AEP Unit Plans Hefty Outlays for Transmission Projects

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Changes in the electric power business and PJM are forcing Appalachian Power Company (Roanoke, Virginia), a unit of American Electric Power Company (NYSE:AEP) (Columbus, Ohio), to invest nearly $600 million in its transmission system in West Virginia. PJM, the regional transmission operator (RTO) for all or part of 13 states in the Mid-Atlantic and Midwest, used to be known as the Pennsylvania-New Jersey-Maryland Interconnection.

"We are closing several coal-fired power plants in 2015," Appalachian Power spokesperson Jeri Matheny told Industrial Info in an interview. "Because of that, we need to change the way power moves across the grid. Also, we need to strengthen the grid. In some cases, we need to change the direction power is flowing to reduce congestion. We also need to rebuild one line by making it taller and able to carry new cables that are heavier and thicker than the existing lines."

Appalachian Power serves an estimated 1 million customers in West Virginia, Virginia and Tennessee. It isn't the only utility closing coal-fired power plants in the PJM market, but Matheny focused on her company's planned coal-plant closures:

• Glen Lyn Power Station, a 335-megawatt (MW) generator located in Glen Lyn, Virginia
• Clinch River Power Station, a 705-MW generator located in Cleveland, Virginia
• Kanawha River Power Station, a 400-MW plant located in Glasgow, West Virginia
• Philip Sporn Power Station, a 295-MW generator located in New Haven, West Virginia
• Kammer Power Station, a 630-MW generator owned by Appalachian Power's corporate parent AEP and located in Moundsville, West Virginia

The 2,365 MW of scheduled coal plant closures will be partly offset by Appalachian Power's plan to convert the Clinch River plant to burn natural gas, which will add 480 MW of new generation. That project is awaiting approval from utility regulators in Virginia and West Virginia. Although Appalachian Power has not set a construction kick-off date for Clinch River, the utility hopes the repowered generator will be operating in 2016 at a cost of about $65 million.

In addition, AEP last year completed the Dresden Energy Center in Ohio, which will add 580 MW of gas-fired generation to the regional power mix. Also, Appalachian Power is seeking to acquire shares in two plants--John Amos and Mitchell--owned by another AEP subsidiary, Ohio Power. So the wheels are in motion for enough generation projects to keep the lights on.

Two of the Appalachian Power generators slated for closure, Sporn and Kanawha, tie directly into an existing 138-kilovolt (kV) line in the Kanawha Valley near Charleston, Matheny said. Earlier this summer, Appalachian Power announced plans for $337 million of transmission upgrades in West Virginia, most of which will take place in the Kanawha Valley. The existing Kanawha Valley Transmission line runs alongside Interstate 64 and the Kanawha River near Charleston. Appalachian Power expects to begin working on that rebuilding project this year, and complete it in 2017.

The Kanawha Valley transmission upgrades include rebuilding approximately 52 miles of existing 138-kV transmission lines and making upgrades to substations. The bulk of the Kanawha Valley work will take place between the company's John Amos Plant and its Turner and Cabin Creek substations, with a key loop in the Cross Lanes area and another in the Kanawha City area, the company said in a statement. Additional work will be done to facilities that feed off the backbone transmission line that runs from Poca to Cabin Creek. The last major reinforcement to this backbone was nearly 40 years ago, Appalachian Power said.

These Kanawha Valley upgrades "not only meet the immediate need to strengthen the grid, but position the region well for growth in the future," Charles Patton, Appalachian Power's president and chief operating officer, said in a statement June 26.

Appalachian Power also is planning two other transmission projects: The $237 million expansion of the Cloverdale Substation and the $20 million, 138-kV, grassroot Blacksburg Falling Branch-Merrimac Transmission Line. Neither of those projects is related to the planned closure of coal-fired generation, Matheny said. Rather, they are being constructed to reinforce the electric grid in the PJM market. The Cloverdale project is scheduled to kick off late next year and be completed by year-end 2016, while the Merrimac Transmission Line is scheduled to begin construction early next year and be operating by the summer of 2015.

"Across North America, we see up to $11 billion of transmission projects kicking off this year, billions more than in prior years," said Brock Ramey, manager of North American Power Research for Industrial Info. "Much of that spending is to strengthen the grid and rebuild aging infrastructure. We're seeing a high percentage of transmission projects that are relatively shorter and lower voltage compared to the multi-state, 500-kV projects that were announced in previous years."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.