasing base load generating capacity without aggravating global warning is to build next-generation, coal-fired power plants using Integrated Gasification Combined Cycle (IGCC) technology.
"We feel it's critical to move forward with Integrated Gasification Combined Cycle," Morris said.
Filed for IGCC in two states
American Electric Power has filed applications to build IGCC plants in Mason County (WVa) and in Meigs County, Ohio. Morris said Gov. Joe Manchin is an advocate of the West Virginia project and, if it were up to him and Manchin, construction of the Mason County plant would be under way. (Ed. Note: Maybe it was a political speech in support of the governor?)
Again, looking at the big picture nationwide, Morris said that while China puts a new coal-fired power plant online once a month, a base load coal generating plant hasn't been built in the United States since 1990.
Comments to analysts
Earlier Tuesday, in a meeting with analysts in New York City, Morris said the process of getting the regulatory and legal authority to build the integrated gasification plants "is taking longer than we'd like....... and arguably longer than our customers can really afford and longer than the in-state regulators can afford."
Morris told the analysts that because of the longer time required to gain regulatory approval, AEP has reduced its estimated capital investments in 2007 and 2008 by $528 million.
That reduction reflects some equipment purchases that the company had expected to be made in late 2007 or 2008. "We now think that's likely to happen later," he said.
Power needs still there
AEP has said it needs 1,200 megawatts of additional generating capacity in the eastern United States by 2010. Morris said that need has not changed.
Because of regulatory delays, the company will probably have to purchase some of the electricity it needs between 2010 and 2012 or 2013, when the IGCC plants are now expected to begin operating.
"That's not the best thing for our company, our customers or the people of West Virginia," he said.
AEP has repeatedly said it won't build integrated gasification plants unless regulators allow the company to recover its costs. It has been estimated that such plants will initially cost about 20 percent more than traditional coal-fired power plants that burn pulverized coal. (That's the current estimate of the "cost gap", at least according to the Daily Mail article).
The company's application to build an IGCC plant in Ohio is currently tied up in a court case. Because of the delays in Ohio, it is possible the company's first plant will be built in W. Virginia.
Morris noted the proposed Mason County plant will require approval from both the West Virginia Public Service Commission and Virginia state regulators, as well as from the West Virginia Department of Environmental Protection and the U.S. Army Corps of Engineers.
It has been estimated that the two plants will cost $1.1 billion to $1.2 billion each. Morris said the company expects to have more precise cost estimates for the proposed Ohio plant in November and for the proposed West Virginia plant in December.
(Ed. Note: according to what we've seen lately for the cost of modern supercritical PC plants, with all of the back-end cleanup currently being required, that estimate may not be that far off from so-called "conventional technology".)
Posted for your reading and comment by:
Gas Turbine World Magazine