GE, Bechtel sign study agreement for AEP clean coal plant

CHARLESTON, W.Va. - GE Energy and Bechtel Power Corp. have signed an agreement with American Electric Power Co. to estimate the cost and equipment needs for building a new power plant using clean-coal technology.

If AEP approves the scoping study, the General Electric Co. subsidiary and Bechtel will build the country's first commercial-scale integrated gasification combined cycle plant at an estimated cost of $1 billion.

AEP has identified sites in Ohio, West Virginia and Kentucky for its first 600-megawatt IGCC plant. The company has said it wants to have 1,200 megawatts of clean-coal capacity by 2010.

The action in Ohio "does not mean a plant will not be built in West Virginia," Mark Dempsey, vice president at AEP's Appalachian Power Co. subsidiary in Charleston, said Friday.

West Virginia's site is a likely choice for a second identical facility, Dempsey said. Construction on the second integrated gasification combined cycle plant could start within two years.

"If I were a betting man, I would bet that will be at New Haven, West Virginia," he said.

If selected for the Ohio project, "GE Energy will supply the IGCC technology while Bechtel will construct the plant," according to GE's Web site.

IGCC plants convert coal into gas that is burned in turbines to power electric generators. The process decreases nitrogen oxide, sulfur dioxide and mercury emissions.

AEP subsidiaries have filed an application with regulators in Ohio requesting that the utility be allowed to increase rates to help pay for planning and building the plant at a site it is considering in Meigs County.

"As we said back in February, if we get approval from Ohio for cost recovery, the first plant will be built in Ohio," AEP spokesman Pat Hemlepp told The Associated Press.

A decision from the Public Utilities Commission of Ohio is not scheduled until August, Hemlepp said.

The company also has made a preliminary filing in West Virginia for a possible plant about eight miles away from the Ohio site. Appalachian Power is still working on a cost recovery plan for that plant and has not filed it with the West Virginia Public Service Commission, Dempsey said.

West Virginia Gov. Joe Manchin introduced and ultimately signed legislation to speed up permitting procedures in hopes of persuading AEP to build the first facility next to its Mountaineer Plant in Mason County.

But Manchin balked at further requests by AEP to knock down annual property taxes from $12.7 million to $1 million and business and occupancy taxes from $5 million to $600,000 a year, according to documents obtained by The Charleston Gazette.

"You're looking at $15 million a year," Tax Commissioner Virgil Helton told the newspaper. "That's a substantial sum. After looking at all of the pluses and minuses, we decided it wasn't in the best interests of the state."

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AEP: http://www.aep.com

GE Energy: http://www.gepower.com

Bechtel: http://www.bechtel.com