Dive Brief:

• American Electric Power and the Sierra Club struck a deal last month to guarantee income for some coal generating units in Ohio, in exchange for a phaseout of coal and development of 900 MW of renewable energy. 
• But according to Columbus Business First, no cost analysis has been done on the proposal and AEP intends to recover the cost of building wind and solar power from customers.
• AEP did not respond to questions from the Ohio Consumers’ Counsel as to the proposal's costs, instead indicating it would file an emissions reduction plan by the end of the year which will address costs. 

Dive Insight:

When Sierra Club and AEP announced their deal last month, the about-face in strategy seemed like a slam dunk that would allow the company to continue earning income from its coal plants in exchange for developing more clean power. But how much will it cost? Turns out, no one knows. And with Ohio regulators set to rule in March on the proposal, the lack of financial information is likely to become a factor.

Columbus Business First reports that when the Ohio Consumers’ Counsel asked Nachy Kanfer, a deputy director for Sierra Club's Beyond Coal campaign, whether a cost analysis had been done on the 900 MW of proposed capacity, Kanfer replied, "No, we have not."

AEP has also avoided the question, instead indicating it would address costs in an emissions reduction plan it would file later this year. The company said the plan would show how it will "promote fuel diversification and carbon emission reduction, including an analysis of the economic impact of any proposals for the commission’s consideration.”

Under the agreement with Sierra Club, the utility would sign eight-year power purchase agreements to support 2,671 MW of generation it says is essential for reliability, but at risk for retirement. The deal would also see the utility either retire or convert 1,503 MW of coal generation to natural gas, in addition to adding renewables.

If approved, AEP's power purchase agreements would end in May 2024. The deal covers generation from nine AEP units — Unit 1 at the Cardinal coal plant, Units 4-6 at the Conesville plant, Units 1-4 at the Stuart plant and Unit 1 at Zimmer. The PPAs would also cover the utility's 423 MW contractual share of Ohio Valley Electric Corp. generation.

In exchange, the utility would convert Units 5 and 6 at its Conesville plant to co-fire natural gas by the end of 2017 and retire or repower those units to use only natural gas by the end of 2029 and 2030, respectively. That retirement or repowering deal would also apply to Unit 1 at Cardinal.