Harrison Price Four Times Recent Coal-Fired Plant Transactions
The State Journal
9 May 2013
By Pam Kasey
Comparison shopping may be instructive in Mon Power's petition to
buy the Harrison coal-fired power station from sister FirstEnergy
subsidiary Allegheny Energy Supply.
The utility, which serves its own and Potomac Edison ratepayers in
northern and eastern parts of West Virginia, proposed to the
Public Service Commission of West Virginia in November to buy the
80 percent it does not own of Harrison in a transaction that
amounts to $1.2 billion.
Full ownership of the Harrison facility is the best of all
possible options for meeting future customer demand, and the
proposed price is fair, the utility asserts. It provided a
consultant's analysis that some argue is incomplete and skewed.
The proposed price is based on the value of the plant on AE
But three recent sales of supercritical coal-fired plants give
another view. The sales were referenced near the end of direct
testimony filed in the case by engineer and industry consultant
David Schlissel on behalf of intervenors the West Virginia Citizen
Action Group and the Sierra Club.
Schlissel found that the proposed price for Harrison came in far
higher than the recent transactions: $767 per kilowatt of
generation capacity, compared with averages for the three
transactions of $130/kW to $181/kW.
In August, Exelon Corp. sold three Maryland power plants — the
1980s-vintage Brandon Shores, a coal-fired plant, along with coal-
and oil-fired units at the 1960s C.P. Crane plant and coal-,
natural gas-, and oil-fired units at the 1960s H.A. Wagner plant —
to Riverstone Holdings for an average of $177/kW, Schlissel said.
In March, Ameren sold five coal-fired power stations in Illinois
to Dynegy: Joppa, dating to the 1950s; Coffeen and Edwards, from
the 1960s and early 1970s; and Duck Creek and Newton, from the
1970s and 1980s. The transaction came to $181/kW, according to
Also in March, Dominion sold three power stations to Energy
Capital Partners. With one gas-fired station, those included the
Brayton Point Power Station in Massachusetts, with three coal
units and one fired by oil or natural gas, and the coal-fired
Kincaid Power Station dating to the 1960s and located in Illinois.
The average for the coal units was $130/kW, Schlissel said.
Dominion recently had invested $1 billion in environmental
controls at Brayton Point, but wrote off a large part of that
"The forecast for Brayton Point is indicative of what's happening
all over the country," said Tom Sanzillo, who co-authored an
analysis with Schlissel of the challenging conditions for Brayton
Point and other coal-fired power plants, including persistently
cheap natural gas and new and anticipated environmental
regulations. "We are seeing the owners of these 50-year-old
coal-burning facilities facing do-or-die decisions about their
futures, with hundreds having already announced their plans to
retire in the next few years and more going that route every
These units range widely in their characteristics.
Harrison's units are 40 years old, and the plant already has the
expensive scrubbers for compliance with sulfur dioxide emissions
standards. These units that have changed hands recently range from
22 to 60 years old and some do and others don't have sulfur
Harrison, located in West Virginia adjacent to its main supplier
of coal, burns a local fuel; these plants, located from
Massachusetts to Illinois, must deal with a variety of coal supply
But Schiller did not believe the differences between Harrison and
these plants are as great as the sale proposed price would
"The companies' proposed price for the Harrison plant in the
(generation resource transaction) is more than four times higher
than the price paid in any of these recent transactions," he wrote
in his testimony. "This strongly suggests that Allegheny Energy
Supply would not be able to receive $767/kW if it attempted to
sell Harrison to a non-affiliated company."
Rebuttal testimony in the case on the proposed transaction is due
May 17 and the evidentiary hearing will take place May 29-31 in
Case documents may be accessed on the PSC's website; search for,
or subscribe to, docket number 12-1571.